Material Requirements Planning is an inventory management system that helps businesses plan, track, schedule, and monitor their manufacturing processes and material usage more efficiently.
MRPs typically have 3 main goals:
Companies use an MRP to estimate what materials are needed, how much is needed for a specific job, and when delivery can be promised. If implemented properly, MRPs reduce operational costs and increase efficiency while decreasing the need for larger inventories.
An MRP is a tool used by manufacturers to accurately track resources, establish production schedules/deadlines, and monitor resource usage and output.
All MRPs work backward from a Bill of Materials (BOM) and develop the resource requirements needed to create the end product.
Material requirements planning addresses 3 key questions: WHAT, HOW MUCH, AND WHEN?
MRPs increase efficiency and productivity while reducing inventory costs.
A helpful way to understand an MRP is to think of it as a backward-moving system. MRPs start with a completed product production plan and convert it to a list of the subassemblies, components, and raw materials needed to manufacture the final product. All while adhering to an established schedule.
We can map this out by looking at the WHAT, HOW MUCH, and WHEN of any production. At the core, every MRP addresses these 3 questions.
Transforming the above three questions into actionable items requires 4 basic steps.
Did you know VKS can notify managers of low inventories or other problems within the assembly line? By connecting VKS to your MRP or ERP through our advanced API, our work instruction software ensures that workers and management always have the information they need in real-time.
One of the leading advantages of an MRP system is the assurance that you have the right materials when you need them. Having the right materials at the right time means that you don’t need to hold onto large inventories or stockpile resources. This improves operational efficiency and productivity which enables businesses to decrease lead times and increase customer satisfaction.
The modern MRP has quite a few advantages, but that doesn’t mean there aren't any disadvantages either.
The most common problem with an MRP system can lead to a decrease in flexibility. Creating a comprehensive plan that optimizes production schedules is great but how responsive and flexible can manufacturers be when things don’t go according to plan?
Similarly, MRPs rely on gathering accurate and precise information. If the information is wrong, the system will make an ineffective plan.
Connect your MRP to VKSwork instruction software to gather the precise data you need within our smart forms. Employees are given precise instructions and the tools they need to gather valuable process, inventory, and quality data.
And finally, MRPs can be expensive. While traditionally not as expensive as an ERP (Enterprise Resource Planning), MRPs are expensive nonetheless. This means that despite the sure benefits, manufacturers need to weigh this against the cost of the system.
On the surface, it may seem that an MRP and an ERP do pretty much the same thing. And although they share a few of the same qualities, they are far from the same.
As we’ve said, Material Requirements Planning is an excellent tool for manufacturers to manage inventory, capacity planning, and scheduling. ERPs on the other hand, take this approach even further and allow manufacturers to take greater control of their operations through automation of back-office business functions.
Let's take a brief look at the main responsibilities of the modern MRP and ERP.
We can see that the scope of responsibilities is much larger for the ERP, pretty much performing all of the duties of the MRP and then some. But MRPs still have a place within modern manufacturing.
It should be noted that ERPs do not replace MRPs. Although ERPs often have material requirements planning functions built into their long list of duties, standalone MRPs are still useful for manufacturers that don’t yet need the complex capabilities of an ERP.
Traditionally, Material Requirements Planning systems have been used by smaller businesses where the main concern is manufacturing operations. Larger businesses with a variety of users from various departments opt for the more comprehensive ERP system.
Determining which system is most useful to you will highly depend on your operation and needs.
Whether using an MRP or an ERP, did you know you can boost the capabilities of your operation and workforce with work instruction software? By connecting your business platform with work instruction software, you gain greater control of every process on your shop floor while also gaining valuable information from every action and interaction.
Process information and production data are sent back and forth between the two systems to gain the most valuable data possible, prompting ERPs and MRPs to undergo significant Industry 5.0 innovation.