What is mrp

MRP stands for Material Requirements Planning and is a software solution that helps manufacturers calculate more precisely what materials they require, at what time, and in what quantities. MRP II gives you the ability to compare forecasts with actual data, analyze performance and improve processes to achieve better efficiency. ERP, on the other hand, stands for Enterprise Resource Planning and is a more complete software system that includes additional features and functionalities to help manufacturers automate and streamline business processes, not just related to manufacturing, but across their entire enterprise.

ERPs developed out of MRPs and are designed to not only help manufacturers better plan their inventory and scheduling, but to help manufacturers with sales, quotes and estimates, customer relationship management, accounting, human resources, project management, and more.

ERPs go beyond MRPs and connect and integrate all the different aspects of your business into one database, allowing you to streamline tasks and processes, as well as share error-free information across your entire organization.

ERPs power your business with accurate data, and help you to increase efficiencies and reduce costs across your organization. The term ERP was first used in the s by the Gartner Group, but ERP systems have deep roots in the manufacturing industry and can trace their history back to the MRP systems first developed in the s. During the s, manufacturers realized they needed a better way to manage, track and control their inventory, and computer technology was advancing to the point that it could satisfy these requirements.

Basic software solutions, named MRP, or Material Requirements Planning systems, were developed to meet the needs of manufacturers. These systems helped manufacturers monitor inventory and reconcile balances, as well as included very basic manufacturing, purchasing, and delivery functions. Through the s more and more manufacturers started to adopt MRP systems, and the systems themselves began to get more sophisticated. These systems included the same functionalities as the original MRP systems, but also had expanded features and capabilities, making them better able to handle scheduling and production processes.

By the s the first true ERP systems came into use. These systems further expanded upon the basic inventory control and manufacturing processes of previous MRP systems to include other departments, features, and functions, such as accounting, finance, and sales. These systems set the stage for ERP solutions as we've come to know them today, by integrating multiple processes, tasks, and departments into a single system.

Modern ERPs provide manufacturers with a powerful, real-time tool that runs a single, shared database of information, which can be accessed by every department in an organization. Modern ERP solutions not only include manufacturing, supply chain management, and financial and accounting capabilities, but they also can have advanced reporting and business intelligence, sales force and marketing automation, CRM management, and project management functionalities.

What are the main features of an MRP system? A master production schedule: A statement of the planning including orders, forecasts and capacity. Bill of materials BOM : All the materials and components required to make the final product. Inventory status file: Stock records that allow gross requirements to be adjusted to net requirements.

How does an MRP system work? Step 1. Step 2. Netting: the net quantity of material calculated by computing the difference between the stock available in the factory from the overall, gross requirement.

This figure is provided by exploding. Step 3. Offsetting: lead time is estimated for the entire operation that helps practitioners to compute the expected time for manufacturing. It also advises when the manufacturing process should begin so that items are available on the promised date. What are the advantages of an MRP system? The MRP system is widely credited for playing a crucial part in decreasing factory inventory.

It also assists in manufacturing industrial products that are more complex MRP focus is on what materials are required and when they need to be sourced. It is also helpful in product customisation MRP has historically been seen as giving additional advantage because it is known to schedule and track every order whether for production or purchase Material Requirements Planning: login to view Login to view our members-only guide to Material Requirements Planning.

Scheduling production Using the master production schedule, the system determines how much time and labor are required to complete each step of each build and when they need to happen so that the production can occur without delay.

The production schedule also identifies what machinery and workstations are needed for each step and generates the appropriate work orders, purchase orders and transfer orders. If the build requires subassemblies, the system takes into account how much time each subassembly takes and schedules them accordingly. Identifying issues and making recommendations Finally, because the MRP links raw materials to work orders and customer orders, it can automatically alert your team when items are delayed and make recommendations for existing orders: automatically moving production in or out, performing what-if analyses, and generating exception plans to complete the required builds.

How well your MRP system works depends on the quality of the data you provide it. For an MRP system to work efficiently, each input must be accurate and updated. Here are some of the inputs an MRP depends on:. Using the provided inputs, the MRP calculates what materials are needed, how much is needed to complete the build and when in the build process they are needed. With this information defined, businesses are able to execute on just-in-time JIT production, scheduling production based on material availability.

This minimizes inventory levels and carrying costs, as inventory is not stored in the warehouse for future production but arrives as needed. By scheduling materials to arrive and production to begin soon after, businesses can move materials through the workflow process without delay.

Using a master production plan and taking into account subassembly build times minimizes materials sitting on shelves and bottlenecks in the build process. MRP systems allow you to plan and schedule production efficiently, making sure materials move through the work order quickly and helping businesses fulfill customer orders on time. An MRP system that is integrated across an organization eliminates manual processes, such as pulling historical sales and existing inventory.

You spend less time building Gantt charts and production flows to understand when and where you need product available, which frees up time and removes a layer of complexity.