Material Requirements Planning (MRP): A Quick Guide

Material Requirements Planning (MRP): A Quick Guide


Material Requirements Planning (MRP) is a software-based method that helps businesses manage their production inventory levels and supply chain. It uses several inputs to gather production planning data, such as the product's bill of materials, master production schedule, production inventory levels, and other data sources to calculate what materials are required and when. MRP systems facilitate production planning, reduce manufacturing costs and improve productivity, and are often confused with enterprise resource planning (ERP). MRP systems rely heavily on the quality of their inputs to automatically calculate the material requirements of a business. ProjectManager is a great tool for manufacturing companies to use to map their production process, create production schedules on Gantt charts, track resources such as labor and materials with real-time dashboards and much more.

MRP systems use four key information sources to make their calculations: production schedules, material specs, production cycle times and supplier lead times. Research is used to fill gaps in the MRP's information sources, and executives must provide the right resources to apply the results of their research. MRP outputs include just-in-time delivery (JIT), which helps organizations save on inventory costs and ensure materials always have what they need on hand. Benefits of using MRP include keeping raw materials and components available when they need them while minimizing inventory levels, managing inventory more efficiently while reducing customer lead times, and improving profits and customer satisfaction. Unavoidable problems include technical and operational problems that can only be solved through adequate training, support and information sharing.