What is Material Requirements Planning?
MRP is a process used to manage production schedules, materials inventories, and customer orders. It aims to maintain low inventory levels and provide accurate information for sales, purchasing, and production.
1. Identify the Demand for the Products You Build
In MRP, you create sales forecasts to project out the demand for your products. The system calculates how much you need to produce them based on your own internal or dependent demand (raw materials for sub-assemblies, produced internally) and external or independent demand (customer orders for end items themselves).
2. Stay Up to Date with the Data You Need to Make the Planning Work
MRP needs accurate dates on open sales orders, purchase orders, production tickets, and other records so it can generate a good plan of when to begin producing each item. Inaccurate data can cause you to order more than you need, waste money on restocking, or miss deadlines.
3. Accurate Lead Times for Your Suppliers
MRP systems can only calculate your lead time for the materials you need when you have accurate data. When suppliers take longer to deliver critical supplies than the system estimates, you can’t make accurate deliveries and your MRP won’t work properly.
4. Better Workflows
MRP can help you get more done in a shorter period of time by automating your production flow and understanding how long it takes to complete each step of the process. This makes it easier to move products through the production pipeline without delay or mistakes.