MRP, also known as Material Requirements Planning, is a computer-based software system that helps various businesses, mainly product-based manufacturers, understand stock control requirements. At the same time, they find the balance between customer demands and supply chains.
Manufacturers and businesses primarily use the MRP system to do what they do best, ensure efficient inventory management, correct delivery processes, and schedule productions to achieve ultimate customer satisfaction and maintain structure.
How Does MRP System Work
The MRP system rapidly increases the pace of the manufacturing and production processes by determining which components, products, supplies, and raw materials are needed and how much is needed for each type of product. MRP system also notifies you when completed goods should be assembled based on the bill of materials and customer demand.
Material Requirements Planning (MRP) is designed and developed to ask three basic questions:
- What is needed?
- How much is needed
- When is it needed?
While these questions may look pretty simple, the answers to these questions play a vital role in ensuring that you get the utmost best out of this brilliant software solution.
Answering these questions will provide you with clarity on which products or items you need, the quantity of the materials required, and the date as to when shipment or the demand must be completed.
Thus, helping to facilitate and provide a quick and efficient production schedule so that none of your time and money is wasted in any way.
Basic Steps of Material Requirements Planning (MRP)
The MRP system and process consists of four basic steps:
- Determining the demand and materials needed to meet the requirement
The first step of the Material Requirements Planning system process is to estimate the demands of your customers and determine the materials needed to meet their requirements. Then, using the bill of materials method, which is basically a list of all the components, raw materials, and assemblies required in order to manufacture and produce the final product.-MRP uses this information to disassemble and then reassemble the demands of customers into specific components and raw materials.
- Weigh Demands Against Stock Control And Allocate Resources
In this step, the Material Requirements Planning system (MRP system) checks the customer demands against the stock you already own and stored in your warehouse. The MRP system will then allocate the resources needed accordingly. In simple terms, the MRP system issued the necessary inventory into the precise arrears in which it is needed.
- Manufacturing and Production Scheduling
Next, the MRP system will calculate the required labor and time needed to complete the manufacturing task. The deadline as to when it must be ready will also be provided.
- Monitor The Entire Process
Last but not least, in this final step of the process, monitoring for any potential issues or hazards is vital. Therefore, the MRP system will automatically notify and alert the managers assigned to the operation of any delays, and the system can even give them suggestions on alternative routes or solutions to meet the set deadline.