Materials Requirement Planning (MRP) Functions and Objectives

7/21/21 12:00 AM

carlos-aranda-QMjCzOGeglA-unsplashIn manufacturing, it is important to find ways to save time and money in order to maximize your profits. To this day, many manufacturers are still planning their production manually with the help of spreadsheets.

While this can be manageable for small companies, most businesses are able to benefit from using automated production planning software.

One of the crucial aspects of production planning is to ensure that you have enough of each material you will need to begin production. This is where production planning frameworks such as Material Requirements Planning (MRP) come into play. MRP was developed to help manufacturers carry out an efficient strategy to order and organize materials waiting to be assembled.


What is MRP?

Material Requirements Planning (MRP) refers to the process that translates master schedule requirements for finished goods into time-phased requirements for raw materials, components, parts, and sub-assemblies.

While the master schedule designates the quantity and need dates of the end items, material requirements planning generates a production plan that indicates the timing and quantities of all materials required to produce those end items.


Functions of MRP

Having a systematized method of planning your materials will keep your production planning, inventory control, and purchasing departments aligned and keep materials moving through the facility. 

Although an MRP system cannot run a production facility on its own, it allows manufacturers to maintain a steady flow of materials through the supply chain and permits planners to focus their attention on problematic areas.  Some of the functions of an MRP system include:

  • Inventory Management - The main function of an MRP system is to ensure that materials are available when they are needed. This can also help ensure that you do not have too much or too little materials on hand. Inventory management is essential as too much material will incur additional storage costs while holding too little inventory can lead to delays and unhappy customers.
  • Cost Reduction - Cost is reduced significantly for manufacturing facilities using an MRP system. First, by reducing the time that planners would spend on manually determining the quantities and timing of each material or component. Second, through inventory management, MRP will ensure that you do not lose money by storing unnecessary materials or by constantly having to rush in material orders to meet deadlines.
  • Production Optimization - Although the main goal of MRP is to manage materials it serves as an important tool to improve production processes. When materials are flowing smoothly within the production facility, you can save time, decrease costs, and increase the overall throughput. Employees and equipment will be able to work at a more consistent and faster rate if they don’t have to stop to retrieve or wait for materials. 

Objectives of MRP

The main objective of MRP is to provide answers to the following questions:

  • What is needed?
  • How much is needed?
  • When is it needed?

While implementing an MRP system can be extremely beneficial for your production facility, it is often not enough to use it as a standalone system. In order to make the most out of your production and improve the efficiency of your processes, manufacturers should consider using an Advanced Planning and Scheduling (APS) software that will concurrently plan and schedule production.

I have actually been able to reduce on-hand Raw Materials significantly, and it’s interesting. The observation is that I tend to cut it too close, but somehow we never run out! Folks have been used to over-buying to “be safe” for so long, that following the Inventory Plan (MRP) makes people nervous, but again, I never have run out, so I stand on that. I have had to rush in materials due to a surge in unplanned orders resulting in raw material demand, but I have those networks set up, so no biggie.


PlanetTogether APS will allow you to automatically create a production plan and schedule that takes into consideration a multitude of scheduling constraints. This will ensure that you have enough resource capacity and materials on hand to begin production and deliver your items on time to your customers. 

Some of the common benefits of using PlanetTogether's MRP are (1) the simplicity of a "single-click" process than plans materials and resources in a cohesive system, (2) the speed of the MRP process performed by PlanetTogether, and (3) the plan that results from planning material and capacity together, rather than creating an infinite capacity material plan in an ERP system and then planning finite capacity in PlanetTogether.


Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With PlanetTogether APS you can:

  • Create optimized schedules that balance production efficiency and delivery performance
  • Maximize throughput on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to resource capacity
  • Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!

Related What-If Video

 APS Resources

Topics: Implementation, APS, APS, resource, MRP, enterprise resource planning, integration, Material Requirement Planning, materials planning, implementation speed, APS benefits


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