A Materials Requirement Planning (MRP) system is beneficial for a range of businesses across the manufacturing sector. Nevertheless, understanding what it is, and how it can benefit your business is the key to maximising the advantages of an MRP system.
What is a Materials Requirement Planning MRP System?
Utilised in the production process to compare current inventory levels against production capacity, an MRP system is a decision making and planning tool that also analyses the need to manufacture goods based on forecasts.
MRP systems are a computerised technique that looks at requirements within a specific time frame and can schedule production as per bills of materials, while minimising inventory.
Is MRP and ERP the Same?
Whilst MRP and ERP systems are both types of software to use smart forecasting to help the running of your business. ERP can be used across a multitude of sectors, as well as supply chain management. In contrast, MRP is used solely to assist businesses in the manufacturing industry.
How Does an MRP System Work?
The basic function an MRP system is as follows:
- Step 1: Exploding – This is achieved by utilising how many components are needed to prepare one item of manufacturing, also known as the Bill of Materials.
- Step 2: Netting – The overall figure is provided by exploding, and is the net quantity of material calculated by computing the overall available stock in the factory by the gross requirement.
- Step 3: Offsetting – The offsetting stage advises when the manufacturing process should begin in order to meet deadlines, alongside estimated lead time for the entire operation as a whole.
What Are the Advantages of an MRP System?
There are a number of benefits for your business by using an MRP system, such as:
- MRP can be particularly helpful with regards to product customisation, and is focused on the materials required and when they are needed for.
- In relation to the manufacturing of complex industrial products, MRP can assist with this, alongside playing a vital role in minimising factory inventory.
- Typically, MRP is believed to have a further benefit because it is known to track and schedule every order whether it’s for purchase or production purposes.
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