Material Requirement Planning (MRP)

MRP or Material Requirements Planning is a system which calculates the components and materials required for product manufacture. It comprises of three stages- procuring the materials and components inventory, picking out the extras required and then arranging a purchase or production scheduling.

It is one of the most popular automation systems used in the manufacturing process. MRP makes use of the information received from the invoice of raw materials, master production schedule as well as the inventory data for calculating the needed materials and the time they will be required during the process of manufacturing.

It is important in discrete manufacturing and in process manufacturing.  The key aim of MRP is ensuring the ready availability of components and materials as they are needed in the process of production. A MRP tool thus assists organizations in planning requirements for meeting the customer demands.

The MRP knowledge is elemental for making sure that low levels of inventory are maintained for providing on-time delivery as well as making sure that it does not witness a crisis.  The most important element is requirement of raw materials which relies on finished products, that again relies on sales orders.

Comprehending factors like lead time, changes in BOM, economic ordering quantity and minimum order quantities are important for effectively planning, avoiding over stocking as well as material shortages. The input here includes master data like material bills, item master, vendor master and inventory policy. The process involves the ERP system for automatically running MRP. The output involves production and purchase recommendations as well as the exception message.

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In MRP, the key elements are:

  • The "BOM" – Bill of Materials, which is the end product.
  • Multi-Level BOM requirements at Sub Assembly levels with the consideration ofavailable stock.
  • Knowledge of supplier lead time and preferred supplier for each item.

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