Material Requirements Planning (MRP) An overview of MRP Material Requirements Planning (MRP) is a software based production planning and inventory control system used to manage manufacturing processes. Although it is not common nowadays, it is possible to conduct MRP by hand as well. Is a computer based information system that translates the finished product requirements of the master schedule into time- phased requirements for subassemblies, component parts and raw materials, working backward from the due date using lead times and other information to determine when and how much to order.
Material requirements planning is as much a philosophy as it is a technique, and as much approach to scheduling as it to inventory control. MRP begin with a schedule for finished goods that is converted into a schedule of requirements for the subassemblies, components parts, and raw materials is needed to produce the finished items in the specified time frame. Thus, MRP is designed to answer three questions: what is needed? How much is needed? and When is needed?
Manufacturing industries must follow planning processes for every product, from its developmental stage to initial production and to final product. To outline each part of production planning, businesses use computer-based information tools such as material requirements planning, or MRP, and manufacturing resource planning, or MRP I. They function as integrated manufacturing control and activity systems MRP inputs An MRP system has three major sources of information: a master schedule, a bill of materials file, and an inventory records file.
A master schedule is also referred to as master production schedule, states which ends items are to be produced when they are needed, and in what quantities. Then, a bills of materials(BOM) contains a listing of all the assemblies, parts, and raw materials that are needed to produce one unit of a finished product. Thus each finished product has its own bill of materials. And lastly, inventory records refers to stored information on the status of each items by time period, called time buckets. This include gross requirements, scheduled receipts, and expected amount on hand.
It also include other details for each items, such as supplier, lead time, and lot size policy. MRP Systems MRP systems use production stage charts, materials requirement planning and master production schedules to outline the process of creating final products. It outlines the time needed during each production stage, status of outstanding orders and inventory needs for the initial process. It determines the time required for each production stage and demand for the final product. MRP1 Systems MRPII adds data resources to the original MRP manufacturing information systems.
MRPII incorporates plan activities–such as a detailed production schedule and financial needs, inventory management, demand planning, shop-floor control and performance measurements–into manufacturing groups, such as the car industry and Marine Corps logistics. MRP and MRPI Integration MRP and MRPI systems are normally integrated into other production systems, such as Enterprise Resource Planning (ERP), but are still found separately today due to computer prices. The system a company uses depends on requirements.
Just In Time (JIT) inventory strategy will sometimes supersede MRP during repetitive manufacturing processes, since receiving the raw materials during production cuts down on warehouse space and costs. For pharmaceutical and defense manufacturing industries, which use non repetitive production processes, the MRP system is still preferred. Project Benefits MRP allows for organization of the process as a project instead of continuous operation. The project engineer can produce a project master document with such information as division into units, date of the plan and name of the project. A project team is formed.
The name of the team, role of the team and role of any team member or employee using MRP will be defined. Activities in the project can be linked through the use of planning, control of activities and co-ordination. MRP can be used to compute the earliest and latest possible start date for each activity of the project. MRP utilizes reject codes to assure consistent product quality by identifying units out of compliance. MRP further assures quality by using quality assurance methods to monitor line production. Rejected lots of product are tracked by operation work centers. Rejection of materials is tracked by vendor.
Guidelines are developed for inspection of finished products as well as at pre-determined points in the manufacturing process. Outgoing goods’ quality control and quality certifications are utilized. The benefits of the implementation of MRP versus of the cost of the system are considerations for companies examining this method. Lower end estimates for the cost of such a system are approximately $93,000 for a small company to $1,633,000 for the largest companies. However, the implementation approach, management support and degree of computerization have been found to be more important in achieving benefits than the cost of the system.
The size of the company and the nature of the process or product appear to have little effect upon success. MRP will plan production so that the right materials are at the right place at the right time. MRP determines the latest possible time to product goods, buy materials and add manufacturing value. Proper Material Requirements Planning can keep cash in the firm and still fulfill all production demands. It is the single most powerful tool in guiding inventory planning, purchase management and production control. MRP is easy to operate and adds dramatically to profits.