MRP keeps production moving. Material Requirements Planning, or MRP, is a system for calculating the materials and components of a manufactured product and when they're needed during the manufacturing process, based off the company's anticipated demand for a product. MRP consists of three primary steps. Take inventory of the materials and components on hand. Identify what materials are needed.
and schedule production or purchase. To do all this, MRP uses the Bill of Materials, a hierarchical list of quantities of materials and sub-assemblies needed to make a product. MRP automatically tracks and manages what parts are dependent on what other parts or materials to calculate the number of items needed by specific dates.
Benefits of MRP include reduced customer lead times, reduced inventory costs, effective inventory management, and improved manufacturing efficiency. MRP helps companies better match supply to demand and is useful in both discrete manufacturing as well as process manufacturing. But there are some downsides, including the potential for increased inventory costs if companies hold more inventory than necessary, lack of flexibility, not accounting for varying employee efficiencies or delayed material shipments, and a dependence on accurate information requiring strict data integrity requirements.
MRP is often compared to ERP or Enterprise Resource Planning. Click the link above or in the description below to understand the difference between the two. How would MRP benefit your company?
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