Material requirements planning (MRP) systems use time sensitive, priority-planning techniques to calculate labor schedules and material requirements for product runs in manufacturing facilities. MRP systems heavily rely on innovative IT solutions to maintain updated information about manufacturing needs, customer demands, inventory levels and current deadlines. MRP systems are designed to optimize inventory handling and production management.
MRP Information Sources
MRP systems use four key pieces of information to determine what and when materials should be ordered. These four information sources are production schedules, material specs, production cycle times and supplier lead times. Production schedules describe in detail when each product should manufactured. This information is used to adjust production machines and process flows. Material specs list the parts and materials that are required to make each product. The production cycle time establishes standard time frames in correlation with target material needs at each manufacturing stage. The supplier lead time indicates procurement and logistical time frames.
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MRP Objectives
The primary objective of MRP systems is to get the correct materials to the right place at the correct time. Most organizational objectives focus on production inventory, priorities and capacity. When it comes to inventory, MRP systems help management to order the right quantity of parts at the right time. Materials that are prematurely delivered to a manufacturing facility with limited storage space may cause inventory problems. When it comes to priorities, MRP systems help management prioritize the most time sensitive deadlines while monitoring due dates. MRP helps management with capacity planning because they can forecast accurate and complete production runs.
MRP Methodology
MRP systems are still an innovative idea to many manufacturing professionals, so effective implementation requires proactive management involvement. Business leaders must clearly identify processes and metrics to ensure proper organizational responsiveness. There are no industry standard models for implementing MRP systems because all situations and organizations are different. Unique production environments mean that customized solutions must properly contain labor, logistics, materials and scheduling variables. Most organizations conduct thorough research, establish clear policies and implement preemptive procedures before they attempt to introduce an actual MRP system. The actual methodology of MRP systems should focus on material inputs and outputs through analyzing the production schedule and material specs.
Unavoidable Problems
Management must recognize that there are technical and operational concerns that must be addressed through training, support and information sharing. The production schedule and material specs determine what materials should be ordered, so they should be mastered before moving on to the following two parts. The production cycle and supplier lead times determine when orders should be placed, so they must be carefully synchronized and synthesized. There are two common kinds of MRP system failures. First, a lack of appropriate choices and resource to adjust implement MRP systems and processes will eventually cause failure. Second, mediocre system implementation and staff training may cause project scope and systematic malfunctions.
Real-world Case Studies
Most businesses will first conduct research, gather business intelligence and elicit feedback from companies with similar MRP systems in their industry. The best results are always achieved when executives and top management set the necessary conditions and provide the right resources to guide organizational actions. Learning from the mistakes of other companies will avoid potential problems. For example, many MRP sales people will sell complicated systems that come with impressive options and extra features. However, the data required by the MRP system should equal the level of production detail required for quality manufacturing.
A material requirements planning system can help companies to successfully handle market instability, intensive competition and resource limitations. It also helps them to offer competitive prices, product quality, customer service and delivery promptness.
