The purpose of the MRP process is to inform production managers how and when to source the raw materials or component parts needed to fulfill production orders. Using the master production schedule as its source of truth, the MRP process accounts for the order of operations for producing a good, and works backward to plan items and processes accordingly. Ultimately, the MRP process ensures optimal levels of dependent demand inventory to minimize waste and carrying costs, yet satisfy current and future demand.
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Most finished goods are comprised of multiple ingredients, materials or other components, and must undergo various processes and steps before they are considered complete. Because the finished good is dependent on these items, they are referred to as dependent demand, and they must be carefully managed in order to fulfill planned production orders.
The MRP process starts with the master production schedule, as it determines what quantity of a dependent demand product is needed and when. The MRP system then works backward from the master production schedule to calculate the quantity of each dependent demand item that is needed to produce the required amount of end product.
Next, the MRP process determines how much of each item the company currently has available in inventory, and aggregates it with upcoming scheduled deliveries. If there is a gap between what is needed and what is on-hand, the process will indicate that additional orders need to be placed. Finally, if the future net requirements of materials or components is projected to deplete inventory, planned orders can be created to account for each item’s lead time. In this way, the MRP process prevents future production downtime that might occur due to depleted on-hand inventory. Often, an MRP process must be performed for each dependent demand item.
While the MRP process can be carried out by hand, it is most commonly performed electronically, either by a homegrown or commercial material requirements planning (MRP) software solution.
With integrated and automated systems, any business process is made easier and more efficient. MasterControl Manufacturing Excellence optimizes the MRP process by automating manual manufacturing activities, integrating disparate enterprise software systems, digitalizing documentation, and storing data in a central location, making critical trends and insights easier to access, analyze and leverage.
MasterControl Manufacturing Excellence enables your company to:
For more information about MasterControl Manufacturing Excellence and how it can elevate your MRP process, please contact a MasterControl representative.