Material Requirements Planning (MRP) 101
No matter what you’re manufacturing, every business in the manufacturing industry can benefit from a production planning, scheduling, and inventory control system, which is why IBM engineer Joseph Orlicky developed the process known as Material Requirements Planning (MRP) in 1964. Originally designed to supply the UK’s Polaris program, MRP primarily consists of three steps: taking inventory of materials on hand, identifying what additional materials are needed, and scheduling their production or purchase.
In Orlicky’s book, Material Requirements Planning (MRP): The New Way of Life in Production and Inventory Management, he said, “Never forecast what you can calculate,” and that’s especially true in the manufacturing industry, where determining materials vs. demand is an everyday challenge. If you fall short, your customers will go elsewhere, but if you overestimate, you could lose money.
This article will explain the features and benefits of MRP, how to get set up, and highlight a solution to consider when you’re ready to optimize your supply chain—JD Edwards EnterpriseOne Requirements Planning. Let’s get started.
MRP—Features and Benefits
The objective of MRP is to improve critical manufacturing processes by lowering lead times, optimizing inventory levels, and maximizing service levels. By increasing business efficiency, you can:
- Increase customer satisfaction
- Reduce inventory costs
- Improve manufacturing efficiency
- Better match supply to demand
Additionally, some of the features of adopting an MRP solution include:
This gives manufacturers insight on material levels to help estimate when to maintain or order more. With accurate forecasting, you can save and spend money when necessary.
By organizing the inventory process, you can ensure inventory levels are maximized for production while keeping overhead costs low.
An MRP system allows production managers to create reliable schedules for current and future project planning.
Setting Up MRP
The MRP process was specifically designed to be used by the manufacturing industry, but it’s applicable to almost any industry (even a bakery) because it focuses on the balance between supply and demand. When it comes to setting up MRP, you need to consider three things:
1) Quantity Requirements—Identify the quantity on hand, in purchase orders, planned for manufacturing, already committed, and forecasted.
2) MRP Calculations—Develop suggestions for materials that are critical, expedited, and delayed.
3) Complete the Order—Outline the materials for manufacturing orders, purchase orders, and other reporting requirements.
One vital area to focus on when setting up MRP is data integrity. Any MRP system is extremely dependent on accurate information about demand, inventory, and production. If one input is off by just a little bit, that small inaccuracy could cost you big time in wasted effort and money down the road. Ensuring data integrity and quality management are essential to operating an effective MRP practice.
Selecting the Best MRP Software for You
The MRP software field can be overwhelming (not to mention expensive). Some of the features to consider when choosing an MRP solution are flexible requirements, advanced filtering, forecast consumption, supply-chain visibility, and integrations.
Many of our clients use JD Edwards EnterpriseOne Requirements Planning. A comprehensive solution, JD Edwards EnterpriseOne Requirements Planning can be used within a single manufacturing plant or across a multi-factory enterprise. It can also be used as a standalone solution or integrated with other components of JD Edwards to help optimize your business, such as JDE E1 Inventory Management, JDE E1 Configurator, JDE E1 Forecast Management, and more.
If your organization is looking to implement an MRP solution, we have the experts you need to succeed. Our senior-level JD Edwards consulting team can help you navigate this complicated process and develop a solution that meets your company’s unique needs.