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MRP for Small Businesses – Useful Terminology

Definition of MRP

MRP for Small Businesses and Mid-Sized Companies

Hello again,

This post is for small to mid-sized manufacturers who are considering MRP implementation.  The following definitions are sourced from APICS Operations Management Body of Knowledge Framework, Third Edition:

Material Requirements Planning

“MRP is a set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. MRP makes recommendations to release replenishment orders for material.

MRP

MRP calculates requirements based on higher-level requirements derived from sales and operations planning and master production schedule processes. This facilitates increased communication and coordination between all parties to identify and fulfill resource requirements based on established plans.

Explosion

Explosion, or requirements explosion, is the process of calculating demand for the components of a parent item by multiplying the parent item’s requirements by the component usage quantity specified in the bill of material.

JIT planning

Integrating JIT with MRP requires an approach by which the ordering of components and parts is planned based on production rates to estimate future requirements. These plans would be executed using kanban or a similar pull system.

Backflush

In backflush, component parts, material, and subassemblies are deducted from the inventory on hand by exploding the bill of material and multiplying the quantities of each required by the number of assemblies produced.

Backflushing reduces the amount of data capturing and processing needed, but it requires system integrity, accurate reporting of completed items, accurate measuring of yield, and special reporting of unusual situations. Backflushing is especially appropriate for JIT environments, where pull systems are used.”

Learn more about how Passport Software’s MRP for Small Businesses can help your company.

Call 800-969-7900.  Or Contact Us – We are here to help.

 


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