Will Implementing MRP Benefit Your Company?
This post is for small to mid-sized manufacturers who are considering MRP implementation. The following definition is sourced from Wikipedia.
We hope you find it useful:
Material requirements planning
“MRP is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
· Ensure materials are available for production and products are available for delivery to customers.
· Maintain the lowest possible material and product levels in store
· Plan manufacturing activities, delivery schedules and purchasing activities.
Dependent demand vs independent demand
Independent demand is demand originating outside the plant or production system, while dependent demand is demand for components. The bill of materials (BOM) specifies the relationship between the end product (independent demand) and the components (dependent demand).
The basic functions of an MRP system include: inventory control, bill of material processing, and elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used to plan manufacturing, purchasing and delivering activities.
Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost.
Making a bad decision in any of these areas will make the company lose money. A few examples are given below:
· If a company purchases insufficient quantities of an item used in manufacturing (or the wrong item) it may be unable to meet contract obligations to supply products on time.
· If a company purchases excessive quantities of an item, money is wasted – the excess quantity ties up cash while it remains as stock that might never be used at all.
· Beginning production of an order at the wrong time can cause customer deadlines to be missed.
MRP is a tool to deal with these problems. It provides answers for several questions:
· What items are required?
· How many are required?
· When are they required?
MRP can be applied both to items that are purchased from outside suppliers and to sub-assemblies, produced internally, that are components of more complex items.”
Passport Software’s MRP for Small Businesses allows you to set planning rules, set lead times, and provides concise reporting.
PBS™ Manufacturing is a scalable, affordable modular solution that integrates with other modules to meet your company’s unique needs.