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Functions of the MRP system

Functions of the MRP system

Functions of the MRP system

 

What are the functions of the MRP system?
What are its objectives, basic functions, and problems?

In this blog post, I will talk about the MRP system, what it is, what kind of questions it answers, and why it’s a good tool for production planning. Here, you will learn what are the benefits of the core MRP system functions.
 

WHAT IS MRP?

 
Material requirements planning (MRP) is a production planning, scheduling, and stock control system used to manage manufacturing processes. It’s also possible to perform MRP manually, but most MRP systems are managed by software, depending on the number of parts to be organized.

MRP OBJECTIVES

An MRP system must meet these three objectives:

  1. Ensure that materials are available for production and products are available for delivery to customers.
  2. Try to maintain the stock levels of materials and finished products at all times.
  3. Plan manufacturing activities, sales orders, and purchases.
Therefore, the ultimate goal of any company is to deliver its product to its customers in the shortest possible time. To achieve this, some kind of planning is necessary and MRP optimizes this objective.
 
On the other hand, the list of materials (or Bill of Material -BOM-) relates the final product with the components:
  • lists of materials,
  • detail of the materials,
  • components,
  • and sub-components
necessary for manufacturing each product. This also includes all directions for manufacturing items, such as roadmaps, labor and machine hours, jobs, assigning batch/lot and serial numbers…
Based on this, an MRP system will also specify how long it will take a company to manufacture a product from its components (assuming they are all available) and it will calculate the estimated cost for manufacturing.
 
 
 
 

MRP PRODUCTION PLANNING

Generally, the basic functions of an MRP system include:  

  • stock control,
  • management of material lists and
  • supply chain.  

Therefore, MRP helps companies maintain inventory levels and to plan manufacturing, purchasing, and delivery activities. In addition, companies need to control the amount of material they buy, plan what products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, and all this at the lowest cost possible.  

Making a bad decision in any of these areas will cause the company to lose money, such as:  

  • If we purchase the wrong material or insufficient quantities, we could miss deadlines
  • If we buy more than we need -we will influence our cashflow, and lock money in the warehouse.
  • If we start the manufacturing process at the wrong time, it may cause delivery deadlines to be missed.   The MRP solves these problems by offering answers to the following questions:
  • What raw-materials, sub-components, and components we need?
  • How many are necessary?
  • What products, finished goods, and components must be delivered?
  • When we need those items?  

Material requirements planning (MRP) can be applied both to items purchased from external suppliers and to sub-components manufactured internally, as components of more complex items.
The answer to all of these questions can be found in only one option – fulfillment  

PROBLEMS WITH MRP SYSTEMS   

If there are errors in the inventory data, in the bill of materials (BOM) or in the production plan, the output data will also be incorrect. So, the integrity of the data is also affected by inaccurate stock adjustments, errors in receiving of incoming and outgoing products, errors in stocktaking, etc.  

Generally, all these types of errors can be avoided by implementing a global ERP system to manage all this data, flows, and processes, to organize inventory and shop floors, and intercommunicate needs so that each warehouse can redistribute the components to serve the entire company.  

To this end, ERPAG ( https://www.erpag.com/ ) has made notable efforts to provide an MRP as efficient and integrated with the nature of the company, i.e. oriented to the activity of the company with special focus on the productive activity.

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