Are we really sure what MRP means in India?
I would say ‘no’ since the meaning is not the same everywhere. We are discovering the double meaning of this widely spread term. If you want to find out more, stay tuned!
MRP in India is an abbreviation for the Maximum Retail Price. This is actually the highest price that can be charged for a product that is sold in India. Additionally, the manufacturer is the one who calculates the MRP.
The MRP has to consist of all the expenses that the end consumer might have to pay for the product. Therefore, here are a few things that have to be taken into consideration when calculating the MRP:
- Manufacturing Cost
- Packaging/presentation Cost
- Profit Margin
- CnF margin
- Stockist Margin
- Retailer Margin
- Marketing/advertisement expenses
- other expenses etc.
Finally, MRP has to be displayed on every packaged product along with the information about the date of packaging, expiry date, manufacturer information, etc.
What you usually mean by the abbreviation ‘MRP’?
In contrast to this unique concept, the MRP usually stands for Material Requirement Planning. This is a concept of improving the profitability of your business by focusing on improving the production process and the efficiency of the company.
For that to be possible, you actually need a system that is based on the planning of the production process and the control of inventory in order to manage the workflow in the most efficient way possible – that is why this term often referrers to MRP software.
How to join these two concepts together?
With ERPAG, you are actually getting an ERP software that includes MRP modules!
Material Requirement Planning focuses on the time and ability of the company to determine what is required during the production process.
1. MRP is necessary for companies with multiple suppliers that have different characteristics and delivery times.
2. MRP is also in charge of calculating the quantities of materials that need to be purchased and available for selling/manufacturing.
3. All this accompanied by the financial information that it entails so that we can assess the results of our activity at all times.
And when it comes to Maximum Retail Price, you can incorporate it into one of the multiple custom fields on the item level. As a result, this will translate onto documents and product labels that are clearly displayed on the item.
In conclusion, you can incorporate both meanings of the MRP in just one system!
With ERPAG, you can respect the mandatory maximum retail price but still keep your business growing, and make a profit that doesn’t entirely rely on sales!