Understanding Material Requirement Planning (MRP) and Its Purpose for Your Business
Definition Material Requirement Planning
MRP is a system that is useful for calculating how many raw materials or components are needed to produce an item. Generally, this system is used by manufacturing companies. This system was created to answer three questions, namely "what items are needed?", "How much are these items needed?" and "when is the item needed?".
Typically, MRP systems require the help of computer software to automate the production process in manufacturing companies, such as manufacturing software. The company uses this system to estimate exactly how much raw material is needed during production and to schedule deliveries.
This method is effective for various types of manufacturing companies, such as discrete manufacturing (car manufacturing, tooling or the like) and process manufacturing (food or beverage factories, chemical plants and the like). This is the reason why this method was adapted by many manufacturing companies in various parts of the world.
Initially, material requirements planning used mainframe computers to manage information from the bill of materials for certain products and was converted into purchase plans and production plans. A few years later, MRP included a feedback feature that made it easy for production managers to make changes or update directly to the system if needed.
As the year progresses, the material requirements planning system continues to develop and can now be integrated with marketing, finance, and human resources in making production plans. Because of its complexity, MRP at this stage is widely referred to by various parties as MRP II.
If MRP is generally used by manufacturing companies, ERP can be used by various types of industries. Retail, construction, banking and service companies have begun implementing ERP software in their companies. However, MRP is still an inseparable part of manufacturing companies to this day.
Until now, MRP has remained an important part of manufacturing companies. Its development into an ERP system has now made this method suitable for various industrial sectors in the world.
MRP is a system that is useful for calculating how many raw materials or components are needed to produce an item. Generally, this system is used by manufacturing companies. This system was created to answer three questions, namely "what items are needed?", "How much are these items needed?" and "when is the item needed?".
Typically, MRP systems require the help of computer software to automate the production process in manufacturing companies, such as manufacturing software. The company uses this system to estimate exactly how much raw material is needed during production and to schedule deliveries.
How MRP works
This system takes information from the Bill of Materials (a list of all raw materials used, subassemblies, and other components needed to produce an item, complete with the amount). In addition, MRP also utilizes inventory data and main production schedules to calculate the amount of raw materials needed and when they are needed when production is running.This method is effective for various types of manufacturing companies, such as discrete manufacturing (car manufacturing, tooling or the like) and process manufacturing (food or beverage factories, chemical plants and the like). This is the reason why this method was adapted by many manufacturing companies in various parts of the world.
Initially, material requirements planning used mainframe computers to manage information from the bill of materials for certain products and was converted into purchase plans and production plans. A few years later, MRP included a feedback feature that made it easy for production managers to make changes or update directly to the system if needed.
As the year progresses, the material requirements planning system continues to develop and can now be integrated with marketing, finance, and human resources in making production plans. Because of its complexity, MRP at this stage is widely referred to by various parties as MRP II.
Development of MRP into ERP
Because of its ability to be quite effective in increasing the productivity of manufacturing companies, several parties have begun to develop MRP II so that it can be used by other industrial sectors. This was originally the ERP system began to be known by many companies from various industry lines.If MRP is generally used by manufacturing companies, ERP can be used by various types of industries. Retail, construction, banking and service companies have begun implementing ERP software in their companies. However, MRP is still an inseparable part of manufacturing companies to this day.
Conclusion Material Requirement Planning (MRP)
Material requirements planning is an effective method to boost the productivity of manufacturing companies. In its development from 1964, this system was successfully integrated into various aspects of the company to facilitate the company in preparing production plans.Until now, MRP has remained an important part of manufacturing companies. Its development into an ERP system has now made this method suitable for various industrial sectors in the world.
