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What is MRP System – Material requirements planning are always used synonyms with MRP II and ERP software although both have difference with respect to the time frames and their evolvement as a computer based software. MRP system also called as Material requirements planning is a computer based inventory management system which was designed to assist the production manager in placing the orders of items which is dependently demanded.

An example of MRP system is to manage the Bill of material which is necessary require to create a finish product for eg: A mobile phone which consist of raw materials such as plastic, speakers, microphone, screen, battery, internal chips and so on . . . the amount of these bill of materials inventory available in the warehouse will make the number of products which is why we called it as dependably demanded without which manufacturing the finished products may not be possible.

The initial MRP system for managing inventory of a Manufacturing business was evolved in the year 194 to 1950. It actually uses mainframe computers to explore all the detailed information from a bill of materials to understand the creation of finished products. Based on that purchasing plan for buying components was decided. Therefore MRP system was very helpful for production workers or personal to update and change the inputs into the system as require.

Although MRP II which came later concentrated on other areas of business also including Marketing, finance, engineering, Human resources and so on and then the concept of ERP – Enterprise resource planning software which linked different functional areas and the entire business enterprise in one single computer technology.

MRP system initiated from production plan for final products towards development of requirements of raw materials. So basically MRP systems was designed to understand the need, the number and the time the needs to be fulfilled.

MRP system breaks inventory requirements into different periods such as planning, managing which helps the production to be completed on time with proper inventory levels. MRP also ensures that cost are kept on the minimum area. The main advantage for production managers with implementing MRP tools was that it helps them  for capacity planning and allocating the production time. Although MRP solutions can be costly when it comes to the development and also takes time which small business may not be able to afford previously.

MRP Components and Working

MRP – Materials requirement planning System includes three main sources, Master schedule, inventory files and Bill of materials. MRP system pulled information from BOM, Master schedule and inventory record files determines how much raw materials, parts, sub assemblies is require for each period during planning. MRP also determines the gross materials requirements, which further reduce from the current inventory and then add it to the buffer stock to make sure the perfect net requirements.

Advantages and disadvantages of MRP system

  • MRP System offers many benefits to manufacturing units. Some of them were
  • MRP helps production manager to reduce the inventory levels and carrying cost.
  • MRP track material requirements and provides most economical lot size for orders.
  • MRP tracks the quantity requires to meet the buffer or safety level.
  • MRP also helps to allocate production time with different products and offers a proper planning for future needs.
  • MRP helps other department such as plant foreman, purchase manager, inventory manager, production planner, service representatives, sales managers and so on . .

Disadvantages of MRP system

  • There are few drawbacks of MRP the first is that if accurate input and information is not added properly such as BOM and inventory records it may face issues with the proper output.
  • Estimations plays an important role which in case misses can hurt the other areas such as delivery dates.
  • Another disadvantage is that MRP implementation is time consuming and it is sometime difficult to develop successfully.

  Read more articles about Enterprise Resource Planning Software

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