What is MRP?

To discuss what MRP is, we’ll jump to the end result of the Material Requirements Planning process.  That end result is the finished product or finished goods.  Now while it may seem a little unusual to start at the end, that’s exactly where MRP starts. 

In systems work, it’s critical to understand where we’re trying to go.  Once we know where we want to go, we can try to figure out the best way to ge there.  But if we don’t know where we’re going, the odds are quite good that even the best plan won’t get us there.

MRP does this by starting at the finished goods and then working backwards from there.

We first look at the final result, the finished goods that are needed.  And then we ask “How do we get there?”.  In very simplified overview, we start to answer that question by looking at the production plan for these finished goods.  That in turn leads us backwards to the requirements for the subassemblies of these finished goods.  And since subassemblies are made up of components, we then look at these.  Then we finally get to the raw materials for those components. 

The purpose of all of this is to find answers to the following three questions:

• What is needed?
• How much is needed?
• When is it needed?

As Manufacturers, we’d like to produce as much income as possible. While there are many factors that contribute to our profitability, three that MRP systems address are:
How much can we produce?
Can we produce it on time?
And can we produce it with the least amount of inventory (both in actual use and left in storage)?

Future topics for this thread will include the inputs to the MRP (the Bill of Materials, the Master Schedule, and the records of the current inventory) and the processing (including the reports).  Other related posts will talk about the benefits of MRP and the history of MRP. 

Until then, here’s a link to an ERP software portal site.

See you then.