Why is Material Requirements Planning (MRP) Important?

Image by Mircea Ploscar from Pixabay

Do you struggle to determine the right amount of materials needed to meet the current demands for your products? Although Material Requirements Planning (MRP) has been around a long time, many companies still need help planning to minimize costs while meeting production needs.

APICS defines MRP as a set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase.

Why is MRP important? There are many benefits to effective MRP including:

1. Relates order quantities to requirements by looking to see if there is a future need AND orders for that need, NOT just for stock
2. Minimizes inventory by attempting to reduce all items to zero inventory
3. Changes are known as soon as MRP is recalculated
4. Helps buyers and planners with the information needed to take action on specific items
5. Reduces stress when working properly – accurate inputs is key!

At APICS Milwaukee, we know that effective MRP is very important in production environments impacting inventory levels, shortages and overall manufacturing costs. More accurately planning for materials helps with scheduling and improves overall productivity. Successful MRP enables your company to better compete and take advantage of growth opportunities!

If you’d like to learn more about MRP, the nature of demand, bills of material, when to use Order Point vs. MRP and more, join us on August 13^th for a workshop focused on the topic! Click here to register today.

After completion of our MRP Workshop you will be able to:

1. Describe what MRP is
2. Understand the nature of demand
3. Know when to use Order Point vs. MRP
4. Understand the composition of a bill of material
5. Perform an MRP planning explosion
6. Use MRP-generated action messages.

APICS Milwaukee is the premier professional association for supply chain management, helping over 180 Milwaukee area companies represented by our members, with educational and networking opportunities.  We look forward to helping you and your company improve your planning efforts!