MRP, or Material Requirements Planning, is an inventory and supply management system designed for businesses.
MRP software systems are designed to help plan manufacturing activities, delivery schedules, and purchasing of materials based on customer demand and production schedules. It ensures that there is enough material to meet production needs and that the production process runs smoothly.
Using an MRP system can help you save time, reduce costs, and increase efficiency.
Want to find out more? Here we explore the objectives of an MRP system and how it can help your business.
To manage inventory
MRP systems use data from the production schedule to determine the amount and cost of materials and components, aka inventory or stock required to meet customer demand. By maintaining an ideal inventory level of parts and materials, MRP systems can reduce inventory carrying costs within a production cycle.
To plan production
A material shortage causes hold-ups in the production line and inevitably increases costs and wastage. MRP systems can highlight these situations and inform decisions to reroute production or start the production of a different product where materials are available. As a result, manufacturers can plan their production lines even when materials are scarce.
To plan purchases
Understanding what is available, what to buy, and when to buy it is essential to streamlining the production process and creating cost efficiencies. To plan purchases effectively, a smart system must be implemented to track production steps, identify any needed purchases and to correlate that information with the production schedule and anticipated material deliveries.
A good quality MRP system will help your business forecast when raw materials will run low based on inventory currently committed to sales orders and, accounting for typical fulfilment times, alert your purchasing manager and prioritise supplier action when stock hits a critical level.
To manage resource
Information provided by an MRP system about the availability of raw materials tells the manufacturer if they need to engage other resources. With the help of the system, a manufacturer can determine what equipment is needed and when, if extra labour is required and whether to hire or buy additional operational assets.
To manage data and documentation
Manufacturing involves collecting, analysing, and presenting a large amount of data. Using an MRP system, purchase data, inventory data, delivery data, and cash flow data can be processed into receipts, invoices, lists, reports, and other easily readable documents and quality management systems.
To reduce errors
Creating standardised workflows is essential to reduce the number of production errors in your manufacturing business. Simple errors like a simple customisation not being completed correctly can be a costly mistake and easily done when relying on hard copy documentation or experienced staff running on ‘autopilot.’
A good MRP system will allow you to upload images for core components and specify shelf locations for more accurate picking – reducing the likelihood of simple human error.
To increase multi-skilling
One of the negative points of having long-standing production operatives is that they retain much of the ‘how to’ create your products in their head and are so busy that they are unable to share that knowledge with new colleagues. An MRP system can act as a knowledge base, allowing less experienced teammates to follow simple workflows to take up the slack at busy times.
Our Custom Forms module can be configured as an interactive task list for less experienced colleagues to follow. This means more straight forward jobs such as despatch, or simple sub-assemblies can be shared by more colleagues following an easy guide from your MRP system.
To improve visibility
Getting a sense of how your business is performing can be difficult if you’re a senior manager. A MRP system like Flowlens comes with customisable dashboards so you can see how the business is operating at a moment’s notice. Dashboard can be configured to display stats on purchasing, production, despatch or any other element of your business and to produce reports at the touch of a button.
Additionally, creating a centralised system that ties into your entire business from purchasing to invoicing, creates greater visibility for your team across the full company. Having some insight into other departments helps your team pull together as one and appreciate the challenges others face in their day-to-day. In our experience, it’s incredible how this unlocks rapid progress for companies implementing MRP systems for the first time – as teammates from separate departments see the bottlenecks in the business, everyone can work together to unblock them!
To save time
MRP systems automate many formerly manual processes in the manufacturing workflow, massively increasing your workforce efficiency. Many Flowlens clients see savings of over 20% per person across their business (that’s an extra day a week!) Additionally, the higher level of accuracy made possible by using an MRP system means less time undoing costly mistakes and less time spent on reporting with our fully customisable dashboard tools.
To determine the most economically viable purchase
MRP systems consider the quantity and cost of materials required, alongside the cost of shipping, storage, and transportation, to determine the most cost-effective purchase.
Looking to implement MRP into your manufacturing business?
To summarise, MRP systems are designed to ensure that materials and components are readily available when needed for manufacturing, that production follows an optimised schedule, and that finished goods are delivered on time to customers.