What aspects need to be paid attention to when running MRP (Material Requirements Planning) well?

MRP is the abbreviation of "Material Requirements Planning" (Material Requirements Planning), which is an inventory management method used in the manufacturing and distribution industries. MRP helps companies determine what should be produced, when it should be produced, and how much raw material is needed. MRP ensures that the demand for parts and raw materials is consistent with the production plan, thereby optimizing inventory levels, reducing material shortages, avoiding excessive inventory, and improving production efficiency. MRP is an infinite capacity scheduling and cannot be automatically calculated based on the production line capacity. It requires manual balancing of demand and production capacity and manual equalization.

What aspects do you need to pay attention to when running MRP well?

The key point of MRP calculation involves the accurate calculation and planning of material requirements to ensure that production activities can proceed smoothly according to the established master production schedule (MPS). So, let’s take a look at what you need to pay attention to when running MRP well:

Master Production Schedule (MPS): MPS is the basis for MRP calculations. It determines what products to produce, how much to produce, and the production schedule. MPS is usually developed based on sales forecasts, customer orders and inventory levels.

Bill of Materials (BOM): The MRP system requires an accurate BOM to calculate the demand for each material. The BOM details all the parts and raw materials required to produce a product.

Inventory status: MRP systems require real-time updated inventory data to calculate net requirements. Net requirements refer to the quantity of materials that need to be purchased or produced to meet the production schedule, taking into account existing inventory and committed orders.

Procurement/production lead time: refers to the time required from when an order is placed to when the material actually arrives. MRP calculations need to consider the procurement lead time and production lead time of materials to ensure that materials are available when needed.

Safety stock: To cope with demand fluctuations and supply chain uncertainty, safety stock levels are considered when calculating MRP. Safety stock is extra inventory kept to prevent stockouts.

Lot size: MRP calculations also need to consider economic ordering lot size or other lot size strategies to determine how much material to order or produce each time.

Demand time range: MRP calculations are usually performed within a certain time range, which depends on the cycle of the production plan and the lead time of the material.

Order processing time: MRP calculations also need to take into account order processing time, which is the time it takes from identifying the need to actually placing the order.

Capacity constraints: MRP calculations need to consider the production line's capacity constraints to ensure that the production plan is feasible.

Planning parameters: MRP systems usually have some parameter settings, such as planning outlook period, ordering cycle, safety time, etc. These parameters will affect the accuracy and flexibility of MRP calculations.

Exception management: MRP calculations will produce some exceptions, such as material shortages, order delays, etc. Effective management of these exceptions is the key to MRP success.

System updates and maintenance: The MRP system requires regular updates and maintenance to ensure data accuracy and system stability.

By accurately calculating these key points, the MRP system can help companies optimize inventory management, reduce the risk of out-of-stock and over-stocking, and improve production efficiency and customer satisfaction.