Material Requirements Planning (MRP) is a software-based integrated inventory and supply management system designed for businesses. It is a production planning, scheduling, and inventory control system used to manage manufacturing processes. MRP helps organizations to maintain low inventory levels, plan manufacturing, purchasing, and delivering activities, and estimate quantities of raw materials. The basic functions of an MRP system include inventory control, bill of material processing, and elementary scheduling. MRP helps manufacturers get a grasp of inventory requirements while balancing both supply and demand. Using required inputs, the MRP calculates what materials are needed, how much is needed to complete a build, and exactly when materials are needed in the build process. This allows businesses to use just-in-time (JIT) production, scheduling production based on material availability, minimizing inventory levels, and moving materials through the manufacturing process efficiently.
MRP is useful in both discrete manufacturing, in which the final products are distinct items that can be counted, and process manufacturing, which results in bulk products that cant be separately counted or broken down into their constituent parts. MRP helps develop a production plan for finished goods by defining inventory requirements for components and raw materials. MRP is the system most companies use to track and manage all of these dependencies and to calculate the number of items needed by the dates specified in the master production schedule.
In summary, MRP is a software-based integrated inventory and supply management system designed for businesses to manage manufacturing processes, maintain low inventory levels, plan manufacturing, purchasing, and delivering activities, and estimate quantities of raw materials. MRP helps manufacturers get a grasp of inventory requirements while balancing both supply and demand, and it calculates what materials are needed, how much is needed to complete a build, and exactly when materials are needed in the build process. MRP is useful in both discrete manufacturing and process manufacturing.
