Material Requirements Planning (MRP) is a software-based integrated inventory and supply management system designed for businesses. It is a planning process based on the availability and flow of all materials involved in the entire manufacturing process. MRP is a system designed to plan manufacturing production, identify necessary materials, estimate quantities, and determine when materials will be required. It consists of three primary steps: taking inventory of the materials, calculating the materials and components needed to manufacture a product, and ensuring that the right inventory is available for the production process exactly when it is needed and at the lowest possible cost. MRP is a core part of nearly all integrated information management systems for manufacturers, called enterprise resource planning or ERP.
The MRP system receives inputs from an array of sources as staff from all over the company contribute information by interacting with the software. This includes customer orders and procurement data, inventory movements, and production reports. The system calculates the need for materials and recommends production and purchasing activity (orders) to satisfy those demands. MRP planning is the process of exercising those calculations to develop a plan. The MRP system outputs useful data in the form of work orders, material plans, and reports.
MRP is widely used by manufacturers and has undeniably been one of the key enablers in the growth and wide availability of affordable consumer goods and, consequently, has raised the standard of living in most countries. Manufacturers use MRP to meet production deadlines, improve order accuracy, and achieve financial goals. MRP ensures that materials and components are available when theyre needed, inventory levels are optimized, manufacturing efficiency is improved, and customer satisfaction increases.
In summary, MRP is a system designed to plan manufacturing production, calculate the materials and components needed to manufacture a product, and ensure that the right inventory is available for the production process exactly when it is needed and at the lowest possible cost. It is a software-based integrated inventory and supply management system that companies use to estimate quantities of raw materials and maintain inventory levels.
