Manufacturing Resources Planning (Production planning) is an efficient way of controlling production, scheduling, and stock or inventory. It can be summed up as a tool for managing each stage of the manufacturing process.
MRP systems have three main objectives:
- make sure materials are ready for production, ensuring there is enough stock to deliver to customers
- keep materials and products at their lowest possible levels
- help plan manufacturing, delivery, and procurement.
MRP started out as a manual exercise involving hand calculations, but these days MRP systems are implemented by specialist software that integrates seamlessly into production operations.
Who can benefit from Production Planning?
Any manufacturing company that uses several parts to manufacture their products. For example, any manufacturer that uses an assembly line will benefit from implementing MRP. This applies to big and small manufacturers alike.
If you’re a manufacturing company with more than ten employees, then MRP is almost certainly right for you.
Advantages of MRP
As well as improved production planning, there are many advantages of using an MRP system. Here are the main ones:
- Better competitiveness – with MRP system you send your price offers fast and more precisely.
- Availability of materials – you will always have the right type and amount of materials for production, providing there haven’t been any problems with the supply chain. The beauty of MRP is that if there are supply chain issues, it will be flagged up early, giving you a better chance to rectify the problem in time.
- Cuts down on excess inventory – businesses report a reduction in inventory of up to 14% after switching over to an MRP system.
- Improved customer service – with a robust MRP system in place, delivery of goods on time is virtually guaranteed.
- Optimised manufacturing – the amount of equipment downtime will be significantly reduced.
- Increased data collection – valuable insights into the planning and production process can be gained from analysis of the data, allowing further business improvements.
These advantages will have some serious financial benefits. There will be a decrease in capital cost due to the reduced inventory, and more efficient use of production equipment. It’s likely that there will also be an increase in profits due to the improved customer service. Companies that deliver on time come across as being efficient and trustworthy, inspiring customer loyalty.
Even with the initial cost of implementing an MRP planning system and maintaining it, there is likely to be a large financial benefit, which can help your company to grow.
Improved production planning
To see how MRP can help with production planning, let’s look at the different aspects of a typical MRP system:
Master Production Schedule
This is the overall planning schedule for the whole company. It gives a birds-eye view of all business activities. It is a plan for everything from equipment to staffing, from inventory to delivery, and everything in between. Every step of the manufacturing process is covered in this schedule, and data is extracted at each point on the journey.
This helps with production planning as it gives managers detailed information on the whole process. It can help with forecasting and to streamline operations, for instance. Managers can track each order throughout the whole system, to improve production output.
The downside of using the master production schedule is that there will be a lot of data and it takes a long time to review the whole process. Sometimes, it may be better to zero in on certain parts of the production process.
Product Structure (or Bill of Materials)
These records focus on parts and materials that are stocked in the warehouse. It provides details on every item and the assembly details required to create the end product. It lists part numbers, quantities, descriptions, lead times, etc.
This detailed overview of the production input helps to monitor stock levels, ensuring that they are kept to the minimum level required for smooth operation.
These records contain inventory details, past and present. The accuracy of this data is paramount to the success of the manufacturing business.
Again, MRP aims to keep inventory to a minimum level, avoiding excess stock which may have to be sold off cheaply.
The entire MRP system is designed to help companies stay on top of production planning and to optimise warehouse and operational processes.
Production planning is beneficial for manufacturing companies, large and small. It can help a company’s bottom line by streamlining processes, maximizing output and minimizing waste.
The only drawback of MRP is that the system is only as good as the data that is fed into it, so rigorously accurate data collection is needed for the advantages to become apparent.
Overall, a software-based MRP system is a wise investment to help your manufacturing business expand and grow.