8 Major Benefits of MRP for Manufacturing Business
“Great things are done by a series of small things brought together.” – Vincent Van Gogh
MRP stands for Manufacturing Resource Planning, including workforce, materials and operations planning. It’s a methodology aimed at managing the whole quote-to-cash workflow process with the goal to improve the processes while the company grows.
You can also listen to this article:
Read about the 8 major benefits of MRP below:
#1 Accurate lead times and product costs
“How long does it take?” and “How much does it cost?”, are simple questions from the customers that are not so easy to answer for many manufacturers.
Manufacturers who have implemented MRP systems know the answers:
- Calculate the product cost and lead times without contacting the production manager.
- Inform manufacturing of a confirmed customer order in one environment with just a couple of clicks. No e-mails or phone calls.
- One place to follow the customer order from quote until shipment.
- Stay on top of the manufacturing process and immediately take action when errors occur.
#2 Real-time accurate inventory and stock overview
Improving stock and inventory management are incentives that have motivated a number of manufacturing organizations to implement the best practices of MRP:
In MRP, stock stands for inventory optimization and control, stock movements, stock lot and serial number tracking, shipments, and much more. All transactions done in other sections directly influence the stock.
- Focus on ordering what’s needed and when needed, shortening inventory turnaround, frees money from stock, and lowers the inventory investment.
- Optimizing the minimum and maximum stock levels, preventing stock-outs.
- Automating stock and inventory transactions, such as booking for manufacturing, inventory valuation, write-offs, balance calculation, product costing, etc.
MRP software customers report on average a 14% inventory reduction.
#3 Accurate planning and reliable production schedule
The MRP system helps production managers to accurately plan production and put together a reliable production schedule.
When will the materials be available? MRP System will provide all the necessary information to the production manager as to when the materials will be available.
How long do the manufacturing operations take? The MRP System manages a schedule for each individual operation (such as assembly, testing, packaging, etc.).
Additionally, for each individual operation, the system manages preparation time, hourly productivity, operation cost, defect rate, etc. This allows the production manager to schedule production in just a couple of clicks.
The MRP system organizes the scheduled operations and work orders
- Each team member has access to the information that they need.
- Workers can keep track of their tasks on their individual schedules.
- Management can stay on top of processes and follow how the customer orders or operations are carried out from a master production schedule.
#4 Accurate material planning and purchasing
Focusing on reducing inventory, having what’s needed when needed and available for production requires an efficient procurement solution:
- All vendors are centrally managed.
- All purchase terms are centrally managed, including delivery and cost terms, and accessible when planning production.
- Purchase requests can be quickly fulfilled after the customer order is received.
- One place for purchasing to raise Purchase Orders and easily e-mail suppliers. No need to e-mail or call procurement.
- Track all steps of manufacturing and the availability of materials.
#5 The data to print reports and calculate statistics at your fingertips
The well-known quote, “What you can measure, you can improve,” is very much true for manufacturing. A properly implemented MRP system allows you to save time researching the data and instead focus on printing reports that matter.
Late COs, late MOs, late POs, min. stock, late invoices, MO in progress, OEE, TEEP, sales, stock level, cash flow ($), purchases on time (0%), manufacturing on time (100%), deliveries on time, understanding the profitability of sales orders, products, items, etc.
#6 Streamlined team reporting
The responsibility of an efficient MRP system is to organize team reporting, allowing tracking what is finished, and when. There are three ways to do reporting:
- The old-fashioned print a paper and mark an order finished when the manager gets it back.
Two options for real-time reporting.
- Full desktop view: worker can view drawings, attachments, see all details, material locations, report start-stop.
- Simplified kiosk view for a tablet or smartphone: the worker sees what they have to do and simply clicks start and finish.
#7 Regulatory demand for traceability and transparency
The MRP System helps you to meet the regulatory demand and enforce quality and audibility.
- Full visibility of the manufacturing process from vendors to finishing the end products.
- Track patches, product series, versions
- Managed quality levels and materials expiry dates.
- Transparency in subcontractor standards.
Read more about Stock lot/batch tracking.
#8 Saving time on dull tasks
The very essence of the MRP System is to help all team members save time and work efficiently in one environment.
- Accurately assigns tasks and simplifies reporting.
- Automated documents exporting: quotations, invoices, waybills, picking lists, shipments, purchase orders, etc.
- Avoid e-mail and phone for internal communication.
- Prevents human error and helps keep an eye on what’s important.
- Saves time from having to enter data in multiple solutions.
Read more about Manufacturing ERP Software.