How Material Requirements Planning Benefits the Businesses

How Material Requirements Planning Benefits the Businesses

By Manufacturing Technology Insights | Thursday, October 15, 2020

The companies use material requirement planning (MRP) to calculate the components and materials necessary to make a product.

FREMONT, CA: The material requirement planning (MRP) is a process, which is utilized to calculate the components and the materials that will be necessary for making a product. These three critical comprehensive steps are essential to follow.

• To recognize the extra ones that will be necessary to conduct manufacturing and production procedure efficiently.

• Scheduling of the production or purchasing raw materials and components because they might have to ensure that there is no delay in the production pipeline.

• Taking note of the materials’ inventory and readily available details.

The Material Requirements Planning Background

Companies must have some background knowledge about the material requirements planning and understand how it came into being and know the organizations that have implemented it accurately.

The material requirement planning process was initially developed to be fed to the Polaris program. The first company to apply MRP was Black and Decker in 1964, and after that, many other organizations started utilizing the system. Later, a more advanced MRP version was developed, known as manufacturing resource planning (MRP 2). It was used for rough-cut capacity planning, capacity requirement planning, and master scheduling.

The Manufacturing Resource Planning

The material requirements planning (MRP 1) was utilized freely due to which the companies required something more advanced that can efficiently deal with the demand forecasts and capacity control. This led to the development of MRP 2.

MRP 2 can be classified as a process utilized to make accurate plans about the various resources that are a segment of the manufacturing organizations. It addresses several operational planning units and even deals with financial planning. Here are some of the features of MRP 2, but it is not restricted to them.

• Itemizing the master data

• The inventories and order handling

• MRP

• Standard costing determination

• Mastering the production schedule

• The bills of materials

• Managing purchases

• Cost control

• Capacity panning

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