• Material Requirement Planning

    Material Requirement Planning (MRP) refers to basic calculations method or tool/software for the materials required to develop the end product along with their time of procurement.

    It is a technique for determining the quantity of the raw materials required to develop the end product and the timing of the acquisition for the same and making the end products available for the end users.

    Basic features of MRP

    • Along with the growth of IT system, manufacturers have designed an automated system to facilitate ordering of materials and parts for manufacturing goods. This resulted in the development of software application called MRP.
    • MRP is a time phased planning system which detects the due date and optimum quantity based on the priority and demand of the raw materials.
    • The original MRP program is linked with material requirements with inventory levels and replenishment purchase orders and works for new orders over a time frame. It aims to maintain lowest possible material and end product levels to reduce storage cost.
    • MRP is used to find out the discrepancies if any and help to restore a balance between the inventory requirements and replenishment.
    • MRP program determines the net requirements for every manufactured and purchased component and create a planned purchase orders.
    • MRP helps the procurement managers to control the manufacturing activities effectively.

    MRP Benefits

    Inventory Reduction: MRP helps to procure the materials as and when needed based on the demand of the same. Thus it helps to avoid excess build up of inventory which is a very costly affair. It also reduces the inventory cost significantly by doing the same.

    Reduction in manufacturing and delivery lead times: MRP identifies materials and components quantities, timings when they are actually needed. MRP helps to avoid delays in production and priorities production activities by putting due dates properly for each order.

    Realistic delivery commitments as per the schedule date: By using MRP, production can give marketing timely information about likely delivery times to prospective customers.

    Increase efficiency of the production system: MRP provides a close co-ordination among various work centers and helps achieve uninterrupted flow of materials through production line. This increases the efficiency of the production system.

    Post Tagged with

Leave a Reply

Your email address will not be published. Required fields are marked *