Material Requirements Planning is the name used by logistics and manufacturing companies for that part of their ERP software that enables them to get the right materials to the right place at the right time.
Good MRP software not only responds to emerging shortages, but has a certain predictive value that allows companies to have the supply of needed materials arranged even before the shortage occurs.
MRP-I versus MRP-II
In practice, MRP software is most commonly used by assembly companies that need a constant supply of parts to assemble their final product. This involves using a partsbreakdownlist ("parts list"), which indicates which components the product is composed of.
In addition to the above MRP-I software, there is also MRP-II software, which regulates not only the supply of materials, but also the crew and machinery. In short: everything needed to keep a factory running.
MRP in SAP Business One and Wholesale
In ERP systems such as SAP Business One and Wholesale, the MRP creates a recommendation for purchase orders and production orders based on the current status of transactions in the system. Thanks to SAP HANA, SAP Business One is even able to include uncompleted transactions in material planning.
Our ERP systems do not place orders automatically, but instead suggest them. These orders can then be reviewed and adjusted as necessary by purchasing professionals or production managers.
For small and medium-sized businesses, this way of working offers just the right balance between automation and manual control.
Advantages of MRP software
When you want to keep a production facility running, there is a fair bit of planning involved. MRP software takes manual counting and control off your hands. But there's more to it than that...
- Fewer errors. MRP software replaces informal, ad hoc production planning based on 'feeling'. Thanks to MRP software, you are not dependent on 1 or 2 professionals, but more people can take on a piece of planning, thanks to clear information.
- Less inventory is less cost. MRP software allows you as a wholesaler, assembly plant or manufacturing facility to run on a minimum number of inventory items while still accounting for fluctuations in production or customer orders.
- Through smart planning and the predictive value of the software, you can order materials in bulk more often and benefit from more competitive purchasing prices.
- Automation allows you to focus on strategic purchasing rather than day-to-day inventory management.
Want to know more about the possibilities of MRP functionalities for your company? Then contact one of our ERP specialists.
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