Published on 01-Nov-2023

MRP Systems - What are they?

MRP Systems - What are they?

MRP Systems – What are they?

Manufacturing goods requires the management of a wide range of features. Purchase orders, materials, BOMs, all of which need to be monitored and processed. How can you to keep track of these? What is the best method of organising them?

A Material Requirements Planning, or MRP, system is essentially software used to schedule, order and organise the activities of a manufacturing company. Making use of the data put into the system, it generates the requirements of materials. In addition, these systems can highlight where shortages of stock exist and also suggest what needs to be ordered or constructed whenever necessary. Data needs to be readily available for all within the business. MRP can enable this by consolidating all the information on one platform.

Who uses the MRP System?

MRP Systems require a lot of manual input from a wide range of people within a company. 

1. The sales team must ensure that orders are entered. This creates a requirement for a finished product.

2. The production team review inventory levels and sales requirements before supplying the manufacturers with work orders.

3. Purchasing staff review stock levels, forecasts and sales orders so that they can raise purchase orders in order to satisfy demand for any materials required.

4. Personnel responsible for receiving goods must ensure that materials are added to inventory so that they are available to be used in manufacturing.

5. Staff in the stockroom must maintain accuracy of the inventory so that up-to-date availability of materials can be seen by purchasing and production teams.

6. Shipping personnel are required to satisfy the sales order demands when shipping completed orders.

This may sound like a large amount of work, but in comparison to many business solutions that include duplicated work and overly manual processes, there are a number of advantages to using MRP systems.

MRP - The good

Inventory Management: Due to the up-to-date and organised nature of MRP systems, using them allows for clarity regarding the demand for resources at any given time, in addition to reduced excess inventory and the ability to optimise the use of materials. 

One Company-wide platform: With standardised templates, and repeat jobs autogenerating data for production processes, you will ensure that paperwork is standardised, jobs are well documented, and you have complete audit traceability. 

Also resources will be deployed more efficiently in this way because your staff can spend less time inputting data, allowing more time to complete tasks and improve productivity.

Analysis of Business Performance: Consolidating your data into one platform, means you can view your whole business from one place, and see the impact of your sales team, onto production. 

Reporting functions are usually built into MRP systems, and with the ability to easily look back through past activity, you can observe trends, predict demand and forecast requirements.

Whilst MRP can provide a great deal of benefit to a business, there are still some negative aspects of using these systems that should be considered before choosing one of these systems.

MRP – The bad

Implementing any new system that controls your core processes will have a big impact on your business; costing time and money to set up, and disrupting your existing processes. 

The cost of implementation is expected to be offset by return-on-investment earned through the benefits. However, MRP systems are typically standardised, and designed to fit generic manufacturing operations. This often means, in more niche manufacturing companies, that spreadsheets are needed to supplement inefficiencies in the system; which prevents optimal return on investment. In some cases, you’ll be able to request bespoke changes, but these will increase the cost, and may also extend the implementation process. 

Additionally, MRP software can be fairly complex, so your team will require training to effectively use the system, and they may be resistant to the change in processes. If some staff are unwilling to change, or lack sufficient skills to learn the new system, you could be caught in-between paper based and digital systems. This will cause greater issues. So, it requires strong leadership, and management to ensure the implementation’s success. 

Finally, if you have an existing ERP system that runs certain aspects of your business, and intend to implement an MRP system to control the production processes; integration can be an issue. You must consider the possibility of linking the production data to your existing databases, and vice versa.

Could MRP help your business?

The main issue many companies are hoping to solve when looking into software such as MRP systems is that their data is scattered across a number of sources. Post-its, excel spreadsheets, paper forms, this lack of consolidation results in less accurate information, and reduced availability of data.

There is no communication between departments, so the integrity of the information suffers.

As a result of the inaccurate data, forecasts can be incorrect, resulting in overstocking issues and leaving a gross excess of materials. 

Providing accurate job costings can be another problem that companies are looking to solve. Without accurate data about your labour, materials and subcontractor costs, you may not be fully aware of how much it costs to put through a specific customer job, and may be undercharging. 

Furthermore, without clear visibility into your company’s data and reports, managers will struggle to make informed decisions about resources and strategy.

If your business suffers from any of the above issues, it may be the case that MRP software could greatly benefit you.

However, if you run highly complex job processes, a standardised MRP system may not be wholly beneficial, as you’ll likely need to supplement it with external unconnected sources.

Also, if you’re in quite a large company with multiple sites, you may require something a bit bigger, and an ERP system may be best. 

Is MRP the solution for you?

Simply put, MRP is a cut down version of ERP, which includes processes in a company’s HR and accounting areas. With this in mind, if a more extensive system is required for your business, you may consider looking more into the various ERP systems available.

Alternatively, our production control systems can help your business to better organise your process and give greater insights into your production line. Production control software can be more bespoke to your business processes, whether you are a subcontract, special processes or engineering company, production control can suit whatever your focus is. MRP systems are more of a ‘one size fits all’ solution, meaning that personalisation of these systems is limited and it may not fully solve the issues that you face.

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Application Notes