MRP (Material Requirements Planning) & Manufacturing Resource Planning (MRP II)

Material Requirements Planning (MRP) is a production planning and inventory control system used to manage manufacturing processes.

An MRP system is intended to simultaneously meet three objectives:

•     Ensure materials are available for production and products are available for delivery to customers.
•     Maintain the lowest possible material and product levels in store
•     Plan manufacturing activities, delivery schedules and purchasing activities.

The basic function of MRP system includes inventory control, bill of material processing and elementary scheduling.
Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost.
 

Manufacturing Resource Planning (MRP II) evolved from early Materials Requirement Planning (MRP) systems by including the integration of additional data, such as employee and financial needs.

Material requirements planning (MRP) and manufacturing resource planning (MRP II) are predecessors of enterprise resource planning (ERP), a business information integration system. Both MRP and MRPII are still widely used, independently and as modules of more comprehensive ERP systems, but the original vision of integrated information systems as we know them today began with the development of MRP and MRP II in manufacturing.

Characteristic basic modules in an MRP II system are:

•     Master production schedule (MPS)
•     Item master data (technical data)
•     Bill of materials (BOM) (technical data)
•     Production resources data (manufacturing technical data)
•     Inventories and orders (inventory control)
•     Purchasing management
•     Material requirements planning (MRP)
•     Shop floor control (SFC)
•     Capacity planning or capacity requirements planning (CRP)
•     Standard costing (cost control)
•     Cost reporting / management (cost control)

and related systems such as:

•     General ledger
•     Accounts payable (purchase ledger)
•     Accounts receivable (sales ledger)
•     Sales order management
•     Distribution requirements planning (DRP)
•     Automated warehouse management
•     Project management
•     Technical records
•     Estimating
•     Computer-aided design/computer-aided manufacturing (CAD/CAM)
•     CAPP

The MRP II system integrates these modules together so that they use common data and freely exchange information, in a model of how a manufacturing enterprise should and can operate. The MRP II approach is therefore very different from the “point solution” approach, where individual systems are deployed to help a company plan, control or manage a specific activity. MRP II is by definition fully integrated or at least fully interfaced. MRP II systems have been implemented in most manufacturing industries.The vision for MRP and MRPII was to centralize and integrate business information in a way that would facilitate decision making for production line managers and increase the efficiency of the production line overall. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for machine and labor capacity, scheduling the production runs according to the arrival of materials. 

An MRPII output is a final labor and machine schedule. Data about the cost of production, including machine time, labor time and materials used, as well as final production numbers, is provided from the MRPII system to accounting and finance. In order to calculate the raw materials needed to produce products and to schedule the purchase of those materials along with the machine and labor time needed, production managers recognized that they would need to use computer and software technology to manage the information. Originally, manufacturing operations built custom software programs that ran on mainframes.

Benefits from MRP II systems can provide:

•     Better control of inventories
•     Improved scheduling
•     Productive relationships with suppliers

For design / engineering:

•     Improved design control
•     Better quality and quality control

For financial and costing:

•     Reduced working capital for inventory
•     Improved cash flow through quicker deliveries
•     Accurate inventory records

source: from internet