Material Requirements Planning (MRP) is a software module that plans materials and manufacturing parts and assemblies. MRP operates within larger software systems for manufacturing companies called manufacturing resource planning (MRP II) or enterprise resource planning (ERP). MRP focuses on planning of the various levels of manufacturing and purchasing necessary to acquire and produce a product. MRP works particularly well in environments that are stable in terms of batch-quantity sizes and length of time to perform manufacturing processes. In situations where batch size and time variability increases or where competing programs like lean manufacturing exist, MRP can be difficult to apply and use.
Lead Times and Batch Sizes
Lead time is the length of time it takes to either purchase material or manufacture a product. MRP uses average lead times for each part to help calculate when a part will be ready and backs off that date to determine when a part must start. Planned start and availability dates are calculated for upcoming purchase orders and work orders. The average lead time assumes an average batch size or quantity. The average quantity is also used to calculate the plan for proposed purchase order or work order quantities. Often these averages are violated as purchasing and manufacturing actually take place. This leads to differences in plans and actual work.
Shop Floor Scheduling
MRP only deals with start and availability dates for parts. The processes to make a part could encompass several steps in fabrication. These steps within the start and complete dates are scheduled by shop floor software systems. Shop floor systems also operate on average or standard hours for labour and machinery to perform functions. Varying quantities can vary the schedule. Misalignment of MRP and shop floor schedules is potentially a disadvantage.
Capacity planning software takes the shop floor schedules and totals labour and machine hours required for specific work areas over increments of time. Hours per day or week is accumulated so that each work area can understand the potential workload and plan for it. If the shop floor schedules are not aligned with the MRP plans, then the capacity plan will not align with MRP. These misalignments can cause poor and conflicting decisions to be made about the allocation of people, materials and other resources required to run the company.
Lean manufacturing may create conflict with MRP. Because lean manufacturing targets manufacturing processes and often causes changes to work areas and processes, assumptions about shop floor schedules and MRP plans can become outdated. Lean manufacturing and MRP can coexist but care must be taken to understand the changes required by lean and how they impact MRP batch sizes and lead times. Similarly, a move to repetitive manufacturing, which emphasises rates and flows of product, can result in changes in batch size and lead times that conflict with MRP assumptions. MRP in either situation can become less useful and a disadvantage when implementing other manufacturing programs.