Why is Material Requirements needed in Production Planning?
What is a MRP process?
Material Requirements Planning is the way to calculate the materials you need to start a production.
To manage the huge number of materials in storage, many will look into an inventory management system.
But what happen if we need those materials for production? An inventory system could certainly not able to handle this on its own – that’s why you need an MRP Process which is able to connect to your Inventory or ERP system. In the simplest case, we can simply reserve all the material needed alongside the release of the production order via a Bill of Materials (BOMs).
In the case of multi-stage production, this means that we reduce the stock of, for example, expensive purchased parts for final assembly, which takes place in 6 weeks, already today when we cut the sheet metal for the housing construction. Of course, the longer the lead time, the higher the “waste of space” in the warehouse as you also have to store the half-finished material. This may also trigger reordering and unnecessary capital commitment.
With this, the material moves deeper and deeper into the “Gray Zone” in the dark corner of your warehouse. You started to ask yourself: Do I still have the correct amount of stock to continue my production in a flexible and economical way?
How to correctly determine the material requirements?
To correctly determine your material requirement, first, you need to know actual material requirements as accurately as possible, so that you can also manage inventory as accurately as possible. At the same time, this gives you the opportunity to react flexibly to customer orders at short notice, for example, use the actual stocks on hand!
The “Digital Manufacturing” principle
In planeus, the MRP process combines two approaches of the “Digital Manufacturing” principle:
- The summary of Material Requirements is determined based on the requirements of the individual Work Steps.
- The date that the material is needed has to be precisely set according to the orders’ schedules and the resource availability of the time.
For this purpose, a general Bill of Materials must break down to the individual Work Steps and, if necessary, needed to be depicted via additionally designed steps using partial Bills of Materials. The actual time when the material is needed, is determined by detailed production planning algorithm, in which the material requirements planning is rooted deeply from.
In addition to delivery dates, it also depends on your resources and their availability, which also often includes “secondary resources”. For example, in many cases, in parallel to the machine and the raw material, you also need the right person (e.g., specifically-trained operator) and the right tools (e.g., a suitable mold) for the job.
Here at planeus, we don’t see Material Requirements Planning as a single standalone feature, but a vital part of our modern Production Planning & Scheduling (PPS) system. We believe in a combination of a carefully constructed smart features in an intuitive system with a user-friendly interface, all with a fraction of the cost and time of the older generations of solutions.
