Procurement Glossary & Terminologies

Definition

Master schedule criteria for finished goods into time-phased requirements for raw materials, components, parts, and sub-assemblies is known as material requirements planning (MRP).

The material needs planning process creates a production plan that specifies the timing and amounts of all the materials required to make the final items. In contrast, the master schedule sets their quantity and need dates.

Functions of MRP

Your operations strategy, stock management, and procurement departments will remain aligned if you use a systematised approach to planning your materials. This will also keep materials moving through the facility.

Although it cannot manage a production facility independently, an MRP system enables producers to keep materials moving steadily through the supply chain and allows planners to concentrate on troublesome regions. An MRP system performs several purposes, including:

1. Inventory management: An MRP system’s primary goal is to ensure that materials are always on hand when required. This can also ensure that you don’t have an excessive amount of or insufficient amount of materials on hand. Goods control is crucial since having too much inventory can result in higher storage expenses, and having too little might cause delays and displeased consumers.

2. Cost Savings: Using an MRP system allows industrial facilities to cut costs dramatically. First, by saving time that planners would spend manually calculating the requirements for each material or component. Second, by using inventory management, MRP will prevent you from losing money by repeatedly placing last-minute material orders to fulfill deadlines or holding superfluous goods.

3. Production Process Improvement: Although managing materials is the MRP’s primary objective, it also serves as a crucial tool for enhancing production procedures. You may save time, cut expenses, and boost throughput when materials move freely throughout the production facility. Workers and machinery can work more steadily and quickly if they don’t have to pause to get or wait for materials.