Unlock Peak Efficiency: How MRP Software Transforms Manufacturing

Whether you’re a large manufacturer that produces many products with multiple parts or a smaller operation that assembles parts from different sources to sell as a unit, you are undoubtedly familiar with at least the basic tenets of material requirements planning (MRP) – ensure materials are available to create the final product at a pace that satisfies customer demand. Though it may sound easy, balancing the cost of materials and other resources with demand and earning potential can be a complex endeavor.

That’s why when MRP software came about in the 1960s, businesses rapidly embraced it as a way to more efficiently manage production. Not surprisingly, today’s MRP software goes beyond its original design to encompass more accurate forecasting and planning models as well as applications that support product realization, from pre-production to distribution. This article gives you a look into today’s MRP software, modern application within an ERP system, and shows how incorporating modern MRP software into your operations can ultimately improve your bottom line.

Contents

What is material requirements planning?

What is MRP software?

MRP vs. ERP

How does MRP software work?

Key functions of MRP software

Benefits of MRP software

Cloud MRP software

QT9 ERP software for MRP and more

What is material requirements planning (MRP)?

Material requirements planning, or MRP, is the process of determining the appropriate types and amounts of materials needed to produce a good, and ensuring those materials are available when they are needed for production. The process consists of three primary steps: inventorying materials on hand, identifying what additional materials are needed, and then scheduling their production or purchase so that they arrive on time and in the right place so operations can proceed smoothly.

What is MRP software?

MRP software calculates the materials needed to meet production plans and customer demand using data from lead times, sales forecasts and production plans to determine the optimal stock levels. With MRP software, companies can easily view production requirements, stock on hand and purchasing or production needs, as well as historical purchasing and production data. Many MRP software solutions include additional related processes, such as initiating purchase orders, managing warehousing and manufacturing, and managing suppliers. These types of MRP software are considered enterprise resource planning (ERP) solutions.

MRP vs. ERP

MRP is often considered a function of an ERP system, however, ERP software grew from MRP software. Widespread use of MRP as a formalized business process came about in the late 1960s/early 1970s, and an extension of it, dubbed material resource planning (MRP II), was introduced in 1980. MRP II broadened the MRP scope to include related operations within an organization, such as product design, capacity planning and financial management. In the 1990s, the analyst firm, Gartner, began using the term “enterprise resource planning (ERP)” to describe systems that combined MRP and MRP II with additional related processes from across a manufacturing “enterprise,” all of it managed in a centralized platform. When people talk about MRP software today, they are generally referring to ERP software.

How does MRP software work?

An MRP system can be used in different manners depending on the type of business, its products and its fulfillment approach – make to order or make to stock. For manufacturing, MRP software almost always utilizes a bill of materials (BOM) to determine the parts and components a business will need to purchase or manufacture to create a product.

Developed by product engineers, a BOM is the ultimate record of the materials, components and processes used to build a product. It gives manufacturers and inventory control experts a plan by which to begin gathering materials. It includes details such as part names and numbers, descriptions, quantities required, and the order in which they will be needed.

MRP software compares resource requirements outlined in the BOM with stock on hand and determines the materials that will need to be purchased or produced to coordinate with the timeframe determined by the master production schedule, often referred to as the MPS. MRP software calculates the ideal dates for acquisitions or production by analyzing demand forecasts and lead times. This information is then used by the purchasing or production departments to begin their roles in the materials fulfillment process.

Key functions of MRP software

Purchase Planning

MRP software purchasing applications support the original mandate of MRP – calculating material acquisitions needed to meet production plans and customer demand. Modern MRP purchasing applications can also evaluate costs, track suppliers, automate purchase orders, and create quality records, among many other capabilities.

Production Scheduling

MRP software is designed to support manufacturing production, ensuring materials needed in production are available closest to the when they are needed in the production schedule in order to minimize costs yet maintain efficiency and meet demand and delivery deadlines.

Inventory Control

Inventory management works in conjunction with production scheduling to track the location of materials, ensure there is enough on hand for production and facilitate getting that inventory where it needs to be at the right time. Inventory control applications can auto-allocate inventory, synchronize inventory across multiple locations, and create automatic reorder points.

Real-time data and reporting

Since all business functions are interconnected within the ERP platform, information from different departments is consolidated and updated in real time. This gives management a comprehensive view of business performance, enabling better decision-making based on more accurate data. Financial reports, inventory levels and production schedules can be accessed instantly, providing companies with insights that help them respond quickly to market changes or operational challenges.

Bill of Materials (BOM) Management

MRP software incorporates the BOM into its material acquisition or production processes, using data from the BOM to ensure the right materials are available at the right quantities and in the correct order. The digital environment allows manufacturers to easily make changes to the BOM if needed and improves accuracy for complex products.

ERP and MRP

When MRP is a function of ERP software, many additional business applications are often incorporated, including:

• Accounting
• Accounts receivable and accounts payable
• Sales management
• Purchasing management
• Quoting and invoicing
• Shipping
• Returns management

Benefits of MRP software

Like so much in the realm of business planning, there is a lot to consider for effective material requirements planning, especially at higher production volumes or for products that are more complex. MRP software seamlessly and systematically evaluates material requirements, production schedules, sales forecasts, customer orders and inventory to calculate the optimal supply of product inputs. This leads to:

Improved production efficiency – Using a centralized database and integrations between production functions, such as purchasing and shop floor management, MRP software is able to simplify the process of ensuring that materials are where they need to be at the optimal time, so that production can proceed on time, in the correct sequence, with minimal interruptions.

Reduced costs – MRP software reduces the cost of purchases by determining the most cost-effective materials and components. It can also reduce inventory carrying costs and waste through better alignment of production and demand, and helps manufacturers avoid employee overtime through more efficient scheduling and fewer bottlenecks.

Optimized inventory - MRP software helps companies reach optimal inventory levels by using real-time and historical data to accurately forecast material needs. The software gives immediate insight into inventory locations and quantities, so you always know what’s on hand and what needs to be ordered or reordered. Inventory capabilities enable the software to automatically update inventory data when shipments arrive or leave the warehouse.

Reduced lead times – With the more accurate forecasting capabilities of MRP software, it becomes easier for manufacturers to schedule production for optimal efficiency, which keeps order-to-delivery times low and makes customers happy.

Traceability and compliance – Many manufacturers must keep detailed records of product materials. Some MRP systems enable easy traceability using barcoding for lot or serial number traceability, satisfying regulatory mandates and making it easier to track products in the event of a recall.

Improved customer satisfaction – Greater production efficiency means manufacturers are able to get their products to market more quickly, improving customer satisfaction and market position.

Cloud MRP software

Cloud MRP software is an MRP solution that is delivered over the internet via a third-party provider. The benefits of cloud MRP software are numerous for businesses, since they are not responsible for maintaining the software on their own servers. This not only eliminates the need for staff and space to maintain the software, it also makes installing system updates simple. What’s more, cloud-based software enables businesses to easily access their MRP data and production information from anywhere, at any time as long as they have an internet connection.

There are many additional advantages to cloud-based MRP software, including:

• The ability to scale use according to needs
• Lower costs, since delivery is usually based on subscriptions, so businesses only pay for what they use
• Ability to access anytime, anywhere
• Vendor-provided maintenance, security and backup

QT9 ERP software for MRP and more

QT9 ERP is a comprehensive MRP software that simplifies material requirement planning by centralizing it with pertinent manufacturing and enterprise-wide functions. QT9 ERP improves efficiency and accuracy through integrated data and automated operations, all without breaking the bank.

QT9 ERP provides more than 17 modules as part of its standard offering, as well as easy access to data and analytics to help manufacturers make the best decisions for moving forward. With QT9 ERP you get:

• 17+ modules, including MRP and multi-level BOM

• Quick implementation

• Tailored customer support

• Customer, compliance, supplier and physical inventory web portals

• Lot and serial number inventory control

• Access to digital business intelligence and analytics

QT9 ERP also offers electronic batch record (eBR) and device history record (DHR) applications to address the needs of life sciences companies. Our ERP system lets you configure processes to best meet your needs and is highly scalable, so you can implement at your own pace.

Reach out today for more information about QT9 ERP.