MRP stands for Material Requirements Planning. The MRP as we know it today dates back to the early 70's of 1900, when it was born as opposed to the materials procurement technique based on Reorder Point (RoP). Against RoP, MRP major advantage lies in its ability to minimize material stock, while improving customer service level.
MRP purpose is to plan purchases and production, taking into account the constraints imposed by factory resources. The critical factor for every production company is the answer to three key questions: what, how much and when to produce and buy. MRP is the tool you need to answer these questions, since its purpose is to ensure materials availability in the right quantity and at the right time. It seems important, right? It is, above all in relation to the supply stock management. This is one of the most serious problems, because choices in this field reflect on both technical and production process, as well as economic. It is easy to see that materials storage is expensive, whereas a small material amount can lead to irregular production.
A wise planning allows you to supply raw and semi-finished materials only when actually needed. To achieve the goal, MRP algorithm receives as input ongoing production, stock situation, market demand, supply timing and production and sales forecasts, producing as output a proposal for production and purchase orders to meet the demands. In order to obtain this result, MRP system also verifies that the time necessary for production (calculated in hours of both human and machines work, including the time required for their setup), does not exceed the actual availability. In this way you get a realistic production plan, that functionally meets market demand. In this way you can know what, how and when to produce and buy.
Conceptually, then, MRP analysis leads to plan and fulfill a series of different items needs (purchased, semifinished or finished product) through time by generating proposed Purchase Request and proposed Production Orders.
What does this mean? To simplify, imagine having to cook a full meal, from appetizers to desserts: MRP tells you how to go shopping, what and how much food to buy, with which timing prepare the courses and how to optimize the use of the oven to serve dishes in the proper sequence and without delay. In practice, MRP transforms the finished product requirements (food to be served) in components and raw materials requirements of the (ingredients to prepare or buy). But there's more: MRP knows that something is already "in the pantry," and this is when we talk about netting off, ie the calculation of how much we have to produce net of inventories.
Beginning early to prearrange your lunch, you are also able to go forward with the preparation and seize best deals on the market; you can arrange that a minimum stock of ingredients is always present in the pantry. Transposing the analogy in the company, we see how the MRP system takes account of this and is able to calculate flow of incoming and outgoing products and components from the warehouse, providing a daily situation forecast.
If you're looking for a way to increase your company productivity and minimize annoying waiting times and production costs, Mago.net can help you thanks to its MRP functionality. Let's see how and why.
Mago.net MRP is the flexible and effective tool that optimizes production scheduling. Using the wizard Mago.net makes available, MRP system evaluates warehouse size, raw materials to be purchased and items to be produced, generating purchase orders and production orders. The orders can be confirmed through Proposed Orders Confirmation process and Generating Supplier Orders process.
Mago.net MRP allows you to know at all times what is necessary to supply in order to complete the ongoing production without delay, and which are the dates most suitable for such supplies.
Launching the procedure it is possible to act on net, calendar days to exclude, on possible loads from vendor to be considered in advance, setting the preferred production policies. After processing, MRP reports allow a proper situation analysis.
Planning means to choose between different potentially efficient options. For this reason, Mago.net MRP module allows you to hold unlimited simulations in line at the same time. Simulations can be compared to each other, before you decide which one best meets your business productivity.
Production costs preliminary analysis (achieved through Mago.net MRP features) allows an objective assessment and provides practical support to final decisions. Even individual production costs results are continuously monitored and updated: total elasticity and complete decision making are fully guaranteed during the simulation as well as in work progress.
The distinction between articles to produce and items to buy is not always clear. It may happen that buying directly from the suppliers articles usually produced on the farm (and vice versa) is cheaper. In such cases Mago.net MRP analysis can activate the Make or Buy option. This option allows you, when confirming Production Proposed Orders, to choose whether to create a Production Order or an Order to Supplier. Once you have successfully completed the planning, you can choose to automatically convert any future productive activity into corresponding purchase order to the supplier.
Mago.net MRP features are many more. If you are a more "technical" fellow or simply want to know more, please visit the Help & Information Center, or follow the online course dedicated to Mago.net Production module. On Microarea YouTube channel you can also find a short animation, concerning Mago.net benefits in Production Management.
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