Material planning, also known as MRP systems, is a very useful support for business administration. Through this activity it is possible to organize, control and monitor the stock, which helps any company to meet the needs of its customers in a timely manner.
MRP systems improve the production processes of companies, which helps them increase their levels of competitiveness in the market.
MRP Systems. Material Requirement Planning
Let’s start by simply defining what MRP systems are, which elementally are platforms designed to support companies to manage their inventories in their different productive stages.
In other words, they help to know and direct in detail the stock of materials that the company needs to maintain a continuous and efficient production, and thus deliver its products in a timely manner to customers.
As we have mentioned in previous blogs, the inventory is the entire collection pending its transformation, consumption or sale. That is, they are all those goods that are part of the production chain. Optimum inventory management ensures the immediate availability of all goods.
The materials that make up the inventory may have an independent or dependent demand, the latter are those that are required to manufacture the products, therefore, they are subject to customer demand. However, when there are items of both types of demand, inconsistencies in the administration may occur.
Due to the recurrence of the previous approach, the MRP systems were born in the 70’s as a computer technique that responds to three main objectives:
- Maintain a competent status of stock levels of materials and products produced.
- Plan the work that includes the production chain, delivery orders and purchases.
- Ensure the availability of materials to support the continuity of production and thus obtain the products on time.
The MRP I is the incipient resource of the MRP systems and as we have pointed out, this material needs planner is a stock management method associated with software that organizes inventories and at the same time projects production.
With an MRP I it is possible to answer the questions of when and how much to supply materials according to the needs of the company, subject to the demand of the market in which it is developed.
It is a system capable of generating purchase orders within the company, which are the result of the optimal planning of material resources. Through MRP I, errors in the supply of raw materials, in the production chain and in stock management are prevented and solved.
The use of this type of MRP systems inherently involves planning the work of the production chain, which has a precise anticipation to establish what is required in the future and what materials are available.
The main objective of an MRP I is to provide objective and systematic work to determine the material requirements of a company. To achieve the above, the system aligns with the parameters of time and competition, which help you estimate the quantities of finished product and the raw materials required for it.
To specify in an organized way the response time of the supply and production of a company for each of its products is possible with an MRP I.
Benefits of MRP I
MRP systems provide multiple benefits and some of the most significant are:
- Reduction of quantities in stock.
- Customer satisfaction all the time.
- Increase of the efficiency of the productive chain.
- Coordination in production activities and inventories.
- Increase in the manufacturing speed of the final products.
- Evasion of expenses in materials due to unforeseen requirements.
- Timely detection of difficulties in resource planning.
- Possibility of knowing the financial consequences of planning.
Now you know that MRP systems emerged in the second half of the twentieth century to meet the needs of product inventory management. However, over time the functionality of the MRP I began to be limited and at that time it evolved into a more complete planning model, the MRP II.
Being the successor to MRP I, it not only has the same functions of calculating material resources, but also takes into account the entire business organization to obtain a comprehensive study of the production chain.
This evolved system fully comprises the elements required to carry out the master production plan, it no longer only focuses on the materials and products to be produced and sold; He is also interested in the capabilities of the machinery and labor that the company possesses.
With an MRP II you get answers related to how much and when it should be produced, as well as what are the resources available for this.
These types of MRP systems are designed to identify in an optimal and timely manner the problems that the production plan may present at the time of its application and in this way, facilitate the analysis and execution of the relevant adjustments.
The production master plan and the simulations of the behavior of the company’s production system quickly and efficiently detect, correct and control the recurring errors in the production of the products.
The MRP II has an optimized configuration to support the planning, simulation, execution and control processes to achieve production objectives by adapting the capabilities of labor, inventories, costs and manufacturing times.
Benefits of MRP II
This system provides a complete material resource planning that adapts to the productive needs of each company. Some of its most outstanding benefits are:
- Decrease in stock costs.
- Top management of materials list.
- Adaptation to the optimized market demand.
- Simple adaptation of product changes.
- Cost reduction in the production chain.
- Automated calculation of material requirements.
Differences between MRP I and MRP II
The MRP I system supports the planning of material resources and also manages stocks that relate to production and purchasing activities. It is in charge of establishing the precise moment to place orders to suppliers of the exact quantities of the necessary material.
Your guiding questions are: What? How much? and when? It must have materials.
MRP II plans and controls the resources that are required in the production chain. Its approach does not focus solely on materials and product stock, it includes the capabilities that a company possesses in aspects of labor and machinery.
Your guiding questions are:How much? When? and which one is it?They are the existing resources.
Some specific differences between both MRP systems:
- It is a receptive system.
- It only includes the production chain.
- It is based on the master production plan.
- It results from the practice and experience of the company.
- Plan the purchase requirements for raw materials.
- Optimize productivity performance.
- It is based on the analysis of market demand.
- It requires a previous study of the behavior of the company.
- It includes all the areas of the company and the resources of each one.
- It adapts quickly and efficiently to the needs of customers.
Action plan for MRP systems
When hiring MRP systems it is necessary to follow a series of steps that help to improve your work. The plan follows the following order:
- Determine and specify the list of materials that constitute the products.
- Develop a master production plan. This will function as the framework for action with the MRP system, here the units to be produced in a given period are considered.
- Record the inventory of the assets that the company has, as well as future items to acquire.
- Synchronize inventory data with the software to make queries and changes in real time.
- Indicate the basic needs of the inputs and elements used in the production chain.
- Indicate the receipt of resources. In this step it is imperative to verify that the orders arrive in a timely manner, otherwise, resolve the deficiency as soon as possible.
- Perform the inventory count available at the time. This is possible by adding scheduled deliveries to the previous inventory and eliminating gross needs.
- Receive the raw materials to establish a production order or what is the same, receiving the production orders.
- Set the production order of a particular product.
MRP systems are the perfect complement to the master production plan, as they help improve the productivity performance of any company’s processes. This type of software is a useful tool that facilitates inventory-related activities.
MRP systems. Visual Mexico Solutions
In Visual Mexico we have VISUAL ERP, which has a complete MRP module, capable of satisfying the needs of companies of any business in which they develop. It ensures to maintain an optimal level of inventories and to plan the production, deliveries and purchases to deliver a quality service and product to customers.
Our MRP module improves the profitability of companies by implementing strategies that help them achieve their goals optimally.
The planning of the material resources and the production chain are related to the activities of each area of the company, therefore it is essential to implement an MRP system to guarantee the return on investment that reflects the effectiveness of business work.
MRP systems are platforms that expedite the effective and adequate planning of the materials required in the manufacture of products. And as an additional element to its functions are business software, which includes the reports and analysis of the MRP.
In Visual Mexico we prioritize the final objective that companies share, which is the delivery of their products in a timely manner. That is, we take care of optimizing the delivery period through our MRP module that helps establish the particular requirements to fulfill this task.
Business practices have changed throughout history and currently, market demands are focused on the quality and speed of delivery of products. For this reason, an MRP is a business imperative, since it allows to know in real time the level of inventory and thus, supply the demand.
In addition, it has the function of automated programming of production activities to speed up the supply of material resources, impacting the performance and competitiveness of the company.
For us, material requirements planning can be applied to items purchased with external suppliers and at the same time with those that are produced internally. With our MRP it is always possible to get timely answers to the following questions:
- What materials are required in the production of a certain product?
- How many are needed for it?
- When should they be requested?
- What is the final product to deliver?
The MRP module of Visual Mexico manages and controls the level of the stock, which provides a report of the actual stocks and the status of the orders in progress to monitor compliance with the supply deadlines.