Author: Paul Henriques in: Tutorials
Material Resource Planning, or MRP, is the process of translating a production schedule for an end product to a set of time-based requirements for all of the sub-assemblies and parts needed to make that set of finished goods. MRP should be used as a decision support system that provides suggested orders. Planners make any required modifications to the suggested orders and then finalize them. I.e., MRP is used to suggest a schedule of what parts should be available, and when, to satisfy part demand.
MRP calculates material requirements and schedules based on the following factors. The two simplest factors are supply, what you have, and demand, what you need. After that, it gets more complicated:
MRP calculates the projected inventory by looking at what’s currently in stock (Inventory), any vendor purchase orders or work orders (Supply), minus sales orders (Demand). Or, as a formula: Projected Inventory = Inventory + Supply – Demand. Often, this is done manually on an MRP table:
With this, based on upcoming demand, you can calculate when you will need to increase supply to ensure that you meet client demand.
For a single purchased part, like a screw, with clearly indicated values, creating an MRP chart is easy as seen in the following example:
Screw A has the following characteristics:
· Inventory: There are 35 in inventory today
· Demand: There is an upcoming order for 50 pars to be shipped in 5 days
Based on these values, the MRP will suggest that you have 15 parts supplied to inventory within 5 days. Here it is on an MRP table:
However, for manufactured parts with multiple levels, each one with differing lead times, safety stocks, and order multipliers, automated systems will simplify the process and ensure that you do not run out of parts as seen in the following example:
Part A10001 has the following characteristics:
Based on these values, you will need 6 MRP charts. One for each part on the BOM. In the MRP table below, the parts have been added with the order amount placed on the latest possible order dates:
Notes
Now, it is up to the planner to sort the supply quantities based on the plant capabilities. For example, it may be more reasonable to spread the supply values more evenly across the week.
As complicated as this is for one part with 5 component parts, imagine the same for all the parts you produce, plus reused component parts (like a screw that is used on 2 or more assembled parts).
Manually performing this process for every part on your shop floor can be difficult and lead to human error. OnRamp comes with a built-in MRP module that will calculate your upcoming supply needs based on inputted demand.
The part factors are set up in the following screens:
Demand is registered to MRP when you create a customer sales order. Running MRP creates work orders, which also create demand for the BOM sub-components of a part.
Sales Orders are added on multiple screens, including Sales Order by Customer Ship To [S1085].
Supply is registered to MRP when you create a work or purchase order.
Purchase orders are added on multiple screens, including Production Purchase Order Maintenance [S1725].
Part Lead Time, Safety Lead Time, Order Lot Size Horizon / Order Period, Order Multiplier, and, Order Minimum are setup on the Part Master [S1009] > Planning tab.
Note: Lead Time and Order Minimum can also be set on the vendor part record for purchased parts.
Safety Stock is setup on Safety Stock [S1914].
Use Review MRP Schedule by Part [S1214] to:
For more information about how OnRamp ERP software can add value to your business fill in the contact form below. A member of our support team will contact you within 1 business day to discuss any questions you have.
Start the collaboration with us while figuring out the best solution based on your needs.
Our efforts began as an internal project of Mancor Industries when we identified the need for a more cohesive ERP system to manage the complexity of multiple plants, multiple products, multiple customers and multiple functions.
Read More
