{"id":785,"date":"2017-09-25T10:27:24","date_gmt":"2017-09-25T10:27:24","guid":{"rendered":"https:\/\/www.mrpeasy.com\/blog\/?p=785"},"modified":"2022-11-11T13:41:30","modified_gmt":"2022-11-11T13:41:30","slug":"mrp","status":"publish","type":"post","link":"https:\/\/www.mrpeasy.com\/blog\/mrp\/","title":{"rendered":"MRP System Series #1: What is MRP?"},"content":{"rendered":"\n

This is our first post in the series explaining the concepts surrounding MRP system.<\/em><\/p>\n\n\n\n\n\n\n\n

MRP is a term that can be understood in many ways. We\u2019ll try to shed some light on the history and relevance of the term and the characteristics of the MRP systems<\/a>.<\/p>\n\n\n\n

(Funnily, the answer to \u201cWhat is MRP?\u201d depends on the age of the respondent.  Read on, and you\u2019ll understand why.)<\/p>\n\n\n\n

\"mrp\"<\/figure>\n\n\n\n

MRP was one of the first manufacturing software systems designed to increase productivity<\/strong> with the help of computers. It has led to great improvements in production efficiencies.<\/p>\n\n\n\n

In general, MRP is a method for company management, which allows management to accurately and efficiently plan the company\u2019s resources in terms of materials, equipment, and workforce. Even though MRP could be applied manually, it\u2019s unthinkable without MRP software<\/a>.<\/p>\n\n\n\n

MRP can be applied to any kind of production: Make-to-stock or make-to-order, for simple products to complex products with sub-assemblies, where components are produced in-house, or even to managing outsourced production.<\/p>\n\n\n\n

Inventory management, the processing of bills and materials and scheduling are the very basic functions of an MRP system.<\/strong> One of the primary goals of MRP is helping organizations maintain low inventory levels. Mainly, it is used to plan production, purchasing and delivering activities.<\/p>\n\n\n\n

Nowadays, the term MRP is mainly understood as Manufacturing Resource Planning (aka MRP II)<\/strong>, which allows for very accurate planning and management of resources. When it first emerged, MRP was coined Material Requirements Planning (aka MRP I)<\/strong>.<\/p>\n\n\n\n

Historically, most formal practices before the introduction of MRP were mainly only applicable for big manufacturers whose series produced standardized products year-after-year. Those methods mostly fell short in changing environments, or for smaller manufacturers with many or custom products, for which market demand cannot be easily predictable. In turn, this resulted in keeping higher inventory levels and more materials and products were obsolete since market demand changed.<\/p>\n\n\n\n

To counter this, new manufacturing inventory management software emerged – Material Requirements Planning (aka MRP I). This enabled more accurate production and inventory planning based on demand. <\/strong>The greatest benefit was minimizing inventory (and waste also!) through highly accurate planning, which would have required enormous effort done manually.<\/p>\n\n\n\n

(We could argue if MRP is for inventory management or for production planning, while it really is for both. If your job title has the word \u201cinventory\u201d in it, use the former\u2026 if \u201cproduction,\u201d use the latter!)<\/p>\n\n\n\n

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