Bottom Line: Material Requirements Planning (MRP) software helps to keep manufacturing operations in balance by managing all inventory requirements and resources necessary to meet production demand while maintaining lean inventory levels.
Getting orders shipped on time at the highest quality levels possible is the goal of all manufacturers because everyone wants to keep the customers they have and gain more business from them today. Knowing there is enough inventory, skilled labor, machine or equipment, and work center availability is key. Many manufacturers I’ve spoken with recently rely on their MRP systems to assign the best possible production technicians for a given product being produced using specific machinery in their plant. Manufacturers who choose to have their MRP and ERP systems share a single database eliminate data silos and costly third-party integration.
Why it’s Important to Adopt Material Requirements Planning (MRP) Software Today
Having all accounting, finance, and manufacturing data on a single database is giving manufacturers the insights they need to see how manufacturing decisions impact their bottom lines. That’s one of the several reasons why MRP continues to be at the center of nearly every manufacturers’ operations today. The following are the advantages of adopting MRP software in manufacturing today:
- Having the same planning window for purchasing and production improves on-time delivery performance while improving inventory planning. Manufacturers say this is the most valuable benefit because it makes synchronizing purchasing, production, and inventory easier than using any other manual or semi-automated approach. Manufacturers report more on-time deliveries, less cash wasted on inventory carrying costs, improved perfect order performance, and better visibility across the shop floor. MRP excels at evaluating material availability based on the required manufacturing date while taking into consideration current demand and material lead times.
- Using Advanced Planning and Scheduling techniques to optimize how raw materials and production capacity are managed to improve production yields further. In high volume, low margin production environments, Advanced Planning and Scheduling helps to optimize the allocation of raw materials at the best possible levels to meet demand. When evaluating MRP systems for your manufacturing operations also see how automated raw material ordering, hard and soft allocation, and ideal versus existing analysis can contribute. It’s also a good idea to evaluate if Min/Max planning can potentially help to improve production further yield rates, on-time delivery, and perfect order performance.
- Know if and by how much the variances of standard versus actual labor hours are impacting production efficiency and costs. Discrete and job shop-based manufacturers rely on Labor Capacity Planning to measure standard labor hours against the required hours to see if allocations by work orders and production schedules are accurate. Leading MRP systems will support scheduling labor hours by week, day or shift, based on work orders and labor schedules. Calculating available labor by category and qualifications and scheduling operators by skill level is a must-have for improving Labor Capacity Planning as well.
- MRP systems improve asset utilization rates by supporting Auxiliary Equipment Planning for each machine on the shop floor. Balancing inventory, labor, and asset utilization goals are why many manufacturers are adopting MRP systems today. It’s common to see batch, discrete, and process manufacturers move to a second-generation MRP system as their business model changes and become more complex. Manufacturers say they need greater accuracy and control over triangulating between inventory, labor, and machinery optimization rates for newer, more complex products. One challenge they also often mention is evaluating and solving conflicts of auxiliary equipment linked to the bill of material, which can be solved with Auxiliary Equipment Planning integrated into an MRP system. Look for an MRP system that also supports Rough Cut Capacity Planning, which compares available work center time based on the shop calendar versus required hours for each machine type.
- Improve Machine and Work Center Capacity Planning. The best MRP systems evaluate machine availability by taking into account variables that affect production capacity. Examples of these variables include maintenance, setup, teardown and reconfiguration. If the job cannot be run within the requested time frame due to capacity limits, the system determines the first available time and date the work center can have the requested number of items completed. Look for an MRP system that supports views of availability by type or individual machine by day, week, or month.