Material resources planning (MRP) is the process of identifying, acquiring and using the material resources necessary to produce the desired volume of finished goods. The planning process does not, by itself, determine the number of raw materials or finished goods that are necessary or available; it determines the best way to get the materials or finished goods needed to produce the desired volume. There are many different elements to MRP, including planning, budgeting, materials tracking, and purchasing.
MRP is a well-defined process that controls the manufacturing processes to ensure that they are being carried out in an optimal manner. It helps in planning the manufacturing processes for the products to optimize cost and make sure that the customers are able to get their products delivered on time. MRP allows the manufacturer to make sure that the most time-consuming part of the manufacturing process is being carried out during the busiest hours and lesser time is spent on non-productive operations. MRP helps the manufacturer to have more control over the production process and can identify any potential problems before they take a major toll on the profits and revenue.
Why is MRP important?
While organizations take different paths in planning, material resource planning is all about taking a step back, analyzing, and looking at both the physical and financial aspects of your industry.
Every industry has its own material resources, as well as the way that they are used and acquired. The way in which things are made, the way people make them, and how things are designed all affect how quickly they wear out, and how expensive they become to maintain and purchase.
By developing a plan that is built on three distinct areas — material sources, material needs, and material purchasing — you can create a strategic approach to your organization’s capital investments. While most material planning efforts focus on building a long-term supply chain, a strategic plan will help you better integrate and coordinate your physical and financial planning efforts.
This system helps the manufacturer to achieve a high level of output with lower costs. MRP systems are flexible in nature and can be implemented to suit different manufacturing units, ranging from small home-based units to large medium, or large manufacturing units.
The current focus area of MRP is to improve the quality of outputs as well as control and eliminate the non-productive activities in the manufacturing process. It ensures that the produced products are delivered on time, while also keeping track of inventory levels.
Your MRP implementation checklist:
Here are the basic steps that are followed in MRP:
- Manufacturing process flow chart. The manufacturing process flow chart is used to describe the whole manufacturing process, which includes all activities associated with production in chronological order.
- Description of the production activities. The description of the production activities includes production planning and scheduling, monitoring activities, production equipment, and structures, packing processes and transportation/ handling, final inspection and invoicing, and other logistics.
- Production Plan. The production plan or the specification sheet is prepared to give guidance to the unit on how the production process will be carried out. The production plan helps in ensuring quality, avoiding quality problems, managing production processes, avoiding unplanned disruptions, and budgeting the manufacturing process.
- Production Schedule. The manufacturing schedule helps the manufacturer to define the order of execution of the process. The manufacturing schedule is completed by defining the start date, production time, and product inventory levels.
- Product inventory control. The unit’s inventory control helps in monitoring the inventory levels, avoiding stockouts, indicating where the inventory is, and guiding production activities according to the plans.
- Production Planning. The product plan is prepared based on the details of the product and allows for operations to follow the production plan.
- On production execution. Once the manufacturing plan is executed, the actual production and deployment of the product take place.
- Scheduling. The unit updates the production scheduling for the next few days.
- Post-production. The unit takes stock of the inventory during the post-production period. This helps in controlling the inventory levels and a clearer picture of the inventory levels emerges.
- Controlling warehouse management. The warehousing management helps in management and monitoring the warehouse status and issues. It also guides the production management team to take corrective measures before they reach critical levels and in time, in order to prevent product shortages.
- Revenue collection. The unit conducts the collection of revenue using financial management software. The finance manager of the unit can also monitor the performance of the manufacturing unit using the same software.
- Customer Services and Maintenance. The customer service and maintenance help the unit to maintain the service and support standards for the product in order to improve the product quality.
The key components of a successful MRP Implementation:
There is no going around the fact that maintaining a quality planning and execution strategy is key to a successful MRP implementation, especially in this ever-changing and competitive market. The question is: What makes for a successful MRP implementation? We reached out to a group of manufacturing domain experts, and these are the key components that have been proven to work across different industries and the issues faced, and strategies they’ve used to navigate through it.
- Define goals and expectations from the beginning. If you are attempting to implement a new MRP system in your transformation program, it is important to take time to put together a list of goals and expectations that are needed to realize the full benefit of implementing the new system. By way of example, a B2C business owner will need to consider whether they want to improve customer satisfaction and the value of their services, reduce costs and overhead, optimize advertising channels, improve their website presence, increase overall sales, improve their platform usability, improve collaboration, and so on. All of these goals and expectations must be established ahead of time, so you are not taken off guard by any of them. This is a challenging time for businesses with MRPs. Typically, the MRP is the primary tool in a brand’s arsenal for engaging customers in a highly personalized and digital environment, but businesses do not always understand that all of the channels that they are employing now will be affected by MRP at some point in time. Knowing which channels have historically been the most successful (and efficient) for your business and learning how to convert these channels to those that work most effectively for you is critical to successfully implementing an MRP. If you have yet to build a business case for implementing your MRP, do so before you implement it.
- Get buy-in from leadership and employees. You have a number of stakeholders that you have to meet with to get your MRP implemented. Regardless of whether you have a robust business case in place and you have been planning a digital MRP strategy, there are still going to be some roadblocks. A key element in building a successful MRP is getting buy-in from your leadership team and employees. “There can be resistance to change,” says Yusef Sunaidy, Founder & CEO of Priority Efficient LLC. “Some people simply don’t believe that the current system isn’t working. They are going to say, ‘Why should I work more on digital when we are already doing so much in-store?’ Those attitudes are going to impact whether or not they support the new initiative.” If your leadership is hesitant about the new system and you have been working on the digital MRP for years, you have to keep an open and honest dialogue about how much work it will take for the transformation to happen.
how to select the right Material Resource Planning Software?
Enterprises require a proper material resource planning system to maintain and measure their supplies. A proper MRP will help in better analysis and understanding of the data which can be leveraged to produce maximum profits.
When deciding to purchase MRP software, firstly you should decide if MRP will be appropriate for your business. The first step is to compare the different MRPs available and choose the one which meets your needs. Before choosing the right MRP for your business, the entrepreneur should check the following details:
- Know the cost of the MRP.
- Ask customer support if the cost of the software is included in the license.
- Ask customer support if there are any upgrades available.
- Ensure you understand the difference between SaaS and perpetual licensing.
How to select the right partner for MRP solution implementation
The MRP solution provider has the main focus on ensuring that the employees involved in the process have the best possible training and that the system is integrated with other HR processes in the organization.
The systems used in India vary depending on the type of industry. For instance, manufacturing and other types of industries involve more traditional training while in healthcare, the system must be tailored to suit the industry and its employees. The industry needs to understand the importance of this new system and there are still hurdles such as training employees and fixing the training module for the employees. Other challenges include reskilling and alignment of training to the industry, availability of skilled manpower, and administration.
CionMRP is a SaaS-based Material Resource Planning software that is designed for small businesses especially MSME in the Indian market. Cionlabs has extensive experience in the Manufacturing domain and can help you with a business strategy as well as implementation.