What Is MRP? Material Requirements Planning Explained

Material Requirements Planning (MRP) is one of the most important systems used in modern manufacturing operations.

MRP helps manufacturers plan purchasing, manage inventory, schedule production, reduce shortages, and improve manufacturing efficiency.

What Does MRP Do?

MRP systems calculate material demand based on:

• Sales Orders
• Forecasts
• Work Orders
• Bills of Material (BOM)
• Inventory Levels
• Purchase Orders
• Lead Times

The goal is to ensure materials are available when needed without carrying unnecessary inventory.

MRP software allows manufacturers to better coordinate:

• Purchasing
• Production Scheduling
• Inventory Management
• Supplier Planning
• Work Order Releases
• Material Allocations

How MRP Improves Purchasing

Purchasing departments often struggle with:

• Late material shortages
• Excess inventory
• Supplier delays
• Manual spreadsheets
• Unclear demand visibility

MRP software improves purchasing by automatically calculating:

• Required materials
• Order quantities
• Required delivery dates
• Supplier demand
• Projected shortages

This helps manufacturers reduce inventory costs while improving production readiness.

Production Planning & Scheduling

MRP systems also improve production planning by helping manufacturers:

• Schedule work orders
• Coordinate labor and materials
• Prioritize production jobs
• Reduce downtime
• Improve workflow visibility
• Reduce production bottlenecks

Without MRP, manufacturers often rely on disconnected spreadsheets, manual planning, or reactive scheduling processes.

Inventory Management Benefits

Inventory management is one of the largest operational challenges in manufacturing.

MRP helps improve inventory management by:

• Reducing excess inventory
• Improving inventory accuracy
• Reducing shortages
• Improving lot traceability
• Improving warehouse visibility
• Supporting cycle counting

Manufacturers gain better visibility into:

• Available inventory
• Allocated inventory
• Incoming materials
• Projected shortages
• Production demand

Manufacturing Efficiency Improvements

Effective MRP systems improve operational efficiency throughout manufacturing operations.

Benefits often include:

• Reduced shortages
• Improved on-time delivery
• Reduced inventory carrying costs
• Improved purchasing coordination
• Improved labor utilization
• Improved production scheduling
• Reduced expediting activity

Why Many Manufacturers Outgrow Accounting Software

Many manufacturers initially attempt to manage production using accounting software combined with spreadsheets.

Unfortunately, accounting systems are not designed for:

• Material planning
• Bills of Material
• Production scheduling
• Inventory allocations
• Manufacturing traceability
• Shop floor visibility
• Work order management

As manufacturing complexity grows, these limitations often create operational inefficiencies and limited visibility.

Integrated MRP with Manufacturing ERP

Modern manufacturing ERP systems integrate MRP with:

• Inventory Control
• Purchasing
• Work Orders
• Shop Floor Tracking
• Traceability
• Quality Management
• Supplier Management
• Production Scheduling

This creates significantly better operational visibility compared to disconnected systems.

MRP Software for Modern Manufacturers

SimpleManufacturing™ provides integrated MRP software designed specifically for manufacturers requiring:

• Real-time inventory visibility
• Production scheduling
• Manufacturing traceability
• Purchasing coordination
• Work order management
• Shop floor tracking
• Quality management integration

Manufacturers using integrated MRP systems are often able to improve planning accuracy, reduce operational disruptions, and improve manufacturing efficiency.

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