What is an MRP System?

What does MRP stand for? It stands for Material Requirements Planning, a tool that transforms your production process by optimising your resources. In short, the MRP system calculates what materials you need, when you need them, and how much you should order. This ensures your production flows smoothly without stock shortages or overproduction.

Key features of an MRP system:

MRP Software key features include:

• Shop floor data collection and job costing: analyse time spent on production with touchscreens at workstations to track:

• Machine downtime

• Unproductive working hours and scrap levels

• Real-time measurement of OEE

• Document and information management: Product drawings, images, and training information are available to staff and supervisors so that everything the team needs to do their job is at hand.
• Purchasing and supplier management: automatically raise POs, track deliveries, and manage invoices.
• Traceability for QA: Provide full traceability of every material and component throughout the manufacturing process.

MRP systems support a wide range of manufacturing sectors including pharmaceutical, aerospace, automotive, metal fabrication, precision engineering, and food and drink.

MRP starts with demand forecasting. Once customer orders or forecasts are in place, the system calculates material requirements, inventory levels, and purchasing needs. This ensures you don’t run out of stock or overproduce items.

Shop floor data capture and integration with finance systems brings in an additional layer of data for a complete view of manufacturing operations.

MRP systems help businesses:

• Accurately define what needs to be produced and describe the order in which the material will be required.
• Quantify the demand and calculate the required quantity for final products to meet demand.
• Determine the supply and calculate the assemblies, components, and materials that must be produced or purchased over the planning period.
• MRP transforms how information is stored and accessed, delivering real-time insights and the opportunity for in-depth analysis.

What are the benefits of an MRP system? 

An efficient MRP system simplifies processes and planning. Modular MRP software can save time, increase productivity, and reduce costs.  

1. Gain Visibility 

With your operational data and processes in one system, MRP software delivers visibility from quote to invoice. 

2. Control Your Cashflow 

MRP can help limit the amount of cash tied up in stock, ensure on-time delivery to customers and better control on margins with increased quote accuracy. 

3. Increase Productivity  

MRP systems significantly increase worker productivity; with manufacturing data available in real-time digitally, workers have instant access to relevant information.   

4. Save Time on Administration and Repetitive Tasks 

Automating often manual, paper-based and spreadsheet-based processes speeds up decision-making and reduces errors. 

5. Transform Quality Management  

The best MRP systems guide manufacturers through the process of conforming to strict quality accreditations. Identifying errors is simpler in case of quality issues or non-conformances.   

6. Improve Relationships with Customers and Suppliers 

MRP allows businesses to manage stock and materials more effectively, ensuring customers consistently receive products that meet their needs and are of high quality, and that suppliers have clarity on what’s needed when. 

7. Better informed decision-making  

Easily compile and analyse data - MRP systems allow businesses to set up and monitor specific KPIs and productivity.  

There are some significant differences between MRP I and MRP II. The former was introduced in the 1960s and quickly adopted by businesses to boost production speed and reduce costs by estimating material needs more accurately.

Then, in 1983, MRP II expanded on this by including capacity planning, shop floor control, purchasing, and stock management. With additional inputs like resource schedules and sales orders, MRP II provided more accurate outputs, improving production and resource planning.

Here’s a breakdown to compare and contrast the capabilities of both:

MRP focuses on manufacturing processes, while ERP manages broader business operations like sales, HR, finance, and supply chains. MRP can be a module within ERP systems.

ERP centralises and automates processes, making it ideal for larger organisations. SMEs often start with MRP, adding finance, CRM, and other tools as they grow, creating a flexible, scalable system.

Choosing between MRP and ERP depends on your business needs and budget. If manufacturing control is your priority, MRP might be the right choice. For broader business management, ERP offers a more comprehensive solution.

If you want to find out more, we’ve written a whole guide on the difference between MRP and ERP.

Choosing MRP software can be daunting, there are many options to choose from; there are some which are more suitable for specific industries, and some which are more suitable to the size of your business.

Key things to think about:

1. Scoping – set key objectives, appoint project manager and sponsor, agree budget, compile a list of initial requirements
2. Current state – what issues are you having now? What is the business strategy one, three, five years from now? Which systems / integrations are currently in place?
3. Stakeholders – map out stakeholders and collect their input – what are their needs?
4. Research – ask for recommendations internally and externally, search trusted websites for options and reviews, look for case studies, use industry social media, messageboards and forums
5. Shortlisting – produce a more detailed list of requirements and categorise into ‘must have’ and ‘nice to have’, and weigh each of these.

Questions to ask when shortlisting your MRP system:

• Is the software cloud-based or on-premise?
• Can the system scale as my business grows?
• Do they have implementation pathways i.e. how is the implementation managed?
• What customer support services are available?
• Does the supplier understand my industry? Do they have a track record of supporting businesses like yours? Can they provide reference sites you can speak to?
• What integrations are available?
• What support is provided before, during and after the implementation?
• How will the software be installed and configured?
• What training is provided for your teams?

Ensuring you select the right system for your business is critical – an MRP system will become a core part of your business. Careful thought and planning from the start is key.

A breakdown of the steps involved in successfully implementing an MRP system:

• Getting started - there should be a clear plan of action for the implementation, with information on roles and responsibilities and in-depth product demos for key project team members
• Preparation - existing system will need to be configured ahead of launch
• Training for all relevant teams
• Validation – testing and checks to ensure systems are working as expected
• Launch
• Review – assess progress and any issues

Once your chosen MRP package has been successfully implemented, it’s important to ensure that there is access to further support if needed and dedicated teams who can quickly solve any day-to-day problems should they arise.