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Material Requirements Planning and Manufacturing Resource Planning difference - YouTube
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Material Requirements Planning and ManufacturingResource Planning difference. The MRP is a
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planning system that allows you to manage the production resources of an organization.
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Here is an overview of Material Requirements Planning (MRP I) and Manufacturing Resource
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Planning (MRP II) differences.
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This concept has evolved over time.
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Today MRP systems are associated with software, with the ability to plan and control.
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Its main objective is to determine the amount of resources that the organization requires,
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to meet the required demand.
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Strictly speaking:
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Ensure that materials are delivered in a timely manner to customers.
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Ensure optimal inventory levels
Ensure the use of optimal resources within
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the organization (personnel, cash, machinery, energy, etc.)
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Let’s see next how the MRP I evolved in
MRP II, their main characteristics and differences
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between themselves.
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The use of MRP systems dates back to World War II when the United States government used
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programs to organize the logistics of its
military resources.
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Subsequently, they were transferred to the industry and in the 60s and 70s, the first
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MRPs systems were created.
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This is how the MRP I or Material Requirements Planning systems were born.
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Its main objective was to determine the amount of materials to reach the production levels
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using the minimum inventory cost.
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However, businesses needed to manage a greater number of organizational processes.
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Thus, it was necessary to expand towards a broader planning model and that is why the
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MRP II system was born.
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This new system contemplates and integrates other areas of the business, such as:
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Factory, Administration, sales.
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It is important to note that the evolution
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of computers allowed these systems to improve.
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Today they became a vital component for the management of manufacturing business processes.
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MRP I stands for “Material Requirements Planning”.
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It is basically a material planning and management system through the use of software.
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MRP I solves some issues within any manufacturing process, such as:
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What materials to buy How much material to buy
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When to buy the materials To answer all of these questions, the MRP
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I use:
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The Production Master Plan or MPS, which provides independent product demand.
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The Material Inventory, which means the amount of raw materials, semi-finished goods and
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finished products available.
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The Bill of Materials or BOM, combining the components to produce a unit of product, the
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standardized quantities to use and their parent-child relationship.
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And the outputs obtained will be:
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A Recommended Production Schedule
A Recommended Purchasing Schedule.
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The Schedule is valid for both: the items
to buy and the sub-assemblies and components
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to be produced.
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Note that MRP I systems manage inventories of dependent demand.
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The dependent demand is for component parts or subassemblies.
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The independent demand is the demand for a finished product.
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As an example, a company that manufactures bicycles determines the amount of tires to
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buy for the bicycles demand forecast.
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The bicycles are independent demand, while tires are dependent demand.
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The advantages of using an MRP System are shown below:
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Reduction of the cost of inventories
Control of inventory levels
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Reduction of waiting times in supply and production Better manufacturing and purchasing planning
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Knowledge about input needs
Help in making supply decisions
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Control and documentation
MRP II is defined as “Manufacturing Resource
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Planning” and was born in the 80s.
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The purpose was to offer a broader planning and control tool to its predecessor, the MRP 1
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MRP 2 is a computer-based system that creates production schedules including the arrival
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of materials, machine and labor.
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MRP II defines what resources, what quantities, and at what time they will be necessary to
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carry out all business production processes.
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MRP II constitutes the heart of manufacturing companies.
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It is an integrated method of operational
and financial planning for manufacturing companies.
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In addition to answering questions about what, how many and when to purchase materials from
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MRP I, MRP II answers the following questions:
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What resources are necessary?
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What amount of resources?
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When will these resources be necessary?
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MRP II identifies the capacity problems of the production plan.
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It resolves the divergences between the availability of resources and planned consumption.
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In addition to the MRP I tools, the MRP II
calculates and solves:
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The planning of the manufacturing resources of the organization
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Ability to simulate production processes
Optimized calculation of routes and work centers
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It is based on the study of demand and the market.
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It covers more departments, not only production but also purchasing, quality, financial, etc.
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The inputs are:
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Work Progress Feedback, showing how the work has progressed, to all levels of the schedule
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so that the next run can be updated on a regular basis.
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Resource Scheduling, which is the calculation of resources to convert the raw materials
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into finished goods.
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Batching Rules takes into account the logic which batches are produced (i.e.
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EBQ, Lot for Lot, etc.)
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Rough Cut Capacity Planning (RCCP), to match the workload to the capacity available.
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Software extension programs, such as including sale orders processing, cost accounting, etc.
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The advantages of using an MRP II System are shown below:
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All the advantages coming from MRP I
Optimization of machinery usage and productivity
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improvement Coordination and control of production and
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inventories Ease of adaptation to order changes.
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Reduction of outsourcing and idle times
Financial knowledge of planned and real production.
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In summary, MRP I (Material Requirements Planning) is a material management system.
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It calculates when purchasing orders must be made to suppliers and the work orders released.
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It will provide the amount of material needed, according to the scheduled production.
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In contrast, MRP 2 (Manufacturing Resource Planning) is a manufacturing system.
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It not only deals with the purchasing and
production scheduling but also with the capabilities
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of the factory in aspects such as labor or machinery.
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