Key takeaways
- MRP answers three questions: what do we need, how much, and by when.
- Out-of-date BOMs and unrealistic lead times are the main reasons MRP plans get ignored.
- Start with your top 20 percent of items by value, then expand.
Material requirements planning sounds complicated, but it answers three simple questions: what do we need, how much of it, and by when. Getting those answers right every day is what separates a calm plant from one that runs on expediting.
The inputs
- Demand: confirmed sales orders and forecasts
- Bills of material: what goes into each product, level by level
- Stock on hand, and stock already on order
- Lead times: how long it takes to buy or make each item
- Safety stock: the buffer you keep for surprises
The output
MRP explodes demand down through your bills of material, nets off what you already have or have ordered, and works backwards from due dates using lead times. The result is a list of work orders to release and purchase orders to place, each with a date.
Why MRP plans get ignored
Most plants that have tried MRP and given up hit the same problems. Bills of material that do not match how the product is really built. Lead times that are optimistic by a week. Stock records that nobody trusts. MRP is only as good as these inputs.
- 1 Fix the bills of material for your top-selling products first
- 2 Measure real lead times from the last 20 purchase orders, not the vendor's promise
- 3 Run cycle counts on high-value items so the stock number is believable
You do not need to plan every screw on day one. Start with the 20 percent of items that make up 80 percent of your material value. Once planners trust those suggestions, extend MRP to the rest.
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