Have you been hearing the word MRP lately from your colleagues and wondered what does it mean? Well, you're in luck. You've come to the right crib to know more about this fascinating system.

What is MRP?

MRP stands for Manufacturing Resource Planning that integrates business data into a centralized system from which effective decision making can be done. It is basically a system that streamlines all the data that are vital to every department of the manufacturing industry, from engineering to scheduling, inventory management, cost control measures, and employee and financial needs. 

How are MRPs integrated into businesses?

MRPs come as software systems that consolidate all the data of each of the company's departments into a central storage system and correlate each information to their needs. Most MRPs are software-based that aims to optimize inventory and effectively plan out activities such as raw material procurement, production time, delivery, and an analysis of the system's productivity and the direction the business can go to increase its efficiency. MRP systems can enhance the quality of product and service, enable the company to give a fair price tag to its commodities, and improve deliveries. A win-win scenario for the enterprise, the retailers, and consumers.

To make it simpler, think of how your inventory department works. In order to accurately calculate how much raw materials are needed, for the time being, it has to coordinate with the production team to project the min and max of these materials. Consequently, when the production team wishes to ramp up their productivity and the number of products to be released regularly, it has to coordinate with the inventory of how much the warehouse can safely accommodate. If the numbers are miscommunicated through some manual channel, it will wreak havoc on the system and cost the company precious dollars.

One advantage of modern MRPs is that they are cloud-based. That means there is no need for servers and other hardware to get it up and running. Small businesses can readily use it with just some small monthly subscription.

MRP in Action

An MRP, as mentioned, will store and relate data or information that has been inputted by all the personnel of the organization. These data will come from inventory, production, sales, accounting, procurement, and other essential departments that make up the operation of the business.

These data are then converted into the bill of materials, purchase orders, inventory and sales records, disbursement, and receivables. All these valuable outputs will be vital to forecasting sales, financial reports and will aid any business to manage its operation better. There is a multitude of MRPs out there. Some of which have changed how an organization operates and makes decisions. And it will continue to be the soul of every manufacturing enterprise in the near future.

The manufacturing resource planning system has been a valuable tool for businesses since its inception in 1962. And the more the manufacturing industry moves forward for innovation and complex organization structures, the more MRPs and software are needed to enable the operation to run smoothly and safeguard the longevity of business industries worldwide.