Wells Computer Consultants Ltd

Material Requirements Planning is about determining what materials are required and when they are required to meet the demand that customers place on a company for its products. Such products may be manufactured by the company or bought in from an outside supplier. MRP allows a company to control and determine what materials or finished products it requires to meet the demand. (To discover if the plan is achievable in terms of capacity etc requires Manufacturing Resource Planning (MRPII).)

MRP does this by first considering what the demand is for the company's products for a period and examining the stock levels for the product and how much of the stock is already allocated to meet actual or earlier demands by customers. Whatever of the new demand cannot be met by stock the company must either make or buy in from an outside supplier.

To make a product the parts that are required for assembling the product must be in stock or must be made or purchased from a supplier. Parts in stock means that the product can be assembled immediately provided they are not already required for other products. Parts that are made require other parts or raw materials that may be in stock or must be purchased and so the cycle iterates until the level at which all parts or raw materials are purchased items.

Consult with WCCL for your MRP requirements info@wccl.co.uk

Once the initial demand for the product is established for a period MRP can run through this cycle and make the calculation of the quantities that are required at each level of production and finally the quantities of parts and raw materials that must be purchased from suppliers. MRP does this by examination of the Bill of Materials required for the manufacture of a product or a subassembly or a part.

The same parts and raw materials may be used in a number of different products. MRP groups the requirements for parts or raw materials together into manageable orders. Orders which can either be processed in the workshops or against which purchase orders can be raised on suppliers.

MRP can be used in any selling or production environment that must keep track of material requirements at each level of production. MRP can be used for 'made to order' products or for volume products manufactured for stock. Traceability of the products can be introduced which provides a means for 'duty claw back' for imported raw materials which are present in re-exported finished product. In a servicing workshop the item to be serviced is taken from a defective state to working state. The defective item is one of the list of parts in the Bill of Materials to make a working item. Products can be disassembled or there may be more than one product created from a single process e.g. a chemical process.

Starting with the purchased material for which the costs are known MRP allows the material cost of individual batches of parts or finished products to be calculated. Costs can be calculated using either standard costs or the cost that relates to the purchased parts or raw materials. When traceability of raw materials is introduced the cost of individual items or batches can be calculated.

To find out more about MRP and how it can assist your business contact Wells Computer Consultants Ltd.