Mrp System Principles

The abbreviation “MRP” has two meanings. These are Material Requirements Planning and Manufacturing Resource Planning. The man in the street would be impatient with the distinction, but for industry insiders there is a vast difference between the two. Each is a different manufacturing strategy with the second involving far more work and theory. To complicate matters further, Manufacturing Resource Planning includes a step called Material Requirements Planning. To distinguish the two theories, Material Requirements Planning is abbreviated to MRP I and Manufacturing Resource Planning is called MRP II.

  1. Manufacturing Theory

    • The manufacturing strategies taught in universities fall into three categories: “push” systems, “pull” systems and “hybrid.” Push systems examine demand, buy supplies and push materials through the shop floor from stores to finished product. The delivery times quoted by this system are based on a calculation of how many hours each process takes to convert raw materials into a finished product. Pull systems use the same calculation, but rather than scheduling work from the arrival of materials, they schedule from the delivery date: “if we deliver on the 5th and it takes two days to make, supplies must arrive on the 3rd.” A pull system passes the requirement to the packing department and they pass on their requirements to the next station back. Demand drives scheduling and ripples back to the order for materials. Hybrid systems recognize that the real world is not ideal. Some process take longer than others and all resources should be focused on that bottleneck. This theory is called Optimized Production Technology. It pushes from the bottleneck and pulls to the bottleneck.

    Theory Categories

    • Of the three systems, OPT is the least implemented, because it is the most recent. Pull systems are called “just in time” because materials are ordered just in time to meet demand. Japan's manufacturing success rested on just in time systems. Japan's culture gives it a distinct advantage in implementing just in time. The rest of the world has to rely on MRP.

    MRP Dominance

    • Western Europe and North America need safety buffers to account for industrial disputes and faulty supplies. Third Word and emerging economies cannot risk the just in time method because failure in utilities, such as electricity and transport systems, mean they are not operating in the perfect world. They have to rely on cheap labour for their competitive advantage. These are the reasons why MRP theory dominates most of the manufacturing processes in the world. Even small workshops run by artisans and uneducated entrepreneurs operate MRP without knowing it. It is the only reasonable method of manufacturing in an imperfect world.

    MRP Elements

    • MRP I assumes infinite capacity. MRP II includes capacity planning. Material Requirements Planning is just concerned with how much of each type of raw material go into each finished product. It's main source is the Bill of Materials. The BOM gives a flow of supplies and sub assemblies: Product A is made up of Part D, Part E and Part F; Part D joins together assembly K, L and M; assembly M needs four X, seven Y and one Z; and so on. The BOM maps the assembly line. MRP traces the assembly of an item from components to saleable goods.

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