MRP stands for Material Requirement Planning whose main function is to provide guarantee to deliver materials on time. The main objective of MRP is to plan the supply on the basis of requirements raised, determining the status of the current stock and meet the shortages.
In MRP recommendations on the basis of the current state of transactions are made for purchases and productions orders.
Material Requirement Planning helps determine the quantity and items to be purchased which will act as resources for the item being manufactured. This determination is done at various phases of the manufacture of the item. This process can take place on the basis of the Order Recommendation Report. This report allows you to automatically create production orders as well as purchase orders. If required, you can even outsource items, such as changing a production order to a purchase order.
SAP Business One has a feature of suggesting the orders rather than placing them automatically. These suggested orders can be improved once experts perform inspection.
How you can build a perfect material requirement plan?
- MRP wizard – There should be a user-friendly wizard to help you out in managing material requirements for future usage. Later, it should help by recommending how you should purchase as well as what are the steps that should be taken during manufacturing.
- Providing recommendations – A perfect MRP should always offers appropriate recommendations, such as what are the supply and demand sources, what are existing stock level, how you should plan production orders, what are the actual sales orders, what are the forecasted orders, what is the minimum stock levels, etc.
- MRP results – The MRP should display MRP results, suggestions, as well as exceptions in a proper screen where you can sort, filter, and drill-down through various information.
- Finally, the wizard should allow MRP to be run any-time to explore the various purposes.
A good MRP will have the three key functions. First, it should help ensuring that the required materials are available for production and the necessary products are available for customers to avoid any types of shortages. Secondly, MRP helps in reducing waste as it maintains the minimum stock levels. Last but not the least, it helps in planning manufacturing functions, meeting delivery deadlines and purchasing production items. For a successful MRP, data integrity is very important. Make sure you input the accurate information else you might get stock errors.