What is Manufacturing Resource Planning?

Manufacturing Resource Planning

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Manufacturing Resource Planning

Manufacturing Resource Planning (MRP II) is a method that helps manage a company’s resources throughout the entire manufacturing process, extending beyond the original Material Requirements Planning (MRP) to include areas like shop floor and distribution management, project management, finance, and human resources.

MRP II is a type of computer-based system which takes the overall forecast for finished products and breaks it down into time-phased plans for the subassemblies, components, and raw materials required to produce the final product within the established schedule.

Components of an MRP II system typically include:

  • Master Production Scheduling (MPS): This is a plan for the production of individual end items.
  • Bill of Materials (BOM) : This is a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the quantity of each required to produce an assembly.
  • Inventory Records: These files include detailed info on all items that the system oversees.
  • Purchasing Management: This helps to ensure that all necessary materials, parts, and assemblies arrive at the company when they are needed.
  • Capacity Requirement Planning (CRP): This checks the company’s ability to produce as per the MPS.
  • Financial Management Interfaces: These systems help to keep track of costs and other financial considerations.

The aim of an MRP II system is to provide consistent information to all those who are part of the operational process, allowing the various functions and departments to plan and control the manufacturing process. It supports effective decision-making processes about the allocation of resources, reducing waste and increasing efficiency.

Example of Manufacturing Resource Planning

Let’s consider a hypothetical company that manufactures bicycles, called “Cycles Inc.”

  • Master Production Schedule (MPS): Let’s assume that Cycles Inc. has received orders and predicts a demand for 500 bicycles for the upcoming month.
  • Bill of Materials (BOM): To manufacture a bicycle, they require one frame, two wheels, one seat, one handlebar set, two pedals, and one set of gears and brakes. Each of these components might further consist of smaller parts.
  • Inventory Records: Cycles Inc. reviews their current inventory and finds they have 300 frames, 450 wheels, 350 seats, 300 handlebar sets, 400 pedals, and 350 gear and brake sets.
  • Purchasing Management: After reviewing the BOM and current inventory, Cycles Inc. decides they need to order an additional 200 frames, 550 wheels, 150 seats, 200 handlebar sets, 100 pedals, and 150 gear and brake sets to meet the demand for 500 bicycles.
  • Capacity Requirement Planning (CRP): The company then assesses their production capacity. They realize they can assemble 20 bicycles per day given their available staff and hours of operation. Thus, to assemble 500 bicycles, they would need 25 working days. If the demand was for the upcoming month, and they only have 22 working days in that month, they would need to consider options like overtime or additional hiring.
  • Financial Management Interfaces: The financial systems would calculate the cost of the additional materials to be ordered, labor costs, overhead costs, and compare this with the expected revenue from selling 500 bicycles. This would help in evaluating the financial viability of the production plan.

MRP II would integrate all these steps into one system, providing a comprehensive plan for manufacturing the required bicycles, taking into account the material requirements, production capacity, and financial implications. It would also allow Cycles Inc. to adjust and recalibrate their plans as needed based on any changes in demand or resources.

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