Manufacturating Resource Planning (or MRP2) - Around 1980, over-frequent changes in sales forecasts, entailing continual reajustments in production, as well as the unsuitability of the parameters fixed buy the system, led MRP (Material Requirement Planning) to evolve into a new concept : Manufacturating Resource Planning (e.g. MRP 2)^[1]

Manufacturing Resource Planning (MRP II) is defined by APICS as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP. Image File history File linksMetadata Size of this preview: 449 × 599 pixelsFull resolution (934 × 1247 pixel, file size: 240 KB, MIME type: image/jpeg) Manufacturating Resource Planning or MRP2 Around 1980, over-frequent changes in sales forecasts, entailing continual reajustments in production, as well as the unsuitability of the parameters... Image File history File linksMetadata Size of this preview: 449 × 599 pixelsFull resolution (934 × 1247 pixel, file size: 240 KB, MIME type: image/jpeg) Manufacturating Resource Planning or MRP2 Around 1980, over-frequent changes in sales forecasts, entailing continual reajustments in production, as well as the unsuitability of the parameters... APICS The Association for Operations Management, is a not-for-profit international education organization, offering certification programs, training tools and networking opportunities to increase workplace performance. ... This article or section does not cite any references or sources. ...

This is not exclusively a software function, but a marriage of people skills, dedication to data base accuracy, and computer resources. It is a total company management concept for using human resources more productively.

MRP II is not

Many items on this list can be part of an MRP II, but are not solely what it is.

• a computer system
• manufacturing control system
• inventory reduction plan
• complex
  • Some of the software can be complex, but the user interaction controls do not need to be.
• unique to a few industries

Purpose

MRP II integrates many areas of the manufacturing enterprise into a single entity for planning and control purposes, from board level to operative and from five-year plan to individual shop-floor operation. It builds on closed-loop Material Requirements Planning (MRP) by adopting the feedback principle but extending it to additional areas of the enterprise, primarily manufacturing-related.

Key functions and Features

MRP II is not a proprietary software system and can thus take many forms. It is almost impossible to visualise an MRP II system that does not use a computer, but an MRP II system can be based on either purchased / licensed or in-house software.

Almost every MRP II system is modular in construction. Characteristic basic modules in an MRP II system are:

• Master Production Scheduling (MPS)
• Item Master Data (Technical Data)
• Bill of Materials (BOM) (Technical Data)
• Production Resources Data (Manufacturing Technical Data)
• Inventories & Orders (Inventory Control)
• Purchasing Management
• Material Requirements Planning (MRP)
• Shop Floor Control (SFC)
• Capacity Requirements Planning (CRP)
• Standard Costing (Cost Control)
• Cost Reporting / Management (Cost Control)
• Distribution Resource Planning (DRP)

together with ancillary systems such as:

• Business Planning
• Lot Traceability
• Contract Management
• Tool Management
• Engineering Change Control
• Configuration Management
• Shop Floor Data Collection
• Sales Analysis and Forecasting
• Finite Capacity Scheduling (FCS)

and related systems such as:

• General Ledger
• Accounts Payable (Purchase Ledger)
• Accounts Receivable (Sales Ledger)
• Sales Order Management
• Distribution Requirements Planning (DRP)
• [Automated] Warehouse Management
• Project Management
• Technical Records
• Estimating
• CAD/CAM
• CAPP

The MRP II system integrates these modules together so that they use common data and freely exchange information, in a model of how a manufacturing enterprise should and can operate. The MRP II approach is therefore very different from the “point solution” approach, where individual systems are deployed to help a company plan, control or manage a specific activity. MRP II is by definition fully integrated or at least fully interfaced.

Benefits

Manufacturing Resource Planning is a well-established philosophy and set of techniques for managing manufacturing enterprises. For both MRP II and its predecessors there are many case histories of success in almost every conceivable industrial situation. Naturally individual enterprises notch up particular successes in specific fields, perhaps because they originally had serious problems in that area, or perhaps because they have special expertise, or perhaps because of championship by an individual.

Benefits can come at many levels, and in many forms. Some characteristic MRP II benefits are:

For Management:

• An accurate, consistent and effective way to run the whole business
• The ability to manage orderly growth
• The ability to cope with difficult economic conditions

For Management Information:

• Quicker, better information on which to base decisions
• Consistent information at all levels, in all departments
• Accurate records for internal and external use

For Sales / Marketing:

• Improved on-time deliveries to customers
• Faster, more accurate delivery promising
• Improved responsiveness to customer needs

For Production:

• Improved productivity and resource utilisation
• Increased throughput
• Better reliability of production plans

For Materials Management:

• Better control of inventories
• Improved scheduling
• Productive relationships with suppliers

For Design / Engineering:

• Improved design control
• Better quality and quality control

For Financial and Costing:

• Reduced working capital for inventory
• Improved cash flow through quicker deliveries
• Accurate inventory records
• Timely and valid cost and profitability information

Industry Specifics

MRP II systems have been implemented in most manufacturing industries. Some industries need specialised functions e.g. lot traceability in regulated manufacturing such as pharmaceuticals or food. Other industries can afford to disregard facilities required by others e.g. the tableware industry has few starting materials – mainly clay – and does not need complex materials planning. Capacity planning is the key to success in this as in many industries, and it is in those that MRP II is less appropriate.

References

See also

• CONWIP
• C-VARWIP
• Enterprise resource planning (ERP)
• Just In Time (business)
• kanban
• Manufacturing
• Material requirements planning (MRP)
• Scheduling (production processes)
• Supply chain management
• Distribution Resource Planning