MRP stands for materials requirement planning (MRP software) or manufacturing resource planning (MRP II software).
An MRP system helps companies gain control over their manufacturing materials and planning processes. Think of MRP software as manufacturing-specific accounting software. By tracking the resources spent on materials and manufacturing processes throughout the supply chain, companies can reduce spend and increase their profit margins while cutting waste.
Many companies that research MRP software hope to find a more feature-rich and manufacturing-specific alternative to general accounting software like Quickbooks. An MRP system fulfills a software sweet spot between a highly manual spreadsheet materials tracking system or and a fully-featured enterprise resource planning (ERP) software.
MRP software is generally considered to be a subset of ERP software, so the two share many features. MRP systems typically manage a small number of projects, and don’t include customer-facing features like marketing automation, email marketing, sales tools, or customer service help desks that many ERP systems include.
Production planning is a complex process that accounts for future market trends, past production loads, buyer intent and budget forecasts, and potential risks to the supply chain. MRP software combines historical information with forecasting numbers to build the right plan for a project’s production.
Sales order fulfillment features provide an interface for warehouse and manufacturing teams to gather products and fulfill orders. These features often include modules for warehouse picking, packing, and shipping facilitation. Look for warehouse layouts, right-fit boxes, and packing materials management features. The module may also include shipping tools that help determine the best shipping method or the shipping company with the best price for package weight and desired delivery speed.
Inventory management tools help bring down warehouse overhead costs and get a better understanding of how stock moves across different parts of the supply chain. While many companies invest in separate inventory management tools, they are also available within MRP systems.
When integrated within an MRP software, an inventory management tool magnifies the powers of the data produced by the rest of the supply chain. Within an MRP software, inventory management tools can use data from manufacturing, project, and historical sales data to forecast inventory needs more clearly.
Like inventory management tools, warehouse management software can help businesses run their warehouses more efficiently. An MRP system with warehouse management features will use data from several points along the supply chain to build pricing and delivery forecasts.
Supply chain management features manage how materials get to the factory for production.
Using data from materials and parts supply sources, the company can make calculated decisions about manufacturing rates, pricing and purchasing changes, and shipping charges.
Manufacturing companies have to invest heavily in research and development of new products to stay competitive. Project and portfolio management features within MRP software offer a place for companies to build and track the progress of new manufacturing projects. These tools include everyday project management features like tasks, due dates, and progress reports. They also connect with materials and manufacturing organizational tools such as materials pricing, supply chain data, and factory timetables.
Configure price quote (CPQ) software manages the purchasing and manufacturing rules and restrictions for highly customizable products. Combined with invoicing tools within an MRP, CPQ can significantly reduce the complexity and length of sales processes for manufacturing companies by simplifying the quoting process.
MRP software that includes customer relationship management (CRM) tools for contact management can use supplier, customer, and shipping information to improve supply chain efficiencies. These tools provide location data for suppliers that the company can then use to line up backup and overflow supplies, source warehousing for extra inventory, or dispatch sales to customers within a territory.
Analytics tools within MRP software bring the clarity of data visualization to complex data sets. Reports clarify long-term trends in historical data and drill down to pinpoint bottlenecks in the supply chain that require immediate action. Some MRP systems let companies set up alerts to receive notifications when supplies drop to a specified level, when shipping times rise above a set threshold, or other custom alerts.
Like any industry, technology advancements drive change within the manufacturing industry. The market trends listed here have the biggest effect on the current manufacturing industry and how MRP software manages manufacturing processes.
Software employs artificial intelligence (AI) when it decides business actions based on rules and restrictions that the company sets. AI processes have long been used to speed business decision-making in software products. But artificial intelligence and its more involved cousin, machine learning — which adapts rules based on new inputs — drive change in the manufacturing and supply chain industries.
MRP systems that currently employ machine learning combine weather patterns, changes in shipping and supply levels, and inventory saturation rules to make far-reaching decisions in manufacturing processes. Software helps these tools learn to respond to market changes that affect factory outputs, human resources needs, and supply.
MRP software increasingly uses the data produced by radio frequency identification (RFID) tagging and internet-connected smart devices to better understand the supply chain. These tools help manufacturers predict backlogs and bottlenecks in their supply, understand the exact routes their products take during shipping, and provide faster service by tracking individual assets across the system.
Business intelligence tools bring together data from several different sources to build data visualizations that help teams better understand their processes and analyze their data to improve efficiencies.
Manufacturing companies are producing more data points than ever from inventory management, shipping, RFID, IoT, supply chain, and factory tools that produce digital data points. Companies invested in data can analyze these data points using business intelligence tools to help their businesses run more efficiently and predict possible hiccups.
By connecting otherwise dispersed sourcing, procurement, manufacturing, shipping, and warehousing data, companies can gain insight into building greater efficiency into their production to decrease waste and overcharges, or improve processes. These reductions can increase profit margins without raising prices for end users.
Reducing waste isn’t just good for the environment — it’s good for business. Manufacturing companies who use MRP systems are more likely to find waste in their processes and work toward improving those processes. Less material waste means less money spent on supply and greater profit margins.
A single source of truth (SSOT) platform is valuable for companies of all industries, as it gives team members across the company a single view of processes and products. This helps manufacturing companies with traditionally siloed teams in supply, factory, stocking, and shipping departments.
An MRP software relies on up-to-date inventory, supply, and order information, which can greatly affect the product output. MRP systems require users to maintain oversight over their product levels in order to maintain accurate forecasts.
Over and under-estimating inventory causes the company to ship products late or increase manufacturing waste, which ultimately affects the ROI of the tool. Companies will find that using the latest IoT, RFID, and barcode scanning tech will help mitigate some risk of ordering mistakes.
Most MRP systems manage single jobs, so it’s difficult for them to provide insight into how multiple jobs affect one another. The system may miss discounts and price cuts visible in software systems like ERP that combine production data from several jobs.
Choosing your MRP software requires comparing several systems and making sure the one you choose has the right features and customizations for your industry and product needs.
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