What is Material Requirements Planning?
Are you spending a lot of time updating and utilizing spreadsheets to determine how much raw and packaging to order? Does your business carry more material than necessary to meet demands for your product? Or does your business struggle with the latter, and you have a deficiency in raw materials which causes stockouts and decreased ability to fulfill orders?
If your answer is “yes” to the above, it’s possible that your business is tying up cash that could be utilized in other areas of the business, and/or you have the inability to meet demand because of insufficient materials.
This is where Aptean Food and Beverage ERP and Microsoft Business Central integrated Material Requirements Planning (MRP) can really add value, providing solutions to the above. When properly configured, your Aptean ERP provides a supply planning method that balances supply and demand. This enables an optimal level of inventory to meet the demands of production and ensures the optimal delivery of the right product(s) on time. Read more about how the proper Material Requirements Planning integration can set your business up for optimal success.
Material Requirements Planning
Material Requirements Planning (MRP) is a supply planning system set in place for businesses to assist and streamline inventory requirements while balancing supply and demand. MRP systems are great when it comes to supply chain management since they assist in efficiently managing inventory, aid in scheduling production, and support delivering the correct product on time at the best cost.
Pain Points in your Business
As we mentioned in the introduction to this blog, there are usually two main pain points that we see within businesses when it comes to a lack of a good MRP system in place. Firstly, the company carries more raw materials than needed to meet demand. Secondly, the latter comes into play, and there is a deficiency of raw materials that causes stockout which in return prevents fulfilling orders.
With the current state of today’s supply and demand issues, the possibility of increased pain points within your business is inevitable. MRP supply planning methods can help alleviate these pain points to help balance supply and demand more effectively.
When your MRP is integrated with your Aptean ERP successfully, you gain full visibility to your business’s materials and in return better evaluate your inventory levels, minimizing costs while maximizing profits.
Prerequisites For Success with Your MRP
Aptean Food and Beverage ERP provides integrated Material Requirement Planning that when leveraged will set your business up for success. MRP systems allow you and your team to plan and schedule production efficiently. When this system is set up you can ensure all materials are accessible setting up production efficiently. We find a large part of production scheduling thrash can be due to stockouts of critical raw materials. MRP provides a really powerful solution but there are several areas that have to be in place to use it successfully. These include:
Accurate Inventory: A real-time/perpetual inventory system must be in place. This means receiving the product as it arrives, issuing materials to production when consumed, recording shipments as they depart, properly managing expirations, and having a good cycle counting program in place.
Accurate Bill of Materials: The bill of materials indicates the items and amounts necessary to produce a product. MRP uses the bill of material to determine the ratio of inputs required for a specific production order and then sums up all of the raw material requirements across a set of production orders to then be used as input to a purchase order. If the BOMs are not accurate then raw material requirements won’t be accurate.
Accurate Lead Time: We all know that it takes our suppliers time to respond to purchase orders. We need reasonable lead times defined for all the suppliers to ensure that the raw materials are ordered in time to meet production demands. If the lead times are longer than the required lead time for production then we need to look at forecasting(insert link).
Proper Material Policies: Settings in the MRP module tell the planning engine how to determine the amount of raw material to order. For some items, it makes sense to have demand calculated from the scheduled/planned production orders. For other items with longer lead times, it may make sense to utilize reorder points. Another option is to drive purchases directly from a forecast.
How Adroit Can Help
With the proper MRP, your supply planning method will help balance supply and demand allowing for more efficient inventory tracking, production scheduling, and more. Connect with our team today to see how we can help you to establish the MRP prerequisites and to leverage the power of Aptean Food and Beverage ERP material requirements planning.