From Material Requirement Planning (MRP) to ERP

material requirement planning


Material requirement planning (MRP) was developed by Joseph Orlicky, an IBM engineer. It was in 1964, where they used mainframe computers to study the model for the lean production methodology in the Toyota Production System. This is the start of a newly improved and innovative way of increasing the company or business productivity

Material requirements planning (MRP) is a computer-based system for inventory management. Aside from increasing productivity this also aids in the efficiency of the workflow processes in the given workplace. A number of companies already engaged in utilizing material requirements planning systems to estimate or calculate quantities of raw materials and components needed for manufacturing and schedule their production, purchase, and deliveries. 



Is Material Requirement Planning the same as in Lean Production?


It is crucial for everyone to understand that MRP and lean production are different, though MRP can help with the latter. MRP is considered a “push” production planning system because the company will not do the inventory in advance if there’s no demand from the purchaser, meanwhile lean is a “pull” system in which nothing is made or purchased if there is no proof of actual — not forecasted — demand.

Material requirements planning (MRP) usually bounded to answer three questions “What is needed? How much is needed? When is it needed?”. This system uses information from the Bill of Materials (a comprehensive list of materials used, subassemblies, and other components needed to manufacture a product, along with their quantities). It also utilizes inventory data and the master production schedule to analyze the required materials and when they will be needed during the manufacturing process. By construing raw data such as bills of lading and shelf life of stored materials, this software provides the managers with eloquent information to determine their need for labor and supplies. 

In 1983, management expert Oliver Wight developed an extension of MRP called the manufacturing resource planning (MRP II). This is a widened concept of the planning process to include other resources in the company. 

In 1990, the analyst firm Gartner coined the term Enterprise Resource Planning (ERP) to represent another more expanded and comprehensive type of MRP II that took into account other major functions of a business, such as accounting, human resources and supply chain management, managed all by a centralized database. 




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