MRP (MATERIAL REQUIREMENTS PLANNING) and MRP2 (MANUFACTURING RESOURCES PLANNING)
Production control systems often sound dauntingly technical and complicated. However, the need for a system like MRP can be explained with a simple analogy (Slack et al. 1995). Imagine that in 4 weeks time you are hosting a party for around 40 guests. You have decided to provide beer, wine and soft drinks plus sandwiches and savoury snacks. Putting all of this together on the night would involve some planing and production control. First, you would need some simple estimates of your guests' preferences for red or white wine, beer, fruit juice etc. . Before shopping for these items, you would take into account what you already had in stock in the house. Again, shopping for the food at the party would involve identifying from your food recipes what ingredients were required to make up the various dishes (subtracting what you already have from your shopping list).
Then as well as specifying the quantity of your needs for materials and ingredients against likely demand, you also need to think about the sequencing of the cooking and preparation. You can't do everything on the night, so you might choose for example to do some of the cooking a week before and then freeze the results. This might mean shopping for some ingredients first, leaving others till later. In short, to organize a party, you need to plan and control your acquisition of materials and your process of production. You need to make decisions about the quantity and timing of the purchasing and production of different ingredients, based on forecasts of the numbers coming to the party and your recipes for making the finished products.
Although a production process is much more complex than organizing a party, production control systems like MRP are designed to address similar problems. Figure 1 is a general model of a manufacturing planning and control system. It breaks activities into a front end, an engine, and a back end. The front end produces the master production schedule (MPS) (the equivalent of food and drink at the party). The MPS plans the production of the goods offered to customers over a given planning horizon. The back end handles factory scheduling and manages materials from suppliers (this equates with bringing home the shopping and planning cooking and preparation). Material requirements planning (MRP) is the core of the engine. It takes a period-by-period set of MPS requirements and (in the way our food recipes produce shopping lists) generates a related set of component and raw materials requirements. MRP is the detailed plan for the components required to enable the MPS to be fulfilled.
As well as the MPS, MRP has two other inputs. A bill of material (BOM) shows, for each part number, the associated component part numbers. Thus for a dining room table, the BOM would show that a top assembly and four legs were required. The BOM for the top assembly would show that two end panels, a sub frame, and two leaf inserts were required. The BOM for the legs would show that solid timber stock and associated hardware kits (screws and castors) were required. Inventory status data (the third input into MRP) would indicate how many legs or leaf inserts, etc., were on hand, how many of those were already committed for production, and how many hardware kits had been ordered. This would then allow the requirements for further table production to be worked out.
MRP data thus make it possible to generate a time-phased requirement record for any part number. This data can also drive the detailed capacity planning modules. This is a massive computational task, only made possible by the use of modern computers.
MRP plays a central role in material planning and control. It translates aggregate plans for production into the individual steps necessary to realise those plans, and generates data to develop capacity plans. It also provides links to the shop floor and vendor systems that accomplish production. MRP is therefore the natural starting point for many companies to computerise their overall production control.
With sufficient computer power, sophisticated MRP systems can provide continual updates of the various component and materials requirements to match changing circumstances. This enables better priority-setting and fine-tuning of shop-floor operations. Better capacity planning procedures can also be incorporated. As well as managing material flows, these enhanced systems can allocate resources such as machinery and personnel more efficiently. They can also include financial details. Simulation techniques allow the examination of various "what if" scenarios. Such enhanced systems are less narrowly focused on manufacturing planning and control. They are clearly more company wide. Indeed, their scope is so much wider than the original concepts of MRP, that the guru Oliver Wight coined a new term - MRP2. This stands for "manufacturing resource planning".