What is Material Requirements Planning?

Material requirements planning (MRP) is a computer-driven production scheduling and inventory management system. It uses bills of material, inventory records, and a production schedule to forecast and order materials, so that those materials needed for scheduled production are available in the correct quantities and on the correct dates. The system optimizes the flow of materials through a "push" production system. However, the data integrity of the data inputs must be high, or else the outputs from the system will be incorrect.

A more advanced version of MRP is manufacturing resource planning (MRP II).

Advantages of Material Requirements Planning

There are several advantages to using an MRP system. One is a massive increase in the efficiency of the production process, since materials are always available when and where they are needed. Second, the system reduces purchasing costs, since the system automatically handles inventory monitoring, bringing exceptions to the attention of buyers. Third, an MRP system forces a business to maintain tighter control over its inventory, so that it knows the exact quantity and location of all inventory at all times. Finally, an MRP system eliminates production bottlenecks, because the system allows planners to monitor where constraints in the system might cause blockages, and correct them in advance.