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Material Requirements Planning (MRP) is a type of software based production planning, which uses an inventory system to organize different manufacturing processes. Basically when a company is going to manufacture something to sell, this software is in charge of organizing all inventories, while making sure that all the products and materials are in place in order for this to be possible. This is important for any kind of company that is using an assembly line or making something that requires a lot of different pieces in order for it to be completed.
There are three basic components that make up material requirements planning. The first is to make sure that all products and materials are all in line. In order for successful production, all the products have to be there. The second component a company needs to keep tabs on is making sure they have very low inventory. Companies want to be able to produce their product whenever they needed, but they do not want to have too much in excess in case the product should fail to sell. This is the concept of supply and demand. The third component is planning the manufacturing scheme. Companies need to know what exactly is getting produced by their company and where exactly it is being shipped to.
Companies are trying to maximize the amount of money they bring in so there needs to be a good balance between the inventory of materials and being able to meet the demand of the customers. If companies do not have the right balance then they will cost the company big dollars. Other important factors of material requirements planning involve ordering all the material's at the right time. If production can not begin at the right time, a company may fail to meet the deadline.
The main problem with MRP systems is that they are not 100% perfect. If there is any kind of error in the system, then it is going to throw off all the other numbers thus making the outputted data incorrect. Another problem is that MRP systems do not necessarily factor in other warehouses in other cities or states. Therefore, the system will tell you that you do not need to order anymore parts when in fact those parts are in other factories. The last and biggest factor that the MRP system can not take into consideration is manpower. Manpower is not consistent like a machine and thus creates inaccurate numbers. You can visit You Http://www.mrp-software-guide.com for more information on material requirements planning.
Material requirements planning can be done by humans but it will take a much greater deal of time versus having computer software that's sole purpose is for maximizing the profits do all the work. Since there are flaws in the system, an MRP system can only be 98% accurate due to the inability to factor in certain variables. As great as an MRP system is, there are still factors that can not be fixed. There is new system (MRP II) that has new improvements but will still never be perfect. In the end, there will have to be a mix between the MRP system and human projections in order to get the most accurate numbers to maximize profit.
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Source by Kelly Hunter