Manufacturing Resource Planning - Everything You Need to Know About the Concept

The concept of Manufacturing Resource Planning (MRP II) is often discussed in this context. In this article, we therefore want to look at what this concept actually entails and how it can be used by production companies.

What is Manufacturing Resource Planning (MRP II)?

In Manufacturing Resource Planning (MRP II / MRP 2), all of a company's resources are included in the planning and optimization of processes. This includes, for example, the material requirements and capacities of the plant, but also information on the company's available personnel resources and financial capacities.

Forecasts and simulations are created on the basis of this comprehensive data set. In this way, Manufacturing Resource Planning enables long-term production planning, which is constantly adapted and strategically aligned on the basis of current sales data.  

From MRP I to MRP II - The Development

MRP II is, as the name suggests, a further development. The original “Material Requirements Planning” (MRP I) was conceived in the 1960s and was primarily used for pure material requirements planning in manufacturing companies. 

During the 1980s, this concept was further developed into MRP 2, which now also included resources such as capacity planning, personnel planning and financial planning. This also shifted the focus of the concept away from pure material availability and towards the holistic control of production processes.

Manufacturing Resource Planning later developed into the concept of Enterprise Resource Planning (ERP). This not only considered the resources of a company relevant to production, but also specifically included other business areas of a company (sales, etc.) in the planning.

Manufacturing Resource Planning in Outline

In simple terms, efficient planning of production processes is about ensuring that the right materials are available on site at the right time and in the required quantity. 

In order to ensure this, a few basic principles apply within the framework of materials management:

• Determining Requirements
  Based on current or previous orders and stock levels, the amount of materials required is determined.

• Inventory Management
  Existing stocks are taken into account to ensure that there are no sudden material shortages during production.

• Just-in-Time-Principle
  Goods / materials are ordered in such a way that they are available in time for processing so that storage costs are kept to a minimum.

• Capacity Planning
  Checking production capacities ensures that the utilization of machines / systems is as optimal as possible at all times.

The central components of a manufacturing resource planning system also include primary requirements planning (determination of all products to be produced) and secondary requirements planning (determination of all materials required for the production of these products).

Manufacturing Resource Planning – A Practical Example

Let's take an example to illustrate the role an MRP 2 system can play in the production of a product - in this case a car:

• Receipt of the Order
  The manufacturing company receives an order for the production of 1,000 cars of a certain model.

• Calculation of Material Requirements
  It is calculated which parts (body / engines / tires / electronics) are needed to fulfill this order.

• Checking the Stocks
  The system checks which and how many of these parts are already in stock.

• Ordering Missing Parts
  All missing parts are procured at a suitable time according to the calculation.

• Capacity Check
  At the same time, a check is made as to whether both the required production lines and the personnel are available in the time required for production.

• Production Release
  Once all these steps have been completed or fulfilled, the order is released and production can begin.

The final step in the process typically involves monitoring production and ensuring that the order is completed safely. If problems or discrepancies arise during production, they can be quickly identified and rectified.

Challenges in Material and Production Planning

Especially in the production of goods, there are a number of aspects that companies need to consider from an efficiency point of view. A manufacturing resource planning concept can help to meet precisely these challenges in a very targeted manner:

• Difficult Demand Forecasts
  For manufacturing companies, it is important to determine future demand as precisely as possible. However, due to a large number of influencing factors, this future demand is difficult to determine without an appropriate system.

• Non-transparent Supply Chains
  Companies often have neither a complete overview nor full control over all players along the supply chain. However, a lack of information can lead to sudden supply bottlenecks and thus to delays in production.

• High Inventory Costs
  The less predictable the market conditions are for companies, the more likely it is that larger stocks will have to be held or that overproduction will occur. This requires corresponding storage capacities and at the same time ties up large amounts of capital.

• Complex Production Processes
  Today's production processes are often highly complex and interdependent. Delays in individual areas can bring the entire production process to a standstill. The coordination of all these interconnected processes is of fundamental importance.

• Manual Processes
  Even today, many companies are still struggling with the fact that processes and workflows are not or not fully digitized and automated. As a result, a great deal of effort is spent on manual data maintenance in these areas. 

By relying on comprehensive production resource planning throughout their production, companies can effectively overcome these hurdles within their own processes. 

The Advantages of MRP 2 for Companies

If companies are able to integrate a Manufacturing Resource Planning system into their production, they will secure a number of advantages. The most important reasons for MRP II integration include the following points:

Optimized Resource Utilization

Manufacturing resource planning helps companies to use their own resources much more efficiently than before. This applies to systems as well as personnel and production materials.

Production facilities are optimally utilized wherever possible, employee capacities are planned in a targeted manner and the components required for production are available in the required quantities.

Reducing Costs

Precise planning ensures that all resources are available for each production project. This reduces the risk of possible production downtime to a minimum. 

At the same time, materials are procured in such a way that they can be used promptly and as completely as possible during production. This avoids unnecessary storage costs on the part of the company.

Optimized Adherence to Delivery Dates

Careful planning with the help of a manufacturing resource planning system enables the entire production process to be optimized for greater efficiency. Projects can be planned clearly and implemented within a reliable time frame.

At the same time, companies are able to make more accurate market forecasts with the help of MRP 2 and thus align their products precisely to the wishes/requirements of their customers as part of shopfloor control.

Better Database

By using an MRP 2 system, companies can make very precise calculations based on the current market situation and (expected) demand.

This information in turn forms the basis for a number of business decisions for which the manufacturing companies can now rely on reliable data. 

MRP and MES - Essential Synergies in Production

Whether Manufacturing Resources Planning is a panacea for preventing production obstacles of any kind must certainly be considered depending on the situation. The fact is that an MRP II system can be a valuable planning tool in manufacturing companies. 

It also requires powerful data collectors, such as MES tools. These are essential in order to create a reliable database, which ultimately makes MRP II concepts possible in the first place. Only a systematized and structured data basis that is available company-wide via interfaces and is included in planning enables comprehensive forecasting and planning.

MES Systems as the Basis for MRP II Concepts

Modern manufacturing execution systems therefore form the foundation for effective production management. MES solutions are available for companies of all industries and sizes in order to make the potential of digital transformation accessible to all companies. 

Industry-specific standards and individual adaptations are optimally balanced to cover a wide range of requirements. The systems integrate seamlessly into existing software landscapes and ensure smooth and loss-free data transfer with the leading ERP system. 

In this way, manufacturing resource planning concepts can also be applied and make long-term planning possible.