Most manufacturing companies know that using a Material Requirements Planning (MRP) system can significantly improve their productivity. And setting up an MRP system is crucial for manufacturing companies for numerous reasons.
For one, it is technically a systematic approach to how an organization deals with inventory management. It prevents stock shortages, production delays, and decreased customer satisfaction. Plus, it can help companies manage their inventory efficiently and provide a better customer experience.
If you want to establish one in your company or organization, continue reading this article.
Table of Contents
- 1. Understand Your Business’s Unique Requirements For An MRP System
- 2. Ensure You Have The Necessary Data To Input Into The System
- 3. Evaluate The MRP System’s Capabilities And Limitations
- 4. Give Your Employees Some Time To Train First
- 5. Implement A Process For Maintaining The System
- 6. Be Ready Against Exceptions And Problems
- Conclusion
1. Understand Your Business’s Unique Requirements For An MRP System
Before setting up MRP systems, you must understand your business’s unique requirements. What works for one company may only work for one company. An MRP system should be tailored to meet the specific needs of your business.
Remember that MRP isn’t just an ‘app’ that counts everything in your inventory. It assists in various production and inventory management aspects—some may even provide reports and forecasts.
For example, you’re a computer shop that sells made-to-order (MTO) personal computers. Your MRP will operate differently than a computer shop selling already-built PCs as you operate in a make-to-stock (MTS) manner.
Depending on how your products and items go in and out of your inventory, you may want to choose or set up an MRP system that goes well with your operations.
2. Ensure You Have The Necessary Data To Input Into The System
To run an effective MRP system, you need to have accurate data. With accurate data, an MRP system can provide the desired results. Remember that your MRP system won’t do everything for you. With that in mind, secure copies of essential inventory documents and reports such as sales forecasts, production schedules, inventory levels, and bills of materials (BOMs) before you set up your MRP.
3. Evaluate The MRP System’s Capabilities And Limitations
Each MRP system has its strengths and weaknesses. Evaluate each system to determine which one will work best for your business. Make sure the system can handle your business’s production volume and has all the necessary features. Because of this, it’s essential to evaluate the capabilities and limitations of an MRP system before setting it up.
Take note that MRP systems have several features that can help streamline your business operations, such as inventory management, production planning, and scheduling. However, it’s also essential to understand the system’s limitations, such as the accuracy of the sales forecast and the system’s ability to handle unexpected demand changes.
4. Give Your Employees Some Time To Train First
One of the biggest challenges among growing businesses is employee recruitment. And if you’re in the midst of trying an MRP, you would want to skip that temporarily as you may need to prioritize training your current employees first.
While there are a few popular MRPs, some may offer similar functionalities but may have different user interfaces. Fortunately, most providers often provide their clients with in-depth tutorials and training materials to get their people well-versed with their products.
Remember that an MRP system is only as good as the people using it. It’s important to make sure that your employees are already capable when it comes to using the system. They should know how to input data, run reports, and troubleshoot issues.
5. Implement A Process For Maintaining The System
To be honest, the word ‘maintain’ can be a bit vague if it’s about MRP. Particularly, the proper term would be auditing. Hence, don’t forget to double-check if your system has accurate data, as an MRP isn’t immune or infallible to human error.
Also, always check with your MRP provider for recent news and updates regarding their product. You should ensure that your system is up to date with patches that protect you against cyberattacks and bugs.
6. Be Ready Against Exceptions And Problems
Even the most well-designed MRP system can encounter exceptions. Have a plan for dealing with stockouts, delays, and other exceptions. Your plan should be flexible and able to adapt to changing circumstances.
For example, you may have a supplier that never fails to deliver on time, which makes you automatically include the items you need from them in stock even if the materials aren’t in your inventory yet. If those supplies from them suddenly get delayed, that’s an exception you need to deal with, as your system may still assume that you already have them in stock. Be sure to prepare yourself for this kind of event.
Conclusion
Setting up an MRP system can help manufacturing companies and some select businesses improve their productivity and customer satisfaction. Taking note of the points mentioned above can help you reap all the benefits an MRP system can offer.
Remember that if you’re looking to set up an MRP system, take the time to evaluate your business’s unique requirements and choose a system that meets those needs. With the right system in place and proper training, an MRP system can help you improve your inventory management and increase your bottom line.
