MRP stands for Material Requirements Planning.
MRP is an inventory control and production planning system (usually sofware) that allows a company to managing their manufacturing process.
Material Requirements Planning or MRP is an important business tool to help organizations plan manufacturing, purchasing, and delivery activities in order to maintain optimal inventory levels. If you purchase too few quantities of an item you used in your manufacturing process you risk not being able to supply products on tie or meet contracts. If you purchase too many quantities of an item it wastes money by typing up cash in excess stock, or risk that it may never be used at all.
SAP Business One Built-in MRP
SAP Business One comes out-of-the-box with built-in MRP.
The MRP functionality with SAP Business One will let you determine what items are required, how many, and when by generating for you a recommended production schedule and a recommended purchasing schedule.
Key Features of SAP’s MRP
- Calculates minimum inventory level
- Tracks the dates at which an item must be available at the factory
- Bill of materials
- Calculates inventory and demand
- Generates suggested purchase orders
- Generates suggested production orders
- Forecasts quantities needed
- Factors multiple warehouses
- Order intervals can be set up to consolidate purchases of like items
- Minimum order quantities and order multiples
- Quantity and order discounts
Benefits of SAP’s MRP
- Saves money by not tying up cash in extra stock that isn’t needed
- Inventory levels can be reduced since you know better what you need
- Helps avoid inflating inventory
- Reduces procurement costs by consolidating purchases
- Know right away if you can fill a big order
- Items, inventory, and production are linked to master data record
- Replaces informal production scheduling with structured process that better utilize data
- Provides just the right balance between automation and hands-on control
Screenshot of the MRP Menu in SAP Business One