This guest blog post was written by David Budiac, a managing partner at Software Connect.
For manufacturers, material requirements planning (MRP) software is one of the key elements to running a smooth manufacturing operation. From start to finish, MRP software keeps track of the materials your plant uses or needs to fulfill an order. This highly data-driven tool allows manufacturers to see a complete picture of their inventory of finished products, unfinished products, and raw materials, replacing estimation and guesswork with accurate and up-to-date information.
The manufacturing industry is littered with tools and processes that contain many different acronyms that sound similar but solve very different problems. It is crucial to understand the distinction between a manufacturing execution system (MES) software and MRP software: The MES handles the execution of the manufacturing process, and the MRP takes care of the planning. An MES keeps plant operations running as it coordinates actions between the office and the floor, and the MRP helps determine the overall inventory management operations. Both systems work together like the brain (MRP) and the body (MES).
To put it simply, MRP keeps track of everything used and built over the course of the manufacturing process, as well as any additional resources necessary to complete a product. MRP software helps eliminate manufacturing inefficiencies and shorten order delivery times through resource planning, machine scheduling, and labor load planning. By handling inventory management operations, MRP software tracks plant-side raw material, work-in-process, and finished goods to help improve task scheduling and lower operational costs. After calculating the material requirements, MRP software coordinates personnel, machine workloads, and plans purchasing to meet customer demand accurately.
Earlier this year, Software Connect put together a study of why manufacturers use MRP software. After reviewing nearly 200 discussions with manufacturers, it became clear that more than 70 percent of those we spoke to identified three top features that MRP software offers: purchase planning, demand forecasting, and master production scheduling.
1. Purchase planning
Identified as the top feature by 79 percent of respondents, purchase planning is one of the most useful aspects of MRP software. Purchase planning tools help manufacturers determine what materials they must purchase in order to build a completed product. By accurately planning and accounting for any resources a product may need, purchase planning allows manufacturers to ensure they have enough materials on hand to fulfill an order without missing a deadline.
Without purchase planning tools, manufacturers would be forced to rely on other methods of estimating future purchases that aren’t backed up by data accumulated through MRP software. Guesswork puts manufacturers in the position of either having too much of one material, which could end up becoming expired, wasted, or underutilized, and not enough of another material, adding frustrating delays to the manufacturing process. MRP software to manage purchase planning accounts for all of the materials your factory needs and keeps your purchasing on schedule.
2. Demand forecasting
The second-most desired feature of MRP software, demand forecasting helps accurately fill production orders based on dependent demand. Dependent demand identifies manufactured items that are dependent upon other manufactured items — a customer may place an order for a stereo, whose dependent demand requires components that go inside the stereo like speakers, wiring, and circuit boards.
Accurate demand forecasting is critical: By understanding current and future demand for products, manufacturers can staff and supply their warehouse with enough resources to fulfill orders. Demand forecasting also helps manufacturers stay on time, ensuring products get completed by their due date.
3. Master production scheduling
Manufacturers’ third-most required feature of MRP software is master production scheduling. Based on sales or service orders, master production scheduling creates a detailed plan of production to fulfill production needs demanded directly from customers or forecasts. By understanding how much of a product needs to be made, master production scheduling ensures adequate staffing, tooling, raw materials, and other resources are available for a production run.
Master production scheduling is key to keeping your manufacturing operations running smoothly. An accurate overview of your entire production schedule ensures that resources aren’t wasted and products are fulfilled on time. Inadequate production scheduling can have a domino effect on the entire production line, with just one inaccurate component, machine, or staffing need creating a bottleneck that leads to a delay in production.
Conclusion
No matter your specific manufacturing need, MRP software can help keep your factory’s resources on schedule and on budget. Tools like purchase planning, demand forecasting, and master production scheduling all contribute to a manufacturer’s bottom line, ensuring the right resources are on hand to fulfill any customer’s need.
Even though you’ve taken a look at three of the most desirable features, it’s also worth noting that MRP software can handle several other important tasks. From inventory reservation to equipment maintenance scheduling, MRP software offers manufacturers greater insight and control over their manufacturing process. What do you think are the most important features MRP software offers? Leave us a comment and let us know!
About the Author
David Budiac is a managing partner at Software Connect. At the start of 2018, David helped sample 183 conversations with manufacturers looking for MRP software to categorize and analyze buyer trends. In 2017, he helped survey 154 manufacturers to report on the current technology landscape and expected changes over the next three years. He and others at Software Connect have been helping manufacturers make informed investments in business software since 1996 by providing unbiased advice and recommendations.
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