What is Materials Requirement Planning?

Materials requirement planning is a method of managing stock in a manufacturing business. The cornerstones of these processes are having material on hand when they are needed, possessing the lowest sitting inventory possible without missing an order and coordinating deliveries and shipments. The processes involved in materials requirement planning are vital to the success of many manufacturing businesses.

The process begins before materials come into the business and lasts until after they leave. The scope of these processes make them touch on nearly every aspect of the manufacturing field. Everything done by the company is in some way tied back into the planner’s job.

The first step is planning the arrival of new raw materials and parts. The object of this step is to ensure that the materials arrive just before the current supply runs out. That way, the workers have a small amount of time to feed the new materials into the system, but no materials sit around unused. This step requires the planners to set up deliveries and look for the best supply companies possible.

The next step is ensuring that the processes used by the company are efficiently using the materials purchased. Slight changes in production may reduce waste, and less waste means more profit. In this situation, the planners are looking for different methods for using existing resources.

After goods are manufactured, it is time to sell them and ship them out. At this stage, the planner works closely with the sales and marketing departments to find out exactly what is being sold versus how much is being made. The planner’s job is to make sure that output is as close to sales as possible and account for highs and lows that may be coming before they arrive.

The last step in materials requirement planning is ensuring that the finished goods arrive when they are supposed to. This requires the planner to work closely with the shipping department. In this case, it is important that goods arrive intact and on time for the lowest possible cost.

Since there are many areas involved in materials requirement planning, there are several software systems to help with the processes. In the mid-80s, several types of assistant software came on the market. These planning programs allow people to work through entire production processes, often with the help of barcodes and routing numbers. This reduces much of the paperwork for these steps and frees up the planners to look for more profitable alternatives to current systems.