Material Requirements Planning (MRP) software is a collection of integrated software modules that seek to improve manufacturing efficiency by reducing inventories and minimizing the operational costs of producing it. The software modules for MRP, or the second generation of software MRP II, were strictly defined by the American Production Inventory and Control Society (APICS) to include the following functions: “business planning, production planning, master production scheduling, material requirements planning, capacity requirements planning and the execution and support systems for capacity and material.” Most vendors of this type of software translated these into linked software modules for General Ledger, Accounts Receivable, Accounts Payable, Customer Order Management, Bills of Material Processing, Master Production Scheduling and Capacity Planning, Inventory, Purchasing/Receiving, Material Explosion, and Shop Floor Control.
Essentially MRP II focuses on obtaining the needed material within expected time frames so that work orders can be sent to the shop floor for production execution. For make-to-order manufacturers, this means maintaining inventories of raw or in process materials so as to produce the product to customer time and cost expectations. Manufacturers who produce to stock will initiate manufacturing orders based on forecast and on-hand physical inventory. In either case, raw materials are purchased, received and put into production in an expected time to produce inventory to stock or to customer order. Work orders are released to the shop floor based on a production schedule taking into account plant capacity. These orders are then tracked and costs are accumulated during the manufacturing process.
Enterprise Resource Planning Systems (ERP) includes MRP systems in a less structured environment, with additional management modules that may include functions for Quality, Configuration, Engineering and others. Additionally, ERP systems evolving a software generation later will have a database which integrates all the application modules and is programmed in a modern programming language with an up-to-date user interface.
Master Production Scheduling (MPS) is an essential component of MRP. MPS is a detailed display of what the plant must produce to meet customer orders or a forecast. It considers all management goals and takes into account production capacity, promised delivery dates and material availability,
All industry segments require accounting modules that are integrated and function under generally accepted industry practices. Some manufacturers, such as aerospace, require granularity to control activities based on costs accumulated by contract. Others such as assembly operations, without fabrication, will require less cost controls due to lack of need to monitor scrap. All modules in the financial area need to have strong audit controls to ensure system integrity.
For discrete manufacturers, engaged in job shop production, a heavy emphasis will be placed on production scheduling, capacity planning and shop floor control. Assembly operations require an efficient supply chain to obtain piece parts.