Benefits of MRP
MRP denotes Material Requirements Planning and it is basically an inventory system that is designed to aid managers in arranging and placing orders. These orders are parts of finished products like raw materials, subassemblies and component parts.
1. Efficient planning tool
The main benefit of using MRP is that it is a very efficient tool for planning. This is because it is designed specifically to provide solutions regarding what is required, the quantity of raw materials and also when they are needed. If it is implemented and properly used, the MRP can assist production manages to plan effectively for capacity requirements as well as allocating production time.
2. Saves time
Another advantage of making use of MRP systems is the fact that they usually break down the inventory requirements to planning periods. This helps the production managers in minimizing inventory levels as well as the linked carrying costs. For that reason, production is much faster since there is proper distribution of production time. MRP is also beneficial in computing quantities required as the safety stock and planning for future needs.
3. Enhances customer service
If it is properly designed and controlled, the MRP enhances customer service through reducing late orders. This leads to increased production levels and it assists the company to respond quicker to any variations in demand.
4. Saves cost
The MRP makes it much simpler to formulate a good production schedule. As a result, it saves the manufacturing company from spending labor time doing the same activity. It also assists in determining the cheapest lot sizes, particularly when it comes to placing orders. Aside from that, the MRP system provides essential information that can be used in other production sectors as well such as determining the work force for the entire production process.
However, an MRP system is expensive to implement and it is time consuming. This is not the best option for small businesses.