MRP Planning Process
Complete guide to Material Requirements Planning: running MRP, analyzing recommendations, and converting plans to purchase orders and work orders.
What is MRP?
Material Requirements Planning (MRP) is an intelligent system that calculates what materials you need, how much, and when. It considers:
Demand Sources
- • Sales Orders (confirmed demand)
- • Forecasts (projected demand)
- • Min-Max levels (safety stock)
- • Work Orders requiring materials
Supply Sources
- • On-Hand Inventory
- • Open Purchase Orders
- • Planned Work Orders
- • In-Transit Inventory
MRP then generates action messages - specific recommendations on what to buy or make, and when.
MRP Process Overview
Run MRP
Review
Adjust
Convert
Step 1: Run MRP Calculation
Navigate to: Planning → MRP Dashboard
Running an MRP Calculation
- Click "Run MRP"
- Set Planning Parameters:
- Planning Horizon: How far into future (days/weeks/months)
- Sites to Include: All sites or specific sites
- Items to Include: All items, specific category, or individual items
- Include Safety Stock: Yes/No
- Reschedule Existing Orders: Allow MRP to suggest date changes
- Click "Calculate"
- MRP Processing:
- Explodes BOMs to calculate component requirements
- Offsets by lead time to determine order dates
- Checks on-hand and on-order quantities
- Calculates net requirements
- Generates planned orders
- Creates action messages
- View Results: Dashboard shows summary of recommendations
Run MRP Regularly
Best practice: Run MRP daily or weekly. More frequent runs give you better visibility into material needs and allow proactive ordering.
Step 2: Review MRP Recommendations
Understanding Action Messages
MRP generates specific recommendations (action messages) for each item:
Create Purchase Order
When: Item is purchased ("Buy") and quantity needed exceeds available supply
Shows: Item, Quantity needed, Required date (offset by lead time), Suggested supplier
Create Work Order
When: Item is manufactured ("Make") and quantity needed exceeds available supply
Shows: Item, Quantity to produce, Start date (offset by lead time), BOM and Routing to use
Expedite
When: Existing PO or WO is scheduled too late to meet demand
Action: Contact supplier to expedite delivery or increase priority on work order
De-Expedite
When: Existing PO or WO is scheduled earlier than needed
Action: Delay delivery to better match cash flow and reduce carrying costs
Cancel
When: Previously planned order no longer needed (demand cancelled)
Action: Cancel PO with supplier or cancel planned work order
Step 3: Analyze Supply and Demand
Navigate to: Planning → Supply/Demand Analysis
Reviewing Item Details
- Select an Item from MRP recommendations
- View Time-Phased Display:
- Shows supply and demand by time period (day/week)
- Demand: Sales orders, work order components, safety stock
- Supply: On-hand, POs, WOs, planned orders
- Projected Available: Running balance
- Identify Issues:
- Negative projected available = shortage
- Large positive = excess inventory
- Check if lead times are realistic
- Verify demand is accurate
- Make Adjustments:
- Modify planned order quantities
- Change dates if lead time was wrong
- Delete planned orders if not needed
- Add manual planned orders if needed
Review Before Converting
Always review MRP recommendations before converting to actual orders. MRP is a tool - use your business knowledge to validate.
Step 4: Convert Planned Orders
Creating Actual Orders from MRP
Converting to Purchase Orders
- Select Planned Purchase Orders from MRP dashboard
- Review Details:
- Item, Quantity, Date
- Suggested supplier
- Estimated cost
- Select Orders to Convert (can batch process multiple)
- Click "Convert to PO"
- System Creates:
- Purchase order in Draft status
- Groups items by supplier
- One PO per supplier with multiple lines
- Review and Submit POs through normal PO approval workflow
Converting to Work Orders
- Select Planned Work Orders from MRP dashboard
- Review Details:
- Item to manufacture
- Quantity to produce
- Start and due dates
- BOM and routing to use
- Select Orders to Convert
- Click "Convert to WO"
- System Creates:
- Work order in Draft status
- Material requirements from BOM
- Operations from routing
- Scheduled dates calculated
- Release Work Orders to shop floor when ready
Automatic Netting
Once you convert planned orders, MRP automatically "nets" them in the next run - they become supply and reduce future requirements.
Important MRP Settings
Navigate to: Admin → Planning Settings
Item Master Settings
For each item, configure:
- Make or Buy: Determines if MRP creates POs or WOs
- Lead Time: Days to procure/manufacture
- Min/Max/Reorder Point: Safety stock levels
- Lot Size: Fixed, lot-for-lot, EOQ, multiples
- Planning Method: MRP, Kanban, Manual
Planning Fence
Number of days where MRP won't suggest changes to existing orders (frozen zone). Prevents constant rescheduling.
BOM Settings
Ensure BOMs are accurate and active. MRP uses active BOMs to explode requirements. Inactive or draft BOMs are ignored.
MRP Best Practices
Run MRP Regularly
Daily or weekly runs keep you ahead of material needs. Don't wait until you're short.
Maintain Accurate Data
MRP output is only as good as input. Keep BOMs, lead times, and inventory counts accurate.
Review Before Converting
Don't blindly convert all recommendations. Apply business judgment to MRP suggestions.
Use Safety Stock Wisely
Set safety stock on critical items with variable demand. Don't over-buffer - it ties up cash.
Monitor Exception Messages
Pay attention to expedite/de-expedite messages. They highlight schedule issues early.
Close the Loop
Record receipts and completions promptly so MRP has current supply information.
Common Scenarios
New Sales Order Received
Run MRP to see impact on material requirements. MRP will recommend purchases/production to fulfill the order.
Order Cancelled
Run MRP after cancellation. System may recommend cancelling or de-expediting related supply orders.
Supplier Delay
Update PO due date. Re-run MRP. System will show which customer orders are impacted and suggest alternative actions.
BOM Change
After updating BOM, run MRP. New component requirements will appear. Old components may show excess.
Related Guides
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