Insights

MRP II is essentially an automated system for planning all resources of a manufacturing or retail enterprise, including planning in physical units, financial planning in value terms, personnel planning, and elements of market situation modeling.

A fully functional MRP II system contains the following 16 software modules:

A MRP II software product, according to standards approved by APICS (American Production and Inventory Control Society), includes the following 16 functions:

Sales and Operation Planning;

Demand Management;

Master Production Scheduling;

Material Requirements Planning;

Bill of Materials;

Inventory Transaction Subsystem;

Scheduled Receipts Subsystem;

Shop Flow Control;

Capacity Requirement Planning;

Input/Output Control;

Purchasing;

Distribution Resource Planning;

Tooling Planning and Control;

Financial Planning;

Simulation;

Performance Measurement.

It is crucial to pay attention to the feedback functions in an MRPII system. 

For example, if suppliers are unable to deliver components on time, they should send a delay report as soon as they become aware of the problem. Typically, a typical company has a large number of overdue orders with suppliers. However, the dates of these orders typically do not adequately reflect the actual need for these materials. In companies managed by MRPII systems, delivery dates are as close as possible to the actual need for the supplied materials. Therefore, it is crucial to alert the system to potential order problems in advance. In this case, the system must generate a new production capacity plan in accordance with the new order plan. In some cases, where order delays are common, the MRP II system defines the volume.

MRP II integrates a large number of individual modules, such as business process planning, material requirements planning, production capacity planning, financial planning, investment management, etc. The results of each module are analyzed by the entire system, which ensures its flexibility in response to external factors.

MRP informs about purchase order fulfillment dates, helping plan payments to suppliers. MRP/CRP provides information on the number of key production personnel, hourly rates and time standards for process operations (in the description of process routes), possible overtime, etc. All this is necessary for the company to meet its wage payment obligations. Finally, MRP II reports on the volumes and delivery dates of products to customers, allowing for cash flow forecasting.

The most important function of MRP II is to provide financial decision makers with all the necessary information. Combined planning of financial flows and production capacity in MRP II allows for the precise determination of the financial results of the generated production plan, which is impossible with partial planning.

Furthermore, the MRP II system is capable of adapting to changes in the company's external environment and forecasting situations.

The MRP II methodology describes the end-to-end planning and management of the sales-production-warehouse-supply chain. Unlike previous planning methodologies, it focuses on the operational planning and management of the entire production process, rather than its individual components.

The MRP II methodology aims to address the following key objectives:

Create a master production schedule (MPS), outlining what and in what quantities the company will produce in each period of the planning period. On the one hand, this plan must take into account the existing order portfolio and market research to ensure timely customer satisfaction, but also avoid producing excess product that will then sit in the warehouse for a long time, waiting for its buyer. On the other hand, the plan must be feasible given the company's current asset structure (production capacity, personnel, financial resources). Striking a balance between meeting market demand and the feasibility of such a production program is very important.