Manufacturing Resource Planning 101: Difference Between MRP I & MRP II

Manufacturing Resource Planning 101: Difference Between MRP I & MRP II

Effective planning is the key to a long-term and sustainable growth of any business entity. Before implementing business strategies, there should be a well-designed plan which can answer all the what-if questions that will be raised during the brainstorming stage. Particularly in the manufacturing industry, all resources should be accurately calculated, strategically planned, and properly utilized. These factors will be the basis of productivity, considering all the business segments which include the operations sector and production team, and the management itself. This is also an indication of the management’s efficiency in decision-making.

The most accurate recording of management strategy was developed in the 1960s through the first ever commercial database management package by Gene Thomas at IBM, one of the first business software development companies that offer such service. The main purpose of this database was to integrate and centralize business information in a way that would aid production line managers in effectively making key decisions and boost the efficiency of the production line as a whole. It was in the 1980s when computer systems and software technology were developed to precisely calculate the resource requirements of a certain production line. The need for resources was measured through sales forecasts which were recorded using the software technology. This was the start of software program customization that is designed based on the need of the company.

What is MRP I and MRP II?

Material Requirements Planning (known as MRP I) and Manufacturing Resource Planning (known as MRP II) are computer-driven systems programmed to organize and accurately track production processes which include but not limited to inventory management, production scheduling, financial projection, business planning, and to some extent also includes HRIS (Human Resource Information System) software. MRP I was the prototype for MRP II, which is technically an upgrade and a better version of the former. Both are commonly used in the manufacturing industry.

Material Requirements Planning focuses on the very basic aspects of the manufacturing process such as the measurement of raw materials used in the production and scheduling. Material control aspects are based on orders placed by the customers. The material control aspects were calculated by splitting the top level assembly into individual parts, projecting the quantity of materials needed and projecting the schedule when to buy them based on the component lead time. This limits its capability to rely only on demand forecasts.

On the other hand, Manufacturing Resource Planning (MRP) System looks into other variables in the production process such as manpower requirement, business planning, analysis module and financial estimates on top of the demand forecasts and scheduling which were initially offered by MRP I. These added information are also viewed as tracking tools to give accurate results and projections for a more efficient decision-making strategy. Data are gathered by tracking employee attendance, manpower contribution, and productivity level. MRP II is the enhanced version of MRP I. It is more informative and precise, considering all other aspects being measured simultaneously with the other factors.

Both software programs aim to help businesses control inventory, manage their costs and track all their production needs. By improving their internal processes, they can also satisfy customer’s expectation on a more competitive, strategic, and responsive manner.

How Can Manufacturing Resource Planning Benefit Your Business?

A more precise tracking and management of the production process including all its internal aspects can lead to a swift and efficient business decision on the management’s side. Here are some benefits of implementing the MRP system into your business.

  1. Enhanced design control. The company will not have to worry about possible oversight in the inventory, mismatched scheduling, or delays in the production process. With the enhanced features of the MRP and various offers to choose from, there is a guaranteed control in the production process and more accurate results which can then lead to a more competitive and faster production. The design control was enhanced across time along with advancement in technology to best suit the needs of the present manufacturing industry. Once you have successfully implemented this into your system, it will be a much easier work once you have decided to consolidate all of your software under one roof, also known as the Enterprise Resource Planning (ERP) System.
  1. Faster return on investment through timely deliveries. Since the program can dictate or trigger the production schedule through automation based on the history and data gathered in the previous months or years, it would be easier and faster for the company to produce more items in a shorter period of time. This can also improve the company’s relationship with its client given the accurate lead time in delivering their orders. They can even improve production period through automation of some mechanical functions such as inventory. As the saying goes, time is money. Automation of procedures means saving time for other beneficial practices for the company’s well being.
  1. Improved control of inventories. Due to more accurate inventory records, it will be easier for the company to monitor the existing raw materials as well as the projection for the years to come. It will not only save professional time and employee expenses, it will also make life in the business easier as it promotes a healthier environment. Aside from the paperless and tedious monitoring of accounts and materials, it can also save employee resources and energy in its own little way.
  1. Healthier relationship with suppliers. Accuracy and consistency is the secret to maintaining a stronger bond with your suppliers. Doing business is a give and take relationship wherein both parties benefit from each other. Just like the company benefiting from its clients, suppliers also benefit from the companies to whom they offer their products and services. Manufacturing Resource Planning (MRP) Software is a highly necessary tool in order to ensure a good relationship with the people who help you provide your products to the public, your suppliers.

As business entities realize the value of time and professional effort, technology has parted its role in the betterment of the software programs and systems especially in the field of manufacturing industry. It is only through best practices such as efficient management planning can this industry maximize its full potential and improve its productivity. Mechanical functions are now automated, information is more accurate and well-documented, scheduling is more reliable and Return on Investment (ROI) becomes more competitive and guaranteed each year with the help of manufacturing resource planning.

For more information about software solutions that your business can utilize, you may also read “A Guide to Using HRIS: Benefits of Integrating HR & Payroll Systems” and learn more about this helpful system.