SapphireOne Material Requirement Planning (MRP)
November 6, 2020 10:58 am | by John Adams
SapphireOne Material Requirement Planning (MRP) gives you total control of your inventory and production process.
Control inventory, enhance production, reduce costs and forecast for the future with SapphireOne Material Requirement Planning.
What is Material Requirement Planning?
Material Requirement Planning (MRP), also referred to as Material Resource Planning, is a production planning, scheduling and inventory control system used to manage manufacturing processes and improve productivity for businesses.
Material Requirement Planning has become an essential tool for production facilities, and is designed to answer three important questions for a business – What is needed? How much is needed? And when is it needed?
How to do Material Requirement Planning
MRP works backwards from a production plan for finished goods, which is converted into a list of requirements for the subassemblies, component parts, and raw material that are needed to produce the final product within an established schedule.
Developing a plan for resources within your operation is a must. Without proper resource planning, your operation may have a much more challenging time managing areas of your supply chain such as inventory, production and output – leading to high inventory costs or unfulfillment of customer orders.
Components of Material Requirement Planning
SapphireOne’s Inventory Management module provides many powerful solutions for our clients to manage inventory distribution control and tracking. This includes our inbuilt MRP feature, which gives you the ability to manage your resource planning directly within the SapphireOne ERP system.
SapphireOne’s MPR feature has two main important functionalities. These are:
- The ability to track, adjust and analyse historical inventory usage for the past 2, 3 and 4 years.
- The ability to forecast your future material resource requirements for the next 2.5 years, calculated based on your historical data.
Main features of SapphireOne’s MRP Forecasting tool
- Forecast and plan your required material resources for the next 2.5 years.
- Forecasting tool is fully adjustable, meaning you can tweak any number and it will automatically recalculate your forecast based on recent adjustments. This is a powerful tool as it gives you the ability to account for and recalculate forecasts for unexpected events and occurrences.
- You have the ability to set multiple variants – such as your Minimum/Maximum inventory requirements, Fixed Order Quantities (FOQ), and Lead Times – and the forecast will automatically calculate your future material requirements based on these quantities.
- Any line highlighted in blue can be edited to suit your businesses specific forecasting needs.
- Once you have made all adjustments, you can select ‘Save & Recalculate’ to automatically populate your new forecast.
- You can use this tool to forecast your total inventory, as well as for specific inventory items.
Main features of SapphireOne’s MRP Usage History tool
- Record, track and review historical resource usage for the past 2, 3 and 4 years.
- The Usage History graph is fully adjustable, and the graph can be tweaked by moving the blue dot up or down to reflect past monthly performance – allowing you to account for unexpected events within the historical data.
- When the Usage History graph has been adjusted, the Forecasting tool will then recalculate future monthly projections automatically based on the new historical usage information.
- You can use this tool to track and review usage history for your total inventory, as well as for specific inventory items.
Benefits of SapphireOne Material Requirements Planning tool
- Inventory Control – Ensure materials are available, track stock on hand, minimise inventory levels and plan future MRP requirements.
- Cost Reduction – A steady flow of inventory reduces holding and delivery costs, leading to more revenue within the operation.
- Enhanced Scheduling – Allocate production time among various products and ensure the economic order quantity is achieved on all orders.
- Production Optimisation – An optimised production workflow requires the right material, in the right quantities, at the right time. The MRP tool can help to reduce waste and schedule production according to the forecast, allowing equipment and employees to work more efficiently.
- Improved Supplier Relationships – MRP will help you balance your sales demand and inventory control with the capabilities and capacities of your suppliers, leading to more transparent dealings and a better understanding of both parties’ business needs.
- Plan for the Future – Save your business time, resources and money by using historical data for sales analysis and future forecasting.
Check out the below video for a step-by-step process on how to use SapphireOne MRP, and how it can help improve your inventory and production process.
Any questions?
As always, if you have any questions about how our Inventory Management functionality and MRP feature can help your business, please do not hesitate to get in touch or book a demo with a member of our team. We’re always here to help!
SapphireOne MRP Functionality will dramatically benefit your Production Planning and Inventory Control
May 5, 2017 10:01 am | by John Adams
Material Resource Planning (MRP) is a computer based inventory management system. MRP generates time-based manufacturing and purchasing plans for optimal inventory availability which is tied to historical data of customer demands. MRP is a subset of ERP for managing manufacturing requirements using integrated production planning and inventory controls. The main theme of MRP software is –
“Getting the right materials to the right place at the right time “
In any inventory management, regardless of the level of sophisticated technology used, the Saw Tooth pattern is followed. In this pattern there is a certain amount of inventory that you start with, then you consume it, stock levels drop, you re-order the stock, you receive this stock and the process continues.
There are four distinct steps –
- Demand / Consumption – You have an amount which you are consuming or you are expecting to consume.
- Re-order point – Once your stock drops down to a certain level then you will need to re-order (This level should be set in your inventory).
- Demand during Lead time – After re-ordering you continue to consume while the re-order is on its way
- Replenishment – New stock arrives before your inventory has run out of stock completely.
MRP software balances supply and demand. It also monitors what you are consuming and informs you when it is time to re-order.
MRP takes into account 3 key points –
- What you need – The total amount of material required to be on hand to support the gross demands of the business
- What you have – The supply you actually have in your stockrooms, retail shelves, warehouse, other locations, and what is already on order but has not yet been received.
- What you require to re-order and when – The net planned quantities and dates required to support the demands of your business, based on the Supply you already have, and have on order.
A simple example of SapphireOne MRP Software Functionality
SapphireOne MRP function forecasts can be calculated or entered manually. These forecasts can be dependent and controlled by sales orders, purchase orders. In SapphireOne there is also provision for it to be independent as the user may adjust estimations manually if required. Let’s consider, SapphireOne MRP Forecasting for May, Jun, July 2022
May 2022
- Based on the previous 2 years’ sale (Usage History Graph), SapphireOne MRP has calculated the requirement 1251 stock for the month May 2022. SapphireOne also has the capability to calculate this requirement based on up to 4 years’ historical sales.
- Since there are already 1699 inventory items on hand (from the month April) plus an additional 500 inventory items required for orders in May 2022. That’s why at the end of May the system has indicated that approximately 948 inventory items will remain on hand.
June 2022
- Forecasting for June 2022 inventory stock levels are 745. As there are 948 stock on hand from the previous month, therefore, the system has estimated stock on hand in June is 203 items.
July 2022
- Projected stock requirements for July 2022 is 1050. In this case, previous month’s stock on hand, 203, is unable to fulfil the requirements. Since the system knows there is 21 days’ lead time, the artificial intelligence (AI) that is part of the SapphireOne MRP system, will indicate 21 days before that month that an additional 847 stock items be ordered.
- The system is set up in a way that inventory should never run out of stock and there will always be the minimum inventory items as entered, on hand. Thus, to fulfill July requirements which is 1050 stock, the calculation is as follows-
Stock on hand After filled: 203 [ From month Jun 2022]
Stocks Required for July 2022: 1050
Net required: 1050 – 203 = 847
But minimum stock on hand set for every month is 6.
Hence, the Planned Order Release / Planned order arrival is: 847+6 = 853
SapphireOne MRP system is a powerful resource planning tool that ensures you satisfy your clients requirements while maintaining an inventory level that will enable you to fulfil any normal orders based on historical records.
SapphireOne MRP system’s material planning, purchasing and inventory reports, allow you to establish just-in-time relationship with your clients and vendors. This enables you to take advantage of any quantity price breaks but paying for materials only as you need, to fulfil future orders.
Discover how SapphireOne ERP, CRM and Business Accounting software suite can satisfy your customer requirements while maintaining optimal inventory levels. To know more request a live demo today.