Material resource planning (MRP) is a computer-based inventory management system

designed to improve efficiency for business. It controls inventory levels, plans production and
helps the manufacturing control system to support forecasted demand. Furthermore, MRP is
a major planning process that allows business to perform infinite capacity production
planning and prepare for finite capacity scheduling based on input data such as current and
future orders, forecast demand, the master production schedule, the Bill of Materials (BOM)
and inventory status record.
Advantages
Better inventory control – minimise the amount of inventory holding while keeping
production on track. Using an MRP system means that business can avoid holding rarely
used or excess materials for long periods of time while remaining confident that they won’t
have any shortages of key materials because they take into account the forecast demand
and inventory status record.
Reduced costs – both the business and its customers reduced cost by holding less stock
which have less working capital tied up. With fewer raw materials or components held in
stock, it can reduce your storage costs. These cost savings can be passed onto the
customer in the form of more competitive pricing.
Improved scheduling – MRP gives a clear indication of when production operations need
to be carried out. This enables production managers to see what labour they need and
when, avoid expensive overtime and the amount of equipment downtime will be significantly
reduced. Moreover, Valuable insights into the planning and production process can be
gained from analysis of the input data of MRP allowing further business improvements.
Excellent customer service – utilising MRP enables the business to deliver in full on time
to its customers because with a robust MRP system in place and delivery of goods on time is
virtually guaranteed.
Production Planning – production of the end product (or even sub-assemblies of a complex
project) is dependent on the availability of the raw materials or components. MRP highlights
any shortages so that your production manager can reallocate work centres, machinery or
labour for alternative jobs that have a complete inventory. The beauty of MRP is that if there
are supply chain issues, it will be flagged up early, giving you a better chance to rectify the
problem in time.

Disadvantages
Reliance on Information- MRP is entirely dependent on inputs it receives from other
system departments. If input information is not correct then output for material planning will
also be incorrect
Implementation Difficulties- MRP needs robust database with all information pertaining
inventory records, production schedule, etc, without which output again would be incorrect. It
also requires proper training for end users, as to get maximum out of the system.
Increase Capital Expenditures- Material resource planning system requires substantial
investment out of time and capital for its installation and operations.

https://www.investopedia.com/terms/m/mrp.asp
https://www.planilog.com/en/glossary/material-resource-planning-mrp
https://www.planettogether.com/blog/mrp-advantages-and-disadvantages
https://manufacturing-software-blog.mrpeasy.com/efficient-production-planning/
https://emax-systems.co.uk/importance-material-requirements-planning-mrp-manufacturing/