Picture a small furniture workshop. A customer orders one hundred chairs, delivery in three weeks. The foreman picks up a pencil: how many boards, how many screws, how much fabric? He checks the stockroom, jots down shortages, calls the supplier. For one product this is already tiring work. When the product range grows to ten or twenty items, pencil and paper simply cannot keep up. That is exactly where MRP — Material Requirements Planning — steps in.
MRP answers the most fundamental question for any manufacturing business: ‘What do I need to produce or purchase, in what quantity, and by when?’ To answer that question, you feed three things into the program. First, the bill of materials — a list of every component needed to build one finished product, with the exact quantities. For one chair: four legs, one seat board, two back supports, eight screws. Second, lead times — how many days each material takes to arrive from a supplier, or how many days an internal production step requires. Third, order data — confirmed customer orders and their delivery dates.
The program takes these three inputs and calculates backwards from the delivery date. This is called backward scheduling. Back to the chair: delivery is 21 July. Assembly takes two days, so assembly must start on 19 July. Cutting and shaping the wood takes three days, so that step must begin on 16 July. Boards take five days to arrive from the supplier, so the purchase order must go out by 11 July at the latest. The program works out every one of these dates automatically. Doing this by hand for a single product already carries a real risk of error. Doing it for hundreds of products at once is practically impossible without a system.
The biggest hidden danger in manual planning is what you might call invisible clashes. The same screw might be needed for both the chair and the dining table you produce. You run two separate calculations on two separate sheets of paper, but there is only one screw inventory in the stockroom. MRP consolidates the material requirements of every product into a single list. It tells you: ‘You need 2,400 screws by end of this week; you have 800 in stock; order 1,600.’ Working out that consolidation by hand takes hours and almost always ends in one of two ways — you over-order and tie up cash, or you under-order and the production line stops.
The program produces two main outputs: production orders and purchase suggestions. Production orders go to the shop floor — ‘make this part by this date.’ Purchase suggestions go to the buying desk — ‘order this material from this supplier, in this quantity, by this date.’ Both are calculated from the lead times and order quantities already in the system. The manager’s job is simply to review these suggestions and convert them into actual orders. The number-crunching is done by the program.
None of this works, however, unless the data going into the program is accurate. If the bill of materials contains an error, the program calculates the wrong materials. If lead times do not reflect reality, plans fall apart. If the stock balance recorded in the system does not match what is actually on the shelf, the program treats missing stock as available. Keeping this data clean and up to date is a genuine challenge in many Turkish manufacturing businesses. Stocktakes get skipped, supplier lead times change but are never updated in the system, and production steps get revised without anyone updating the bill of materials. The program keeps running, but its output no longer matches reality. There is an old saying in the software world: garbage in, garbage out.
Before deciding whether MRP is right for your business, ask yourself a straightforward question: how many distinct finished products do you make, and how many components does each one have? If you produce fewer than five products and each has fewer than ten components, an experienced foreman can probably manage with a notebook and good discipline. Once you are dealing with more than ten product types, each with dozens of components, and orders arriving at irregular intervals, building a reliable production schedule without MRP becomes extremely difficult. Before you buy any software, audit your bills of materials and your stock records first. The program is only as useful as the information you put into it — without clean, current data, it is little more than an expensive calculator.
This article was originally written in Turkish by Gökhan MERCANOĞLU on July 17, 2000 and has been automatically translated into English and other languages using machine translation.