What MRP Actually Does for a Small Manufacturer
7 min read
A plain explanation of material requirements planning: the inputs it needs, the output it produces and the conditions under which it fails.
Material requirements planning is arithmetic before it is software. It takes demand — sales orders and forecast — explodes that demand through bills of materials, subtracts what you already have and what is already on order, and applies lead times to tell you when to buy or build.
The arithmetic is not difficult. Keeping the inputs honest is. MRP output is only as good as three things: the accuracy of your bills of materials, the accuracy of your on-hand inventory, and the realism of your lead times. Manufacturers who describe MRP as 'not working' are almost always describing one of those three inputs.
For a small manufacturer, the practical value shows up in three places. Purchasing stops reacting to shortages discovered at kit time. Production stops starting jobs that cannot finish. And the person who has been holding the plan in their head gets a system that holds it instead.
A reasonable first implementation is narrow: get item masters and BOMs clean, get an accurate physical count, set honest lead times, and run planning on a short horizon. Widen the horizon once the output stops surprising you.