PM Articles by ProjectManager.com.
Everything you need for your manufacturing process is a resource—people, materials, equipment, software, facilities, etc. And whatever you’re making, you need to manage those resources to do it.
That process is called manufacturing resource planning (MRP II), and it’s a method that used to work more effectively. When need precise coordination of resources to get the work done on time and within budget, you’re going to need to create an MRP system.
Why is it called MRP II? Well, that’s because manufacturing resource planning (MRP II) evolved from materials requirements planning (MRP I), an earlier resource planning system. Let’s take a look at both to learn the differences, and how to apply them to your own processes.
What Is Materials Requirements Planning (MRP I)?
Materials requirements planning (MRP I) is a type of resource planning used to control inventory, get data on customer demand and solidify a bill of materials for a product. You use that information to create a purchasing plan and production schedule.
When it was first developed, the data exclusively centered on the necessary goods and their quantities. That approach expanded to include other data points (such as sales forecasts) to create better production and purchasing schedules.
What Is Manufacturing Resource Planning (MRP II)?
Manufacturing resource planning (MRP II) is the process of creating an MRP system that allows manufacturers to account for the raw materials and human resources needed for their manufacturing process. MRP II touches on operational and financial planning, but also explores contingency planning that create additional paths forward when issues arise.
There is no proprietary software associated with manufacturing resource planning, and therefore, there are many solutions offered. But almost all manufacturers use some kind of software to create an MRP system.
MRP software is usually modular and has various components that include:
- A master production schedule
- Technical data
- Bill of materials
- Production resource data
- Inventories and orders
- Purchasing management
- Materials requirement planning
- Shop floor control
- Capacity planning
- Cost control
And that’s only the beginning! There are other tools for business planning, tool management, sales analysis and project management. MRP II integrates many manufacturing processes so you can organize and manage them.
What Is an MRP System?
A MRP system is used to collect all the data from MRP I and MRP II and have it reside in a single place. This helps managers with production planning, inventory planning, raw materials purchasing and purchase scheduling.
The goal of an MRP system is to avoid issues like over-or-understocking. It also helps you plan all the manufacturing activities, including procurement, production and delivery.
How to Create a MRP System
When creating a MRP system, there are three key resource management and manufacturing process inputs that are necessary:
- The master production schedule (MPS): The MPS is the number of end goods, and the timing you’ll produce them by. Estimate this by looking at your customer orders and demand forecasts.
- The inventory status file (ISF): The ISF is the real-time data on your inventory. This information lets you know what you have in stock and where it’s currently warehoused. It provides a picture on the overall status of your inventory.
- The bill of materials (BOM): The BOM is a list of all the raw materials, components and anything else necessary to manufacture or repair your product or service.
These three inputs show you the raw materials that are available for production and when you need them. Then, the manufacturing resource plan can help you keep the lowest number of materials on hand while planning and scheduling manufacturing activities.
Why Is Manufacturing Resource Planning Important?
Manufacturing resource planning allows for a more productive and tight production schedule that keeps costs low. But, it also provides valuable data from the production floor you can use to address issues that slowed down manufacturing in the past—so you don’t repeat it in the future.
There is also a reduction of workload that results in greater efficiency when you apply resource planning. The data you collect helps you plan ahead and make more accurate estimates that lead to greater profitability for the company.
In the past, stock control and management were the only tools manufacturers had to run efficiently. Manufacturing resource planning is far more effective in managing resources and making more effective plans. Its use saves the company money, time and labor.
Project management software can organize the manufacturing and manage resources. ProjectManager is a cloud-based software that does all this, and more, in real time. Visualize your production schedule on our kanban board view and get transparency into the process. Try ProjectManager for free today.
How to Make a Manufacturing Resource Plan
When creating a manufacturing resource plan, you need to ask yourself three questions: what is needed? How much is needed? And when is it needed? Working backward from the finished product is how you begin to assemble the materials you’ll need for a manufacturing resource plan.
You can break down the process for manufacturing resource plans into four basic steps:
- Make estimates of the demand for your product: From there, you can figure out the resources necessary to have your supply meet that demand. Those resources are broken down by a bill of materials, which is the list of raw materials, assemblies and other components necessary to manufacture your end product. Don’t forget to include your personnel in this estimate, as they’re also resources.
- Compare demand to current inventory: This will inform how many resources you need to meet demand, on top of what you already have in stock. Manufacturing resource planning allocates the inventory where it’s needed.
- Create a production schedule: That means figuring out how much time each step in your manufacturing process will take. Again, you work backward from a deadline.
- Monitor the entire process: Make sure that you are meeting milestones and not going over the budget. Most manufacturing resource planning software will have notifications that alert you if things are going off-track. If this occurs, have a contingency plan in place.
Enterprise Resource Planning
Enterprise Resource Planning (ERP) is a version of MRP that adds the planning of all enterprise-related activities. ERP includes the use of business software to manage resources within the entire organization through a centralized database. This simplifies workflows and reduces labor. ERP came after MRP, when office operations were added to the mix.
Tools That Help Manufacturing Resource Planning
Software is the engine that drives manufacturing resource planning. The first system devoted to manufacturing resource planning was built in the 1970s. As technology advanced, so did the tools used in manufacturing resource planning. Now, most have enterprise resource planning features.
Features that are included in manufacturing resource planning software include accounting, order management, purchase orders, bank reconciliation, bill of materials, budget and forecasting, payroll and project management. The manufacturing resource planning of the 1970s has advanced to include much of these features, and is now referred to as manufacturing resource planning II.
There are many software solutions offered for manufacturing resource planning. Most are expensive, though they offer a free trial. The tools run the gamut from Windows only to being able to be used on Apple products. Most are on the cloud and some are scalable. There are those that are complicated and a few that are more user-friendly.
Manufacturing Resource Planning Best Practices
Manufacturing resource planning lives or dies on the accuracy of its data. Therefore, the most important tip for anyone making a manufacturing resource plan is to have data integrity. That includes looking at everything from your inventory to dates, lead times, yield and forecasting.
It’s also important to stay flexible and patient. There’s a lot of data for you to digest, and this can take some time—even under the best of circumstances. This is especially true if you’re just beginning to use manufacturing resource planning, which is obviously very data-based. It can be a bit of a transition for those who were working on more of a gut level.
Find the right software to help you manage your manufacturing resource planning. You’ll want to shop for a tool that meets your needs, as not all manufacturing businesses operate the same way. Make sure the software you pick delivers real-time data and has the resource management features you need to match capacity with demand.
How ProjectManager Helps Manufacturing Resource Planning
ProjectManager is cloud-based software that provides real-time data for better monitoring of your production and inventory. ProjectManager lets you organize, plan and report on the progress and performance of your manufacturing. We even have timesheets to simplify payroll.
Create Master Schedules on Gantt Charts
Coordinating resources, creating a workable schedule and staying on budget are the three pillars of manufacturing resource planning. ProjectManager does all three in one robust Gantt chart view. You can set resource costs, assign teams, and set milestones and deadlines to avoid delays on the production line.
Track Progress At-a-Glance with Real-Time Dashboards
To further monitor your progress, ProjectManager has a live dashboard that delivers real-time data, so you know immediately if your team’s workload is imbalanced, if tasks are taking too long or costs are skyrocketing. For a deeper dive into the data, there are one-click reports that you can filter to show just the information you want. You can share reports to update the leadership team on what’s happening on the manufacturing floor.
Track and Adjust Team Workloads
Don’t forget your workers are resources, too, and you need to plan and manage their workload in order to keep them working at capacity. ProjectManager’s resource management tools have a workload chart that is color-coded, so you can see at a glance whether someone has too much work or too few tasks. Then, from the chart, reallocate their assignments and balance the workload to help everyone work more productively.
Track Time Easily and Effectively
Another way to keep track of the work being done on the manufacturing floor is with timesheets. These secure documents lock when sent for approval and can be auto-filled or repeat last week’s assignments if applicable. But they don’t just streamline and add security to the payroll process, they can also show managers how much time each of their workers is spending on their tasks. It’s another tool to tighten the production and get the most out of your resources.
ProjectManager is award-winning software that helps with manufacturing resource planning while giving you the project management tools you need to monitor and report on your progress and performance. Keep your production on schedule and have the resources to match your capacity by trying ProjectManager for free today!