Manufacturing & Service

Material Requirement Planning (MRP)

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Material Requirements Planning (MRP) supports production planning and inventory management system used to ensure that materials are available for production and products are available for delivery to customers. It helps manufacturers plan production schedules, manage inventory levels, and ensure timely procurement of materials. MRP uses demand forecasts, production schedules, and current inventory data to calculate the required quantities and timing of materials needed to meet production demands.

The Axolt ERP system uses Standard MRP algorithm. The MRP Algorithm plays a crucial role in optimizing the Material Requirements Planning (MRP) by ensuring timely availability of materials for production while minimizing excess inventory. It works by:

  1. Demand Calculation: Forecasting product demand based on customer orders and production schedules.
  2. Inventory Check: Comparing existing stock with required materials to calculate net requirements.
  3. Order Scheduling: Creating planned orders for materials, considering lead times and production schedules to prevent delays.
  4. Order Release: Triggering purchase or production orders at the right time to ensure smooth flow in the production process.

This algorithm ensures efficient material flow, reducing shortages, overstock, and production delays in MRP systems.

Get to ‘ Material Requirement Planning (MRP) ‘ from the App Launcher.

Using Filters in the MRP Interface

  • Family & Sub Family Filters:
  • Family Filter:
  • Location: Positioned next to the search bar.
  • Function: Allows users to select a broader product category, such as “Furniture,” “Mobile,” or “Electronic Products.” This filter helps refine the search to target a specific category of products.
  • Sub Family Filter:
  • Location: Found next to the Family filter.
  • Function: After selecting a Family, this filter refines the search further within that category. For instance, if “Mobile” is selected under Family, the Sub Family filter might provide options like “Laptop,” “Desktop,” etc.
  • Site Filter:
  • Function: Users can specify the location (e.g., “Ryder”) to view MRP data relevant to that specific site.
  • Date Range: //How does the date affect MRP
  • Function: Define the period for which the MRP data should be displayed using the “From” and “To” date pickers. This allows users to focus on data relevant to a specific timeframe.

1. Understanding the Data Table

Columns:
  • SL (Serial Number):
  • Represents a sequential number assigned to each product entry. Which makes it easier to reference specific products in the list.
  • Product Code:
  • A unique identifier for each product in the system. It’s crucial for accurate tracking and inventory management.
  • Name:
  • The name of the product, which helps users identify items more easily.
  • Vendor (Price):
  • Displays the vendor associated with the product and the price. It’s essential for procurement and cost analysis.
  • Awaiting Quantity:
  • Shows the quantity of the product that has been ordered but not yet received. This helps in tracking incoming stock.
  • On Hand:
  • Represents the current stock available in the inventory. It’s critical to determine whether additional orders are necessary.
  • Reserved (SO):
  • The quantity reserved for sales orders (SO). This ensures that stock is set aside for confirmed orders.
  • Issued/WIP:

2. Performing Actions

Stock Take:

  • Purpose: This feature allows users to perform inventory checks. It assists in verifying physical stock against MRP records, ensuring accuracy in inventory levels.
  • How to Use: Provide users with a step-by-step guide on how to start and complete a stock take, including how to update records in the system.

Stock Transfer:

  • Purpose: Enables users to transfer stock from one location to another. It’s vital for managing inventory across multiple sites or departments.

How to Use: Provide a detailed explanation of the steps involved in initiating a stock transfer, selecting the destination, and updating the MRP system accordingly.

MRP Algorithm Selection: Detailed Descriptions and Usage Guidelines

MRP Algorithm

Description                        Usage
Lot-for-Lot (L4L) The Lot-for-Lot algorithm is a demand-driven approach where the order quantity matches the exact quantity required for a specific time period. It does not consider any additional inventory, meaning the exact amount needed is ordered without  Surplus.  Ideal when carrying inventory costs are high, and there’s a need to minimize excess stock.

Fixed Order Quantity

(FOQ)

 Fixed Order Quantity is a method where a predefined quantity is ordered whenever the stock level reaches a certain reorder point. The order quantity remains constant regardless of the demand fluctuations. This is useful for products with consistent demand and where the order quantity is optimized for cost efficiency.

Economic Order

Quantity (EOQ)

 EOQ is a classic inventory management formula that calculates the optimal order quantity to minimize total inventory costs, including ordering and holding costs. It assumes constant demand and lead time. Best used in stable demand scenarios where the objective is to balance order size and frequency to reduce overall costs.

Period Order Quantity

(POQ)

 The Period Order Quantity algorithm involves ordering enough inventory to cover a set number of periods or cycles. The quantity ordered is variable but is always aligned with the demand forecast for the period. Suitable for businesses that experience periodic demand and want to align orders with these cycles.
Safety Stock Method This algorithm takes into account the need for safety stock, which is extra inventory held to prevent stockouts due to demand variability or supply delays. The system calculates the reorder point considering the safety stock level. Useful in environments with unpredictable demand or long lead times, where it’s crucial to avoid stockouts.
Just-In-Time (JIT) The JIT algorithm aims to minimize inventory levels by ordering materials just in time for production. This method reduces holding costs but requires accurate demand forecasting and reliable suppliers. Best for companies looking to reduce inventory costs and have strong supplier relationships to ensure timely delivery.

 

Demand Driven MRP

(DDMRP)

 DDMRP is an advanced planning and execution methodology that uses strategic inventory positioning and buffer management. It focuses on real-time demand signals to drive production and inventory decisions. Ideal for complex supply chains with variable demand, helping to balance inventory levels and service levels effectively.

In the Material Requirement Planning (MRP) section, users have access to several key functionalities that streamline the management of inventory and production:  

  1. Create Manufacturing Order: This option allows users to generate a manufacturing order directly from the MRP interface. It enables the scheduling of production activities based on current material needs and available resources.
  2. Create Transfer Order: Users can create transfer orders to move inventory between different stockrooms, sites, or warehouses within the organization. This ensures that materials are available where they are needed most, facilitating efficient production processes.
  3. Stock Take: This feature is used to initiate a stock-taking process, which involves counting and verifying the physical inventory levels in comparison to the recorded data. It helps maintain accuracy in inventory management and identifies discrepancies.
  4. Stock Transfer: This option enables the transfer of stock from one location to another within the same organization. It is useful for balancing inventory levels across multiple sites to meet varying demand.
  5. History Tracking: The History Tracking feature allows users to view and track past actions and changes related to material requirements, stock movements, and manufacturing orders. It provides a historical record that is essential for audit trails and for understanding the progression of inventory and production activities over time.

Steps to create a Material Requirement Planning (MRP)

Step 1:

Create Material Requirement Planning (MRP) through a Material Requirement Planning (MRP) Tab.

Create an MRP by searching for ‘ Material Requirement Planning (MRP) ‘ from the App Launcher.

Once in the Material Requirement Planning (MRP) section, you can view, track, and create materialplans. The interface lets you search for products, `      

  1. To create MRP, click on the New button.
  2. This will Navigate to an “CREATE MRP” screen.
  3. Enter the MRP Name, From Date to Date, Search Site, and Algorithm. These fields define the parameters for the Material Requirement Planning process.

4. After filling in all the required fields, click the ‘+ Products‘ button.

5. Select the relevant products you want to include in the MRP, and then click the ‘Add Products‘ button.

6. Once you’ve selected the products, choose the desired algorithm, select the appropriate reordering rule, and then click the ‘Save’ button.

7. “If you want to create a new reordering rule, you’ll notice that the current rule is inactive. You’ll need to mark it as active before proceeding. To add a reordering rule, click on the plus icon. You can then enter Reordering name, Lead time, ordering Quantity, vendor, Routing, Min/Max quantity and warning Quantity.

8. If you click on the actual demand on that Specific Month, it will show the number of Quantity demand on those products.

9. Once you click the save button, you will get a forecast where you will have the actual and predicted products, which can be changed.

After saving this, the MRP is created. By clicking on the ‘Simulate’ checkbox, the purchase order will be created under the ‘Related’ tab.