Manufacturing resource planning – MRP II


Manufacturing Resources Planning (MRP II) has been developed by manufacturing managers to address the planning and controlling of a manufacturing process and all of its related support functions. It encompasses logically correct planning and control activities related to materials, capacity, and finance, engineering, sales and marketing. MRP II is universally applicable to any manufacturing organization, regardless of its size, location, product or process.

MRP II is a management process for taking the business plan and breaking it down into specific detailed tasks that people agree and are held accountable for. It involves all departments viz., materials department, engineering department that must maintain bill of materials, sales/marketing department that must keep sales plan up to date, purchasing and manufacturing department that must meet due dates for bought-out items and in-house manufactured items respectively.

From MRP I to MRP II:

Manufacturing resources planning (MRP II) is a natural outgrowth of Materials Requirement Planning (MRPI). Whereas, MRP I focus upon priorities of materials, CRP is concerned with time. Both material and time requirement are integrated within the MRP system (i.e. MRPI). Beyond this, MRP II has been coined to ‘close the loop’ by integrating financial, accounting, personnel, engineering and marketing information along with the production planning and control activities of basic MRP systems. MRPII is the heart of the corporate management information system for many manufacturing firms.

Evolution of MRP II:

The earlier resource requirement planning systems were quite simple and unsophisticated. The MRP technique was used for its most limited capability to determine what material and components are needed, how many are needed and when they are needed and when they should be ordered so that, they are likely to be available when needed. In other words, MRP simply exploded the Master Production Schedule (MPS) into the required material and was conceived as an inventory control tool or a requirements calculator. Later, the logic of MRP technique was extended to serve as the key component in an information system for planning and controlling production operation and purchasing. It was helpful to production and operations managers to determine the relative priorities of shop orders and purchase orders. As a manufacturing planning and control system, MRP laid the basic foundation for production activity control or shop floor control.

Closed-loop MRP:

Later, during the 1970s, closing the loop in MRP systems was thought of by experts in manufacturing management. The term “closed-loop� MRP means ‘A system built around material requirement planning (MRP I) and also including additional planning functions such as master production scheduling and capacity requirement planning’. Once the planning phase is complete and plans have been accepted as realistic and attainable, executive functions such as shop-floor control function (viz., input-output measurement, detailed scheduling, dispatching, anticipated delay reports from shop and vendors, purchase follow-up and control etc) came into the picture. The closed-loop MRP system implies that, not only the above elements are included in the system, but also that there is feed back from the execution functions so that planning can kept valid at all times. Further to the closed-loop MRP system, the MRP I was improved to manufacturing resources planning (MRP II).

Manufacturing resources planning is a broader resources co-ordination system. In this, the capabilities of closed-loop MRP are extended to provide information on financial resources, personnel needs and labor budgets. It provides a means of simulating to provide information on the use of various assured plans. Information about inventory investment levels, plant expansion needs and work force requirements is useful for coordinating marketing, finance, engineering and manufacturing efforts to achieve the overall business plan of the firm. MRP II is a direct outgrowth and extension of the closed-loop MRP.