Example of How MRP works
MRP is effectively a large calculator, so what information does MRP use in its calculations? MRP needs the following information (and for it to be accurate) in order to suggest sensible parts ordering dates & amounts and achievable work plans:
- A bill of material (BOM) for each project / job / order (an example of a BOM is given below)
- A build / work time for each part of each job (i.e. design, assembly, painting, testing etc.)
- A complete on-hand inventory of all parts i.e. an accurate record of the number of stocked parts.
- Delivery lead times of parts i.e. the elapsed time from order placement to parts being received at your company.
- The due date (expected delivery) of the job / order to the customer.
A bill of material, or BOM, is basically a structured list of all the parts (including quantities) that are needed for a job / project. The BOM of a job can be displayed in a format similar to a family tree as per the blow diagram (click the diagram to make it larger in another window). The ‘parent’ item, in this case an imaginary product "ES2134", sits at the top and 'child' items / sub-assemblies appear underneath it, i.e. Tier A and Tier B.
Click to make the diagram bigger…
In turn the child items of Tier A and Tier B are listed beneath them and so on until we get to the bottom of the BOM and the parts required for each Door / Backplate etc are listed. The diagram below is a zoom-in on the tree structure of the BOM under Tier B's: ‘B2 - Mains Incomer’.
The BOM defines the structure of the job and all the parts that are required. In addition to this information MRP will also be told information such as: the amount of time it takes your suppliers to deliver the parts that need ordering; the build time of the sub-assemblies; the time taken to test the job, and so on. Using this information in conjunction with the BOM means that MRP can plan backwards from the planned delivery date of the job and will suggest dates that parts need to be ordered by and work needs to have started by if the job is to be completed on time. MRP will also flag tasks that are slipping and parts shortages.
There are a variety of other things that the MRP system will do but the above outlined logic is the core functionality of the MRP system and will yield a number of important benefits to and the way UK manufacturers operate.
