When we launched our Gantt Software Blog, we announced that we want to use this blog on the one hand to share Gantt chart tips, tricks, news and best practices with you. On the other hand, we promised that from time to time we would broaden the perspective and also blog about topics related to more generic market and software applications trends. Hence, we are pleased that we could win Derek Singleton, ERP Analyst at Software Advice, to share with us his view how MRP and production planning and scheduling software differ:
How MRP and Production Planning and Scheduling Software Differ,
a guest blog by Derek Singleton
Without a doubt, one of the most difficult stages of manufacturing production is the planning stage. Minor errors in predicting demand or planning materials can lead to costly mistakes such as producing too much or carrying excess inventory. To drive out waste and produce at the most efficient levels, manufacturers increasingly rely on information technology during the planning stages. Two of the most popular planning applications on the market today are material requirements planning (MRP) software and production planning and scheduling software.
While it’s generally understood that both of these applications are broadly about manufacturing planning, there remains considerable confusion about what each application is actually capable of doing. I recently decided to break down their capabilities as part of my work over at the Software Advice
Manufacturing Blog. I thought it would be worth sharing the knowledge here.
MRP Software Plans Materials
MRP software is one of the more traditional applications in manufacturing software. It’s a subset of enterprise resource planning (ERP) software. These systems are designed to plan materials and provide some support for nearly every mode of manufacturing. The software automates keys steps in the planning process such as:
- Determining what inventory is available on-hand;
- Identifying what materials must be procured (i.e., not in inventory);
- Comparing production times to lead times for parts that need to be ordered; and,
- Creating a production forecast to determine total project time.
Importantly, MRP software does not have the capability to plan capacity (i.e. plan based on machine availability or labor availability). To plan capacity, MRP relies on a companion application - capacity requirements planning (CRP). This type of planning tends to work well for production environments with either large runs or few products. However, a key limitation of MRP software is that it does not factor in changes in demand.
Production Planning Allocates Resources
Production planning and scheduling software extends some of the capabilities of MRP software in several important ways to overcome some of the limitations of the MRP. For starters, production planning and scheduling is able to simultaneously plan materials and production. It’s also able to take demand fluctuations into considerations when planning production. Here are a few more ways that production planning and scheduling software extends MRP:
- Factors in current production limitations, whereas MRP assumes there are no production constraints;
- Uses more complex algorithms to model multiple production scenarios, thereby creating more accurate planning projections;
- Accounts for the lead times of ordered parts to create more accurate project times; and,
- Prioritizes jobs in order of highest profitability to ensure those jobs are completed first.
Another important difference between MRP and production planning and scheduling systems is that production planning and scheduling is able to process inquiries faster. This allows for more frequent adjustments to be made to the production plan - a characteristic of that’s not always beneficial. For instance, when material gets scrapped during production, a production planning and scheduling application will assign a new job to that machine - regardless of whether there’s demand for that increase in production.
These are just a few of the ways that MRP and production planning and scheduling systems differ. To find out of more about how these applications differ, please visit my Manufacturing Blog on Software Advice at: What’s the Difference Between MRP and Production Planning and Scheduling
About the Author
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Derek Singleton joined Software Advice after graduating from Occidental College with a degree in political science. He writes about various topics related to ERP software with particular interest in the manufacturing and distribution software markets. In his spare time he enjoys training in boxing and martial arts.