What is an integrated MRP system in manufacturing?
Blog //16-07-2021

What is an integrated MRP system in manufacturing?

by Andrew Pearson, SME Product Manager

If you are in the manufacturing industry, you’re probably aware that MRP (material requirements planning) is an integral part of production and inventory processes.

But what does it mean to have an MRP system that is integrated with your wider business operations, and what techniques can be used to achieve this?  

In this article we discuss the advantages that are gained from putting this setup in place, and explain how our software allows you to do this in the simplest way possible.       

What exactly is an integrated MRP system?

We’ve previously covered the ins and outs of what material requirements planning is, but it’s time to take a deeper look at what it means to have a fully integrated MRP system.

In this scenario, your production planning, bill of materials, batch traceability and other MRP activities are connected to all the other functions that make your business tick. This isn’t an indirect link either, it’s a concrete connection whereby all the proponents of your company influence one another.  

How do I connect my MRP activities to the rest of my business?

Some manufacturers may use more old-fashioned methods to monitor and manage their operations. In this scenario, each department would record their data on paper, or in a spreadsheet, and would then have to come together to collate it in an effective and coherent way.

Others may use digital solutions, but they will have different systems for each separate process. So, they’ll have an individual MRP system, another one for accounting, perhaps another for inventory control, and so on.

In this situation, there’s the hassle beforehand of researching solutions that interface with one another easily. Even when information is stored digitally in this manner, employees will still have to bring the distinct data together manually. The above two methods, as we’ll come onto, are limited in various ways.

The quickest, easiest, and most impactful way to synchronise MRP activity with everything else you do, is to use an ERP / business management solution, that has material requirements planning as one of its many capabilities. As we’ll now discuss, this technique brings about the most rewards for your manufacturing business.

What are the benefits that come from having a fully integrated MRP system?

  1. A united office floor and factory floor

    With a fully integrated MRP solution, there is no longer a division between what the finance team are doing in the office, and what the production team are doing in the factory. There are no contrasting facts, just one version of the truth.  

 

  1. Increased automation 

    With all processes united under the umbrella of one system, and with actions from one department impacting others, it becomes possible to automate much more of what happens throughout the supply chain.

 

  1. Accurate data

    With this interconnectedness, nothing is lost in translation, as data doesn’t have to be moved from one place to another. Information is updated in real-time, so it is far more likely to be accurate and up to date.

 

  1. Increased visibility

    Where it may have previously been difficult to gain a view of what other business areas are doing, your company now becomes far more transparent. With one pool of data, in one place, it’s easy to see what everyone has been working on, what is currently happening, and what plans are in place going forward.

 

  1. Fewer errors

    With fewer manual tasks, the occurrence of human error is reduced significantly, as information is captured/manipulated digitally (and sometimes automatically too).   

 

  1. Greater efficiency

    With the automation mentioned above, it means that tasks are completed more quickly, and with a higher level of quality. This increases your overall business efficiency. It also frees up time for employees to focus on complex work rather than repetitive tasks.  

What are the disadvantages of having a standalone MRP system? 

It may make sense for some manufacturers to use more traditional MRP methods, depending on their circumstances and requirements. However, with any manual endeavour, there’s more chance of errors taking place when information is being recorded. There’s a bigger risk of important information being lost or stolen too (if it isn’t stored securely). Not only this, but it also takes much more time and effort to make the necessary calculations. 

Even if sophisticated technology is harnessed, data can still be inaccurate. One cause of this is when businesses use a standalone MRP system. By utilising this disconnected approach, there is no central source of performance metrics. Employees from different departments will possibly have contrasting facts. This breeds an environment of inconsistency, inaccuracy and a general lack of cohesion.

Using unreliable data can be harmful to a business’s success. It could lead to uninformed decisions around which practices you implement. This would ultimately have negative repercussions for your finances, and for customer satisfaction. 

Which software is best for achieving an integrated MRP function?

Our Manufacturing Software is an example of a system that brings all of a company’s elements together seamlessly. It has powerful MRP functionality, that gives manufacturers everything they need when it comes to sourcing materials, producing goods, and delivering to customers.

The production planning component gives you complete control over the product creation process, allowing you to put everything in place for a production run to begin, and giving you clarity around the timescales of when it will likely finish too.  

The bill of materials (BOM) functionality allows you to create unlimited depth BOMs, meaning you can make product configurations that are as complex as you see fit. These product recipes detail exactly what materials are needed to build an item, which ensures you never forget a crucial ingredient (which would otherwise cause a downturn in production).  

With the ability to use serial numbering, and being equipped with end-to-end traceability, you have full visibility across the entire production cycle. This means that you can identify any weaknesses, maintain aspects that work well, provide true transparency to customers, and get the product in their hands by the promised time.

With automatic calculations of stock requirements (in relation to future orders), you can make sure you’re able to meet demand. You can maintain an efficient level of inventory, rather than having a large excess or deficit.   

Manufacturing Software’s true strength lies in the fact that it also has e-commerce, accounting, contact management and stock control modules interwoven with MRP, providing full integration. This means that your sales, finances, customer relationships, production and inventory aspects are all interrelated, enriching the quality of your data, and providing the kind of automation mentioned earlier.

The costs associated with buying raw materials, hiring new staff, and running machinery, is passed into your financial data, giving a more accurate picture of performance (and allowing the finance team to deem what is safe to spend going forward). Sales are also fed into these finances, and customer orders can trigger production runs, as well as material purchases (when stock drops below a certain threshold).

With high-quality reporting capabilities, you can collate this centralised (and accurate) data in powerful ways, extracting insight, and allowing it to govern transformational business decisions. Increased efficiency and enhanced operations enable you to grow as far as your ambition takes you. As the software is scalable too, it will adapt as you expand, meaning that much of the discomfort that normally comes with growth is eradicated.  

 

If you want an MRP system that is integrated with the rest of your functions, take a closer look at our Manufacturing Software. It’s an all-encompassing business management solution that is perfect for small to medium-sized manufacturers.   

Blog Business Cloud Essentials Manufacturing
Andrew Pearson

Andrew Pearson

PUBLISHED BY

SME Product Manager

Joined with our Acquisition of Exchequer Accounting Software back in 2016, Andrew is product manager for our SME solutions ensuring that our roadmaps are representative of market requirements. Andrew has over 15 years of experience working with finance and ERP software from a technical, development and support capacity.

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