Essentially, Material Requirement Planning works like an expert system, which determines how much should be purchased for a purchase item and produced for a manufactured item at a particular point in time. This allows you to automatically create production orders and purchase order based on the Order Recommendation Report. If need be items can be easily outsourced by converting a production order to a purchase order. In addition, it’s simple to consolidate individual vendor PO’s into a single order to further streamline the purchasing process.
The application does not place orders automatically, but instead suggests them. These orders can then be improved after inspection by purchasing professionals or production managers who may have special knowledge that goes beyond what can be captured in an MRP application. For small and midsize businesses, this architecture provides just the right balance between automation and hands-on control.
Material Requirements Planning Features
This feature helps you plan and optimize future material requirements and then both manage and execute purchasing and manufacturing recommendations and exceptions.
To make the appropriate recommendations, SAP Business One considers various supply and demand sources, including existing stock levels, planned production orders, open purchase orders, actual sales orders, forecasted orders, master data like BOMs, and planning data like lead times and minimum stock levels.
Exceptionally clear MRP results, recommendations, and exceptions screens allow you to sort, filter, and drill down through MRP pegging information to actual receipts and requirements (forecasts or sales orders) and edit, individual purchase order line quantities.
MRP can be run at any time and used for modelling and ‘what if’ purposes.
Material Requirements Planning Benefits
SAP Business One MRP replaces informal, ad hoc, error-prone production scheduling based on the instincts of one or two people with a more structured process that allows more people to participate using better information.
SAP Business One MRP helps reduce costs by considering both minimum order quantities and order multiples and helping users take advantage of purchase pricing quantity breaks or standard production batch sizes.
- Focus on strategic management
Procurement managers can focus on strategic procurement, rather than worrying about inventory accuracy.
Reduce safety stock or multiple PO’s for the same item by different warehouse or purchasing managers. Move towards just-in-time stocking.