IT Glossary
What is MRP (Material Requirements Planning)?
MRP (Material Requirements Planning) is the method — and the software module — that automatically calculates which materials must be bought or produced, in what quantities and by which dates, so that orders ship on time.
A production line stands idle for an entire day because one small part worth a few euros is missing, while the warehouse holds materials that have been tying up cash for months: the classic paradox of planning done by eye. MRP, material requirements planning, is the mechanism that resolves exactly that equation. It starts from firm orders and the sales forecast, explodes every product into its components using the bill of materials, subtracts existing stock and the purchase orders already placed, then factors in supplier lead times and production times. The output is a precise list of what must be bought or released into manufacturing, in what quantity and by which date, recalculated automatically whenever anything moves — a new order, a supplier delay, a scrapped batch. For a manufacturer the difference is measurable in blocked capital and missed deadlines, because MRP replaces the production manager’s spreadsheet, which works reliably until the first time he takes a holiday, with a calculation that never tires, never forgets a component and sees every open order at once.
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Why it matters for your business
Production stoppages eliminated
Every part is ordered in time for the date manufacturing actually needs it — shortages discovered on the morning of a production run become rare exceptions rather than the Monday routine.
Cash released from stock
Buying quantities calculated against real demand, instead of just-in-case reserves, reduces raw-material stock noticeably — capital returns to circulation rather than gathering dust.
Delivery dates you can actually keep
When sales can see from the system the realistic date an order can be produced, promises to customers rest on calculation instead of optimism — and they hold.
Frequently asked questions
What is the difference between MRP and ERP?
MRP is a specialised function — calculating material requirements for production — that today usually lives as a module inside an ERP. The ERP covers the whole company across finance, sales, inventory and human resources, while MRP acts as its planning brain for manufacturing. Historically MRP came first, and the ERP grew up around it.
What data must be in place before MRP works?
Three foundations: complete and current bills of materials, correct stock figures in the system including work in progress, and realistic lead times per supplier and per item. The quality of the calculation equals the quality of that data — an incomplete bill of materials or fictional stock will produce wrong recommendations with computerized precision.
Does MRP make sense for small, short-run production?
Yes, and all the more so when products carry many components or suppliers with long lead times, because manual calculation collapses first precisely on short runs with varied orders. For workshops and small manufacturers, the MRP modules inside affordable ERP systems offer a simplified version — requirements per order, without capacity scheduling — which delivers most of the benefit at a fraction of the complexity.
Let’s talk about your project
Message us on WhatsApp or send an email — you talk directly to a developer.
office@northdan.com · +40 752 070 247