MRP (Material?Requirements Planning) – Never Run OUT of Stock TIPS! ?? ????
Krishna Keshav Patel??
Supply Chain & Operations Manager | IIM Kashipur Alumnus | Operations & Procurement Expert | Quality Management | FSSC 22000 Lead Auditor
Have you ever wondered how your favorite snacks ??, video games ???or sneakers ?? don’t run out of stock and are always available in stores?
Do companies kind of just wing it in terms of how much stock?they need to have on hand? ? NO!
Do they get it right by?luck? ? No!
They do this using smart MRP (Material requirements Planning) system to anticipate future demand, and avoid stock?outs and waste! ??
Let’s dive into what MRP is, its significance?in a business, and how it helps keep products on demand when customers need them!
?? Mastering MRP (Material?Requirements Planning)
Pretend you own a?bakery ????.
Ingredients for baking delectable?cakes:
? Flour ??
? Sugar ??
? Eggs ??
? Chocolate ??
Now, what if:
? Not?enough flour? → No cakes! ??
? You buy too much sugar? → It expires & goes to waste! ??
??You don’t reorder chocolate? → Angry customers! ??
This is where MRP comes in! ?
MRP is a?system that assists businesses:
?? Anticipate the quantity of them?required ??
Order the right amount at the?right time ?
?? Less?waste & no stockouts ????
?? Save by producing efficiently???
?? In a nutshell: MRP keeps businesses stocked with precisely what they need, and only what they?need! ??
?? Industry?& Key Statistics, What is MRP & Wonders?
?? MRP lead to 30% lower inventory?costs for companies ???? (Aberdeen Group)
???80% of manufacturing companies use MRP to prevent shortages ??? (Source: Manufacturing Global)
Businesses with poor inventory planning lose up to?$1.8 trillion worldwide ?? (Source: McKinsey & Co.)
A correctly working MRP can increase production efficiency by 25% ???? (Source:?SAP)
Without MRP, businesses would face states?of production delays, wasted materials, and unhappy customers! ??
Implementing?MRP – Steps???
DESIRE TO HAVE?MRP IN YOUR BUSINESS? Follow these 5 simple steps! ??
???Step 1: Identify What Materials You Will Need
?? Write?a list of each material to create your product ??
?? Know the materials you must?use & those you 'skate' through! ???
? For Example: A car factory ?? →?steel, rubber, glass, and electronics, to build cars.
?? Step 2: Forecast Demand
?? Using past sales data & trends to forecast product?sales ??
???Take into account seasonal trends (eg ice cream sells more in summer ????)
?? Prevent ordering excess supplies (that?you do not need) ?
? For example: a toy company ?? will produce?extra toys before Christmas when there is a high demand! ??
?? Step 3: Inventory &?Order Planning
?? Minimise stock levels – order materials?to come before they run out ?
?? Suppliers coordination?for on time delivery ??
?? Stockrooms should be?cleared by optimizing warehouse storage
??For instance, McDonald's ?? applies MRP to stock burger ingredients in fresh every day!
???Step 4: Use MRP Software to Process It
?? Use MRP software like:
?? SAP MRP?– Factories ??
?? Oracle MRP – Best for businesses with a heavy?focus on inventory ??
?? Microsoft Dynamics –?Best For Small-To-Medium Business
?? It automatically calculates?when & how much to reorder! ???
? Example: Tesla ? uses MRP with?AI to track every tiny part making up a car in progress!
?? Step 5: Monitor & Improve
?? Monitor what’s working / fix?what’s broken ??
?? Revise?forecasts with real-time sales data ????
?? Collaborate with?your suppliers, so there is no delays ??
? Example: Apple ?? tracks real-time iPhone production to?prevent shortages in materials.
???MRP Working in the Real World Examples
1?? Toyota —?Just-in-Time (JIT) Inventory ????
?? Toyota employs MRP with JIT manufacturing to order material?as needed
?? Less waste?& storage costs makes it quicker & cheaper to produce!
?? The reason why Toyota make high-quality cars at a?lower cost!
2?? Coca-Cola –?Meeting the Demand ??
?? Coca-Cola?makes millions of bottles every day globally ??
?? It tracks sugar, bottles,?labels, and caps using MRP so they never run out
???MRP is what keeps production going & stores filled!
3?? Zara — The Winning Formula in Fast?Fashion ?????
?? Zara doesn’t overproduce clothes in the first place – only what?is needed!
?? MRP traces fabric, buttons, and zippers to?help Zara accelerate production
??Meaning that they can bring new?clothes every two weeks!
?? Final Thoughts – Why Every Business Needs MRP?
Without MRP, businesses waste money, overstock materials, and struggle with late deliveries ????.
With MRP, businesses can:
? Avoid running out of stock ???
? Reduce waste & unnecessary expenses ?????
? Improve production speed & efficiency ???
? Meet customer demand without overproducing ????
MRP is the secret weapon businesses use to stay competitive and profitable!
?? Have you ever seen a store run out of your favorite product? Share your experience in the comments! ??
?? References:
?? MRP in Manufacturing: Best Practices – McKinsey & Co. (2023)
?? Manufacturing Global Report on MRP Adoption (2024)
?? SAP White Paper on MRP Efficiency Improvements (2023)
?? Toyota’s JIT & MRP Strategy – Harvard Business Review (2023)
?? Coca-Cola’s Supply Chain Optimization Report (2024)
?? Fast Fashion & MRP: Zara’s Inventory Management – Forbes Business (2023)
#SupplyChain #MRP #InventoryManagement #BusinessGrowth #Manufacturing #Retail #Logistics #Automation #Toyota #CocaCola #Zara