Manufacturing Resource Planning (MRP II): Definition and Examples

What Is Manufacturing Resource Planning (MRP II)?

Manufacturing resource planning (MRP II) is a process used by businesses to determine and allocate the resources needed for efficient manufacturing.

It combines the data gathering and input efforts of a company's personnel with the processing advantage of a computer system.

MRP II is designed to centralize, integrate, and process information for effective decision-making related to the scheduling, design engineering, inventory management, and cost control required for manufacturing.

Understanding MRP II

MRP II is a computer-based system that can create detailed production schedules using real-time data.

These are then used to coordinate the arrival of component materials with machine and labor availability. This ensures a smooth-running manufacturing process.

Background

MRP II is an extension of the previous MRP (materials requirement planning), which was one of the first software-based integrated information systems designed to improve productivity for businesses.

The MRP information system was a sales forecast–based system used to schedule raw material deliveries and quantities based on assumptions about the machine and labor units required to fulfill a sales forecast.

By the 1980s manufacturers realized they needed software that could also tie into their accounting systems and forecast inventory requirements. MRP II was the solution.

ERP Predecessors

MRP II is used on its own or as a module within a more extensive enterprise resource planning (ERP) system.

ERP is a process by which a company, often a manufacturer, coordinates and manages the essential parts of its business to achieve its company-wide objectives as effectively as possible. Both MRP and MRP II are seen as predecessors to ERP.

An ERP management information system integrates planning, purchasing, inventory, sales, marketing, finance, and human resources.

ERP is most frequently used in the context of software, and many large applications have been developed to help companies implement it.

Examples of MRP II Software

MRP II is not proprietary software and thus is offered by a variety of providers:

• Fishbowl
• Factory Edge
• Prodsmart
• Abas Forterro
• Oracle NetSuite
• Epicor
• VAI S2K Enterprise

MRP II vs. MRP

MRP II has effectively replaced MRP software, as most MRP II systems deliver all of the MRP functionality and more.

In addition to offering master production scheduling, bill of materials (BOM), and inventory tracking, MRP II provides functionality within logistics, marketing, and general finance.

MRP II is able to account for variables that MRP didn't, including machine and personnel capacity. It provides a more realistic and holistic representation of a company’s operating capabilities.

Many MRP II solutions also offer simulation features that allow operators to enter variables and see the downstream effect. Because of its ability to provide feedback on a given operation, MRP II is sometimes referred to as a “closed-loop” system.

MRP included the following three major functionalities:

• Master production scheduling
• Product structure records
• Inventory status records

MRP II includes those three, plus the following:

• Machine capacity planning
• Demand forecasting and management
• Input/output control (quality assurance)
• General accounting

MRP II systems are still in wide use by manufacturing companies today and can either be found as stand-alone solutions or as part of an ERP system, which is regarded as the successor to MRP II software.

ERP suites include applications well outside the scope of manufacturing. These can include everything from human resources and customer relationship management to enterprise asset management.

The Bottom Line

MRP II is a resource planning system used by manufacturing businesses to implement a delay-free, efficient, and successful manufacturing process.

It replaced MRP, a previous and simpler system, and is incorporated into even broader-based ERP systems as one component.