MRP

Material Requirements Planning

MRP calculates from bills of materials, stock levels and orders what needs to be procured or produced, and when.

MRP: Not to be confused with

MRP is NOT the same as plain inventory management. Inventory management only shows what is on hand, MRP actively derives purchase and production proposals from it. It should also not be confused with MRP II (Manufacturing Resource Planning), which additionally covers capacity and finance and is considered the direct precursor of today's ERP.

MRP systems emerged in the 1960s and 1970s to automatically derive purchase and production proposals from bills of materials, stock levels and lead times (Source 1). The extension to MRP II in the 1980s additionally incorporated capacity, labour and finance, and is considered the direct precursor of today’s ERP.

The difference from plain order management shows up clearly in Manufacturing: order management only records what was ordered, while MRP calculates actual material requirements across every level of the bill of materials.

Related terms

• Bill of Materials (BOM)
• ERP

Sources for MRP

1. Association for Supply Chain Management (ASCM), APICS Supply Chain Dictionary, entry "Material Requirements Planning" ↗