First, definitions:

Material Requirements Planning (MRP)—calculates material needs for production at required volumes.

MRP system—software implementing MRP methodology.

How MRP systems work

• Set optimal production schedules
• Track non-production materials in orders
• Calculate total material needs per product
• Determine net material needs and generate supplier orders
• Adjust orders to prevent delays

MRP systems process data from ledgers, pending orders, and product specs—outputting order plans and execution reports to guide internal material use and external purchases.

They optimize schedules, reduce overhead, and identify bottlenecks.

A bottleneck is where workflow stalls. E.g., if three operations take 20, 40, and 10 seconds, the 40-second step bottlenecks the others.

How MRP saves millions

British Airways serves 50M meals/year. In 1997, they implemented MRP for millions of items from 300 suppliers.

Aligning supply with ticket demand cut waste, inventory, storage space, and shortages—saving over 322M RUB annually.

But...

MRP’s flaw: it ignores production capacity and labor costs. In the 1980s, Manufacturing Resource Planning (MRPII) evolved to include:

• Business planning
• Sales planning
• Production planning
• Capacity planning
• Management systems

MRPII’s core: forecasting, planning, and controlling production across a product’s lifecycle.

MRPII benefits:

• Real-time operational insights
• Long-term and granular planning
• Optimized workflows, lower overhead
• Holistic financial tracking

But...

MRPII’s drawbacks:

• Overemphasis on orders
• Weak integration with design, engineering, HR, and finance

Choose based on your production needs—consult an expert.