How MRP Systems Are Changing in 2024

TL;DR: In 2024, MRP systems are evolving to address the complexities of modern manufacturing with cloud-based platforms, AI, and IoT. This shift from traditional, rigid systems to advanced, flexible solutions enables manufacturers to better scale operations, optimize production, and predict demand, revolutionizing manufacturing intelligence.

For decades, MRP (Material Requirement Planning) systems have been the backbone of production planning for discrete manufacturers. But in today's dynamic manufacturing landscape, are traditional MRP systems enough for your factory?

It’s clear that complexity is king for modern manufacturers. Manufacturers are building ever-more intricate hardware, with extensive Bills of Materials (BOMs) and demanding lead times. Traditional MRPs, often siloed and inflexible, struggle to keep pace with this evolving reality.

MRP systems are changing in 2024, paving the way for manufacturers to not only keep pace with the times but to set the pace for the future of manufacturing.

The Role of a MRP System in Manufacturing

Material Requirements Planning (MRP) systems have long been the workhorse for production planning.

According to TechTarget, an MRP system is a software-based tool that helps manufacturers determine the materials, components, and subassemblies needed to produce finished goods. It acts as a maestro, orchestrating the flow of materials throughout the production process, ensuring the right parts arrive at the assembly line at the right time.

For complex manufacturers working with hundreds of thousands of individual parts, an MRP system is indispensable. It serves as the cornerstone of manufacturing planning, offering a structured approach to a host of processes including inventory management, production scheduling, and procurement planning.

An MRP allows teams to start with the finish line, and then meticulously map their journey back, ensuring all materials and steps are lined up with pinpoint precision for a delivery date you can confidently predict.

Some of the key components and functionalities of traditional MRP systems include:

  • Master Production Schedule (MPS): This is the heart of the MRP system. It outlines what finished products need to be produced, in what quantities, and by when. This ensures that production goals are met on time.
  • Bill of Materials (BOM): Details all the components and subassemblies required to build a finished product, along with their specific quantities.
  • Inventory Records: MRP systems maintain real-time data on existing inventory levels of raw materials, components, and finished goods. This helps identify when items are running low and need to be reordered so production is not halted due to material shortages.
  • Reporting and Analysis: MRP systems generate various reports and analytics to help manufacturers make informed decisions. These reports can include performance metrics and other critical data that provide insights into the manufacturing process and areas for improvement.

MRP or ERP Systems: What’s the Difference?

MRP and ERP systems both play a role in manufacturing, but they cater to different needs and have distinct functionalities. The experts at Forbes break it down as:

  • Enterprise Resource Planning (ERP): A type of software that large companies use to manage the various day-to-day business activities within one central system, from accounting and compliance to risk management and supply chain operations.
  • Material Requirements Planning (MRP): A system used in manufacturing for determining the materials and components necessary when manufacturing a product.”

In other words, MRP systems focus on a specific area, such as material management. An ERP solution, on the other hand, manages a broader range of functions beyond production with a heavy bend toward finance.

Though they have distinct functionalities, these systems work even better together. An ERP system might integrate with an MRP for production planning, which creates a more connected factory with a comprehensive view of the entire business operation.

Engineer in warehouse using MRP system to check inventory

Modern MRP System Meaning

While traditional MRP systems have been instrumental in streamlining manufacturing operations, the landscape of manufacturing is continually evolving. Manufacturers today face new challenges and complexities, and their solutions need to meet these new requirements head on.

Modern MRP solutions are more advanced, leveraging the latest technological advancements to offer greater flexibility, intelligence, and efficiency. Here is a closer look at how MRP systems are changing this year.

  1. Cloud-based solutions: On-premise MRP systems (and most other systems) are becoming a relic of the past. Cloud-based solutions offer superior scalability and accessibility for truly smart factories. The flexibility they provide allows manufacturers to scale their operations effortlessly and access their data from anywhere, anytime.
  2. Artificial Intelligence (AI) and Machine Learning (ML): The power of AI and ML is transforming MRP systems. These technologies enable predictive analytics and demand forecasting to help manufacturers remain competitive. Using a mix of historical and current data, these technologies can easily identify trends to reduce waste and optimize production.
  3. Integration with Industrial IoT (IIoT): The rise of the Industrial Internet of Things (IIoT) is revolutionizing data collection on the factory floor. These tools provide real-time data on equipment performance, material usage, and production progress. An MRP solution that seamlessly integrates with IIoT empowers manufacturers to leverage data for real-time process optimization and proactive maintenance.

These advancements in MRP systems are paving the way for a new era of manufacturing intelligence. Learn more about ION Autoplan, First Resonance’s refreshing take on Material Resource Planning, which can set your factory up for success this year.