Understanding Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a systematic approach to production planning and inventory management. Originating in the manufacturing sector, MRP helps businesses calculate the materials and components needed to manufacture a product. The primary objectives of MRP are to ensure that materials are available for production, products are available for delivery to customers, and inventory levels are kept at a minimum.

MRP works by taking into account several key factors:

• Bill of Materials (BOM): The list of materials and components required to produce each product.
• Inventory Levels: Current stock levels of materials and finished goods.
• Lead Times: The time required to receive materials from suppliers.
• Demand Forecasts: Projected demand for finished products.

By analyzing these factors, MRP systems generate purchase orders for raw materials, production schedules, and work orders, ensuring that the right materials are available at the right time to meet production demands without overstocking.

What is MRP in NetSuite?

In NetSuite, Material Requirements Planning (MRP) is an integral part of the Advanced Manufacturing module, designed to streamline the production planning process. NetSuite’s MRP functionality extends beyond traditional manufacturing by integrating with various business processes, ensuring a seamless flow of information across departments such as procurement, production, and sales.

NetSuite’s MRP system is built to handle complex, multi-level BOMs, forecast demand, and manage inventory levels efficiently. It supports both discrete and process manufacturing environments, making it versatile for different types of industries. The system automates the creation of purchase orders, work orders, and transfer orders, reducing the manual workload and minimizing the risk of errors.

Why NetSuite Excels at Handling MRP

NetSuite’s cloud-based platform offers several advantages that make it particularly effective in handling MRP:

1. Real-Time Data: NetSuite provides real-time visibility into inventory levels, production schedules, and demand forecasts. This ensures that your MRP calculations are always based on the most up-to-date information.
2. Integration with Other Modules: NetSuite’s MRP integrates seamlessly with other modules like Inventory Management, Order Management, and Financials. This integration allows for a holistic approach to managing your production process, from procuring raw materials to delivering finished goods.
3. Scalability: As your business grows, NetSuite’s MRP can scale with you. Whether you’re managing a single production facility or multiple locations, NetSuite’s cloud-based architecture ensures that your MRP system can handle increased complexity without a hitch.
4. Customization: NetSuite allows for extensive customization of the MRP process to fit the unique needs of your business. You can adjust planning parameters, set up custom workflows, and tailor reports to gain deeper insights into your operations.

With these capabilities, NetSuite’s MRP module not only meets the basic requirements of material planning but also enhances overall operational efficiency, reduces costs, and improves customer satisfaction.

NetSuite MRP Setup Tutorial

This tutorial will guide you through the process of setting up Material Requirements Planning (MRP) in NetSuite. Follow these steps to configure MRP and optimize your inventory management and production planning processes.

Step 1: Enable MRP Feature

1. Navigate to Setup > Company > Enable Features.
2. Go to the ‘Items & Inventory’ tab.
3. Scroll down to the ‘Demand Planning’ section.
4. Check the ‘Demand Planning’ box.
5. Scroll down further and ensure that the ‘Advanced Inventory Management’ and ‘Supply Chain Control Tower’ features are also enabled.
6. Click Save to apply the changes.

Step 2: Set Up MRP Parameters

1. Navigate to Setup > Accounting > Accounting Preferences.
2. In the ‘Items/Transactions’ tab, scroll down to the ‘Demand Planning’ section.
3. Configure the following parameters:Demand Time Fence: Set the period (in days) within which the system will not generate new supply orders.Planning Horizon: Set the number of days for which the MRP will plan ahead.Planning Method: Choose ‘MRP’ for Material Requirements Planning.
4. Click Save to apply the preferences.

Step 3: Create Item Records for MRP

1. Navigate to Lists > Accounting > Items.
2. Click New to create a new item or select an existing item to edit.
3. In the ‘Purchasing/Inventory’ subtab, configure the following fields:Reorder Point: Set the inventory level at which an item should be reordered.Preferred Stock Level: Set the ideal inventory level for this item.Safety Stock Level: Set the buffer stock level to avoid stockouts.
4. Under the ‘Supply Chain Planning’ subtab:Supply Planning Method: Select ‘MRP.’Planning Time Fence: Set the number of days within which no new orders will be planned.Lead Time: Enter the number of days it takes to receive the item after ordering.
5. Click Save to finalize the item setup.

Step 4: Set Up MRP Workbench

1. Navigate to Planning > Material Requirements Planning > MRP Workbench.
2. Click New MRP Workbench to create a new MRP workbench.
3. In the ‘Criteria’ section:Item Location: Select the location where you want to plan materials.Planning Date: Set the start date for the planning process.Horizon: Set the number of days to plan ahead.
4. In the ‘Planning Actions’ section:Generate Work Orders: Check this box if you want the system to automatically create work orders.Create Purchase Orders: Check this box if you want the system to automatically create purchase orders.
5. Click Run to execute the MRP process.

Step 5: Review MRP Results

1. After running the MRP, the results will be displayed in the MRP Workbench.
2. Review the suggested orders and production schedules.
3. Make adjustments if necessary by editing the work orders or purchase orders directly from the workbench.
4. Once satisfied, approve the orders.

Step 6: Monitor and Adjust MRP

1. Navigate to Planning > Material Requirements Planning > MRP Workbench List.
2. Select the MRP workbench you created earlier.
3. Periodically review the MRP suggestions and make adjustments as needed to ensure optimal inventory levels and production schedules.

Conclusion

By following these steps, you’ve successfully set up MRP in NetSuite, enabling efficient management of materials, inventory, and production planning. Make sure to regularly review and adjust your MRP settings to align with your business needs.

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