Materials Requirements Planning (MRP) and supply chain management features allows our users to incorporate their supply chain strategies into DEAR inventory management.
MRP considers demand from sales and supply from stock on hand, transfers, production, assembly and suppliers to generate supply management suggestions. Use MRP to compare actual and forecasted sales demand with available and potentially available stock supplies and determine when products should be produced in-house, bought from suppliers, and delivered to distribution centers.
Production BOMs can contain finished products (products with their own production BOM) or assembled components (products with their own Assembly BOM). Materials Requirements Planning (MRP) can be performed with or without BOM explosion. In this article we will explain the recommended workflow for MRP for production
We recommend conducting MRP planning for production as a two step process in order to properly schedule orders around available production resource capacity. See Materials Requirements Planning for Production for more information.
- Set General Settings → Minimum Before Reorder to Each location to use MRP module.
- Set up Products
- Configure product suppliers
- Set up Locations
- Users will need the Run: MRP Run permission in order to use this feature.
Table of Contents:
- MRP Run Parameters
- Execute MRP run
- View MRP list
MRP Run Parameters
MRP run parameters define what is included as demand and supply for a planning period. With these parameters, supply suggestions can be calculated according to your business requirements. Set MRP Run Parameters when starting a new run from Inventory → MRP.
The parameters are divided into 4 groups:
- General: Filters demand by date range, location, and customer
- MRP Supply Settings: Define what is included when calculating demand and supply suggestions
- Demand Source: Define what is included into demand calculation.
- Supply order status: Define the status of supply orders (e.g. Draft, Authorized, Planned) when they are created from MRP run.
Users can save MRP Run parameters so they can be reused for future MRP runs. When parameters have been set, the MRP Run can then be executed. This adds up all the sources of actual, draft (if requested), compares it to actual and draft (if requested) supply orders, and supply order required by dates. The user can then compare supply and demand and determine which actions should be taken to meet any remaining demand.
General settings filter demand by planning period, location, and customer.
- Planning period: Select this week, next week, this month, next month, or enter a custom date range. Planning period cannot be in the past. Start date and end date of the planning period are included.
- Required by date of the demand should be within planning period
- Tasks without a required by date and stock level demand are included in planning period by default
- Location: Select the location where demand and supply will be calculated. Select Every location to run MRP for all locations at once.
- Customer: Optionally filters sale demand by customer. In case of selection of the specific customer, all MRP Supply and Demand Source parameters are subjected to the filter by customer. If left blank demand will be calculated for all customers.
MRP Supply Settings
MRP Supply settings define what will be included in the demand and supply for stock. For example, minimum stock levels, nested production components, and demand from overdue sales. Additionally, the user can select if draft (e.g. transfer orders, purchase orders, production orders) or planned (production orders) supply orders are included in the calculated available supply.
NOTE: Tasks can be both supply and demand.
- Case 1: Demand is created from sales. In this case all Production, Transfer, Assembly orders can be supply tasks because these orders can cover the Sales Order demand.
- Case 2: Production, Transfer, Assembly orders are supply for some orders, but also create demand.
Ignore stock on hand/on order
The option available only when a customer is selected in the MRP General Settings.The setting defines if the current stock on hand and stock on order should be taken into account when calculating required supply for that customer.
Example: A customer John Smith creates a sale order for 5 chairs. Stock on hand for the location includes 2 chairs, with a further 3 chairs on order.
- If Ignore stock On Hand/On Order is checked, the on hand/on order quantity will not be taken into account. Demand = 5 chairs.
- If Ignore stock On Hand/On Order is not checked, the on hand/on order quantity will be taken into account. Demand = 0 chairs. No supply suggestions will be made.
Procure up to stock level
This setting means that stock level should be maintained at the chosen location, in addition to the stock demand generated from other sources.
Minimum stock level is calculated as Minimum Before Reorder + Reorder Quantity for a product.
- Reorder settings for a product are configured for each location from Inventory → Products → [select product] → Reorder Levels. Location reorder settings take priority over general reoorder settings.
- If reorder settings are not set for a location, default reorder settings (Inventory → Products → [select product] → General) will be used for the stock level calculation.
- See Low Stock Reorder - Setting Up Low Stock Reorder Points for more information.
e.g. A product Chair has no reorder settings for a location. General reorder settings for Chair are Minimum Before Reorder = 20 and Reorder Quantity = 10. This means that MRP calculations will be made so that a stock level of 30 chairs (20 + 10) on hand is maintained every day, regardless of demand from other sources.
Include past due demand
MRP calculations will take into account demand where Required by Date is earlier than the planning period start date range.
The demand is calculated including past due demand: the demand with the Required by Date earlier than the Planning period Start date range.
- e.g. Planning period = 20/02/2021 - 01/03/2021
Include draft and planned supply orders
Draft and Planned supply orders are Transfer, Production, Purchase, and Assembly orders which have not yet been authorized and are not included in the On Order quantity for a location. These orders can supply demand at one location while creating demand at another location.
A bill of materials (BOM) explosion displays the highest level of a production or assembly broken down into components at its lowest level. If the parent production or assembly contains components that also have a production or assembly BOM, the nested BOMs are also broken down into components.
NOTE: BOM explosion is applied to components only and does not apply to labor resources.
If BOM explosion is not checked, DEAR will not execute any decomposition or a production BOM or assembly BOM. Suggested supply orders will suggest production orders to meet demand, but no suggested supply orders will be created to meet demand for components and nested products.
NOTE: BOMs with auto-assembly/disassembly will generate suggested supply orders for the BOM components delivered to the assembly location. Suggested supply orders will not generate assembly order suggestions for products with auto-assemble/disassemble enabled.
If BOM explosion is checked, DEAR will decompose a production BOM or assembly BOM to calculate the demand for nested products and components.
We recommend conducting MRP planning for production as a two step process in order to properly schedule orders around available production resource capacity. See Materials Requirements Planning for Production.
Save MRP Run parameters
Users can save MRP Run parameters so they can be reused and save time for future MRP runs
Execute MRP run
Go to Inventory → MRP to start a new run.
Set parameters and start run
Manually set MRP run parameters or select a saved parameter set, then click Run to start the MRP run calculation.
View calculated demand and supply
Demand and current supply are calculated according the MRP run parameters when the user selects Run. Each line displays product and demand location.
- Independent Demand is the demand in the location without considering existing supply. Independent demand is based on confirmed sales, draft sales (optional), and stock level settings (optional).
- Dependent Demand is the demand for items that is dependent on another item. e.g. when Retail is replenished from Warehouse, the demand in Retail generates dependent demand in Warehouse.
- Existing Supply is calculated as stock on hand + stock on order + draft supply orders (optional)
- Total demand is calculated as Independent Demand + Dependent Demand - Supply.
MRP demand report can be searched by SKU, Product Name, and Location. Use Export to export the current layout in .csv format.
View suggested supply orders
The suggested supply orders tab displays the results of the MRP run calculation, based on demand quantity and required by dates, supply rules, planned transfer days, stock on hand, stock on order, and MRP run parameters. This will generate a list of suggested transfer, purchase, assembly, and purchase orders to meet the demand in each location by the required by dates.
NOTE: Supply rules are set for each location and specify how demand at a location should be replenished if there is no stock on hand. For example, a location can have supply rules that specify that replenishment should first transfer stock from another location, if not possible then produce goods in house, if not possible then purchase from lowest price supplier. See Supply Rules for more information.
Transfer planning is configured for each location and specifies when transfers between locations should take place. This is used to define the date of suggested transfer orders. See Transfer Planning for more information.
Users can Search suggested supply orders by Product name, Demand Location, Supply Location/Supplier, and Required by date.
Suggested supply orders can be filtered by:
- Products: Filter suggested supply orders by product families, categories, brands, tags, or specific products.
- Demand location: Select one or more demand locations included in the MRP run.
- Supply location/supplier: Select one or more supply locations or suppliers included in the MRP run.
- Supply order type: Filter list by one or more type of supply order (Purchase, Assembly, Transfer, Production).
Click Show products to view products in a supply order and split a supply order into multiple orders if necessary. Click the Supply From/Buy From fields or Status field to change the value before confirming an order.
Confirm reorder action
When you have verified the suggested supply orders details and status, check one or more boxes for a supply order and click Confirm/Reorder to generate the supply order.
Split supply order
Suggested supply orders with more than one product can be split into smaller supply orders, for example to order products from different suppliers. Click Show products to view products in a suggested supply order.
Click Split supply order to split some products into another order. Click + on the split order to add products from the original suggested supply order. Click Confirm to split the supply order. A supply order can be split as many times as there are product lines. Click Undo to remove all products from the split list, or X to remove a single product.
Recalculate takes into account supply orders that have already been edited and confirmed, and recalculates the demand quantities and supply suggestions. Recalculate is only available after at least one edited supply order has been confirmed. Demand is recalculated when Supply task, Supply or/and Required by Date is changed.
Export supply suggestions
Suggested supply orders can be exported in CSV format for reference. The CSV file also shows the full list of products for each suggested supply order. Click the Export button to download the CSV file.
View confirmed supply orders
Suggested supply orders that have been confirmed are moved to the Confirmed supply orders page. Confirmed supply order details are displayed here as read-only with a link to the order (purchase, transfer, assembly, production). Void a confirmed supply order to return it to the suggested supply orders page. After Void, the user should recalculate supply suggestions.
Confirmed supply orders can be searched by Product SKU, Product Name, Demand Location, Supply Location, and Required by Date.
Complete MRP run
Once an MRP run is completed, it can no longer be edited and becomes read-only. Click Complete to end the run and save your changes.
The Errors tab displays the list of errors which occurred during the MRP Run, for example if supplier, lead time, reorder quantity, and/or stock are not set for a product. This will cause incorrect calculations for demand and supply suggestions.
View MRP list
View active and completed MRP runs. There can be only one active MRP run at a time. Click an active MRP run to continue planning.
Check one or more boxes next to an MRP run and Delete to remove the run. Deleting a run does not delete created confirmed supply orders.