Material Requirements Planning (MRP) software can be a great option when a business is struggling to juggle the multiple elements of the manufacturing process.
Here we look at the way three companies have implemented an MRP system, and how this has benefitted their businesses in different ways.
MRP software – an overview
Before we move on to our three case studies, here’s a quick overview of what MRP is.
Material Requirements Planning or MRP software is a powerful scheduling tool that helps manufacturers track important factors like predicted customer demand and production capacity. This means you can purchase the right quantity of materials to produce goods and meet customer demand.
Put simply, MRP is a tool that answers four questions:
- What do we need? MRP records bills of materials – what specific materials, components and subassemblies go into each of your outputs.
- What do we have? An MRP system helps you track inventory levels, purchases and shipments of goods coming into your business.
- What are we capable of? The MRP system details what your people and and equipment can achieve and how quickly they can achieve it.
- When do we need it? MRP software helps you juggle the peaks and troughs of customer demand over the year.
Ultimately, the goal of using MRP software is to improve efficiency and cut costs. It does so by:
- Maintaining optimal minimum inventory levels
- Reducing the chance of waste, spoilage or stockouts
- Decreasing equipment and/or personnel downtime.
So what sort of business will benefit from using an MRP system? MRP is usually suited to larger businesses that:
- Manage multiple production sites
- Have complex workforce planning, production scheduling and maintenance planning needs
- Are wasting money purchasing inventory with their current system
How does MRP software work in practice?
Now you have an outline of how MRP works, we can turn to three case studies that show how manufacturers have used this software to streamline and/or expand their business.
1. How MRP helped Paddock Gear & Engineering expand
Paddock Gear & Engineering (Zimbabwe) supplies products to blue-chip companies in the power transmission industry. This field of manufacturing naturally demands an exceedingly high standard of product and rigorous quality control.
As Paddock expanded it found it was struggling to maintain control of jobs on the shop floor. Not only this, but quality control was being compromised as the company scaled to meet demand. The company’s director was also unable to keep track of whether or not jobs were making a profit.
How did MRP help Paddock Gear & Engineering?
Paddock’s response to these problems was to implement an MRP system. What this did was integrate the control of a whole series of factors into a single production suite:
- Manufacturing instructions and route cards
- Sales orders
- Work orders
- Batch traceability
- Job costing
By using an MRP system, key information on manufacturing jobs was available at the click of a button – from the whereabouts of a job to how much it cost.
According to Paddock’s founder and director, David Marklew, using MRP software has taken pressure off his workload, saved money, and impressed the company’s customers and assessors. He estimates that overall the MRP system has saved him employing two more full-time staff.
- Read the original case study: Paddock Gear & Engineering
2. How MRP replaced Northvale Korting’s obsolete IT system
Northvale Korting (UK) produces control valves for the automotive, petrochemical, marine, nuclear, water treatment, oil & gas industry and more.
Northvale’s 20-year-old IT system – while functional – lacked key operational features vital to modern business processes. Because of this, Northvale decided to adopt an MRP system to assist with operational control, management of internal processes and stock control.
How did MRP help Northvale Korting?
The MRP system Northvale chose took two months to go live, and staff undertook 10 days of training. The system addressed a number of areas, including:
- Shop floor data capture
- Sales order processing
- Batch purchasing
- Stock control
Since introducing the new system, Northvale has reported improved job costing, increased efficiency and lower costs.
3. How MRP helped transform Kirkstall Precision Engineering’s business
Kirkstall Precision Engineering (UK) manufactures products for multiple industries, including textiles, pharmaceuticals and medical equipment, energy, motor sport, oil & gas, and food. Over the last 30+ years, Kirkstall has grown from a small family-run business into a global supplier in these competitive industries.
In 2018, Kirkstall created a five-year transformation plan to facilitate its growth and find new opportunities. They started this transformation by investing in an MRP system.
How did MRP help Kirkstall Precision Engineering?
Kirkstall adopted an MRP system that provided inventory management and quality control for its growing manufacturing business.
This MRP software improved inventory control and work-in-progress management by linking barcode scanners to the system to track goods. This meant up-to-date inventory levels, improved quality control and greater predictability.
Kirkstall has since seen impressive growth: it grew by 30% in 2018 and 10% in 2019. After initially taking a hit from Covid-19, the company proved its flexibility by turning to a new challenge – providing ventilators for the UK’s National Health Service.
- Read the original case study: Kirkstall Precision Engineering
Do all manufacturing SMEs need MRP software?
These three success stories tell a positive story for MRP software – but do all SMEs need it?
Every SME is different, and every MRP system is different.
So the answer is: it depends.
We always recommend that you investigate all of your options before making an investment decision. Having said that, there is some general advice we can give you based on our experience.
SMEs are not usually the ideal MRP user
Generally speaking, SMEs are not the ideal users of MRP software.
MRP software is highly specialised, which means there is a steep learning curve for any business that adopts this sort of system. It also means a fairly costly capital investment – though not as costly as full ERP.
The flipside of this is that MRP helps businesses manage some very complex systems. MRP is sometimes even capable of running its own simulations, for instance.
While this level of functionality may sound ideal, for many SMEs it will be overkill.
For SMEs, problems with unplanned downtime and inventory waste often stem from poor inventory management, rather than manufacturing complexity.
In these cases, issues can generally be solved using simpler inventory management software, which has many of the same features as MRP but is more focused on good inventory and supply chain management.
- Learn more: Inventory management software for manufacturers