MRP vs DRP in Manufacturing

Materials resource planning (MRP) and distribution requirements planning (DRP) are two vital components of the manufacturing industry. Both of these planning methods are beneficial to manufacturing operations that are trying to optimize production and enhance overall efficiency.

They both have a similar goal - moving materials or goods throughout the supply chain in an efficient manner in the most cost-effective fashion. As these two terms are often reiterated throughout the industry, there may be some confusion as to how the two terms correlate and how they differ.

What is MRP?

Material Requirements Planning (MRP) refers to the process that translates master schedule requirements for finished goods into time-phased requirements for raw materials, components, parts, and sub-assemblies. The overall goal of MRP is to determine what materials are needed, how much is needed, and when these materials are needed.

While the master schedule designates the quantity and need dates of the end items, material requirements planning generates a production plan that indicates the timing and quantities of all materials required to produce those end items.

In manufacturing, MRP allows manufacturers to maintain a steady flow of materials through the supply chain by keeping their production planning, inventory control, and purchasing departments aligned.

MRP is also about being a step ahead of production to prepare for swift demand changes. Some manufacturers choose to use demand forecasting to anticipate the materials they will need to start production within a given time-frame. Using such a strategy requires your production facility to use accurate historical sales and inventory data to ensure that you are ordering the right amount of materials while preventing waste.

What is DRP?

Distribution requirements planning (DRP) is the process used for planning orders in a supply chain. DRP is an extension of Materials Requirements Planning which allows manufacturers to compute time-phased requirements.

The output of Distribution Requirements Planning is the distribution plan which ensures that goods are delivered in the most efficient manner. This includes considering the aspects of establishing the quantity and direct location that an item is required to arrive at in a given time frame.

Distribution Requirements Planning will benefit manufacturing operations as a whole by increasing the efficiency of distribution while decreasing costs. This allows production facilities to focus their time and attention elsewhere in the manufacturing process to further improve their operation. 

There are two methods of distributing goods through the supply chain: push or pull. The ‘push’ method is guided by the supplying facilities that produce goods and ‘push’ them to the downstream facilities. In contrast, the ‘pull’ method is guided by the inventory management and planning activities of the downstream facilities. They tell the supplying facilities the quantity and need date of each item or part that is required. DRP is most beneficial to manage goods that have a long manufacturing lead time.

MRP and DRP Correlation

While MRP focuses more on a single location, DRP focuses more on the control of the materials among the various locations. These two systems operate together and evaluate the supply chain in a variety of ways:

• Modification of Orders
• Receipt Schedules
• Inventory Balances
• Transportation Times

These evaluations promote insight within the supply chain and allow for enhanced distribution and efficient ordering of materials that aid production facilities through coming closer to the 

Materials and distribution planning can be a challenging task for many manufacturing facilities. This is why many modern manufacturers are choosing to use advanced planning and scheduling (APS) software that has material requirements planning and inventory management capabilities. PlanetTogether APS will allow you to automatically create a production plan and schedule that takes into consideration a multitude of scheduling constraints. This will ensure that you have enough resource capacity and materials on hand to begin production and deliver your items on time to your customers.

I have actually been able to reduce on-hand Raw Materials significantly, and it’s interesting. The observation is that I tend to cut it too close, but somehow we never run out! Folks have been used to over-buying to “be safe” for so long, that following the Inventory Plan (MRP) makes people nervous, but again, I never have run out, so I stand on that. I have had to rush in materials due to a surge in unplanned orders resulting in raw material demand, but I have those networks set up, so no biggie.

CHUCK DIPIETRO, DIRECTOR OF PROCUREMENT & PLANNING, BEMA INCORPORATED

 

Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With PlanetTogether APS you can:

• Create optimized schedules that balance production efficiency and delivery performance
• Maximize throughput on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to resource capacity
• Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!