What is MRP?
Material Requirements Planning (MRP) is a system that calculates what materials you need, how much you need, and when you need them — based on your open orders, current inventory, and lead times. For job shops, it's the difference between ordering materials proactively and scrambling when an operator says "we're out of 6061."
How MRP works
MRP starts with demand — your open sales orders and jobs. It looks at what each job requires (the bill of materials), checks what you have on hand (inventory), and calculates the gap. That gap becomes purchase suggestions: what to order, from whom, and when, so materials arrive before the job hits the floor.
The key inputs are: (1) a master production schedule (what you're making and when), (2) bill of materials (what each product requires), and (3) inventory records (what you have). MRP connects these three and does the math you'd otherwise do on a whiteboard.
MRP vs ERP
MRP is one function within a larger ERP system. ERP (Enterprise Resource Planning) covers everything — quoting, production, scheduling, quality, invoicing, and more. MRP specifically handles the material planning piece. Most modern manufacturing ERPs include MRP as a built-in module rather than a standalone system.
Do job shops need MRP?
If you run fewer than 5 concurrent jobs and buy materials per-job, you can probably get by without formal MRP. But once you're running 10-20+ jobs with shared materials, MRP prevents the two most expensive problems: (1) buying material you already have because nobody checked inventory, and (2) not having material when the job is ready to run, causing idle machines and missed deliveries.
The tipping point for most shops is when material shortages start causing schedule disruptions more than once a month.
Choosing MRP software
For small job shops, you don't need a standalone MRP system. You need an ERP that includes MRP alongside quoting, job tracking, and scheduling — so everything is connected. The MRP calculation is only as good as the data feeding it, which means your inventory, BOMs, and job schedules need to be in the same system.
Avoid MRP tools that require manual data entry for inventory and BOMs. If your MRP doesn't automatically consume inventory when parts ship and doesn't automatically create demand when you open a job, you'll spend more time feeding the system than it saves you.
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