Materials requirements planning (MRP) and lean manufacturing are two different methods of production. MRP often relies heavily upon procuring dependent demand supplies to maintain inventory. Lean, on the other hand, strives to eliminate inventory and produce in a just-in-time manner. These concepts differ in how production occurs and the manner in which secondary materials are ordered. In some instances, MRP and lean are integrated to garner their respective strategic planning and cost efficiency benefits.
MRP is an inventory management system usually supported by computer technology. The intent is to help managers track dependent demand supplies, or secondary materials, used in the production process. In this sense, a company often bases its production schedule on the procurement of secondary materials rather than consumer demand. Managers are thus able to use MRP to determine what is needed, quantity and manufacturing deadline.
Secondary materials are likely to vary among different manufacturing facilities. Such materials may include subassemblies, component parts and raw supplies. In a plant that manufactures furniture, for example, secondary materials may include several different fabrics, wood, metal and foam for stuffing.
MRP often works backward from a list of finished goods required for the production plan. This list often provides requirements for secondary materials. When inputting information into MRP computer software, managers are likely to use a master production schedule, bill of materials and inventory records file.
If used correctly, the advantages of MRP can often help managers plan well in advance. This means scheduling production workers and allocating time appropriately, arranging for capacity needs and keeping secondary material costs to a minimum. MRP works in contrast to lean manufacturing, which relies on the totality of an organization to meet customer demands. Whereas MRP is dependent upon planning so that materials needs are met, lean is dependent upon execution so the finished good is delivered without waste.
Toyota Corporation is largely credited with developing the idea of lean processes. However, lineage for lean manufacturing, also often known as just-in-time production, can be traced as far back as Eli Whitney and Henry Ford. The concept of lean is to simply eliminate waste. Many proponents of lean manufacturing believe materials, employee time, idle equipment and product inventory are examples of waste, which in turn often hurt a company’s profitability. Lean, therefore, usually eliminates idle work and inventory to deliver fresh, quality products as demand occurs.
A variety of concepts are often interwoven within the practice of lean. Employee team members, for example, are usually considered invaluable parts of the whole production process. Finished goods are thus no longer dependent upon just a manager, but rather upon the entire organization. Quality is another integral part of lean manufacturing, which usually focuses on total cost reduction. In turn, this likely means meeting customer expectations on the first try to eliminate product re-works and returns.
One of the greatest advantages of lean processes is its typical allowance for ongoing improvement. Organizations that implement this practice often strive for greater efficiency, which may exploit employees’ talents and a company’s overall capacity. Lean may also be personalized to meet individual company’s needs. It is usually independent of software or a definitive way of producing.
MRP and lean largely differ in how they perceive inventory. MRP, for example, often relies upon product inventory to meet future customer orders. Lean, on the other hand, usually forces companies to produce as-needed. Hence the term just-in-time, which often refers to fulfilling orders as they arrive, not as they are anticipated.
As a result of the inventory paradigm, MRP and lean also treat production differently. Companies that implement MRP are often reluctant to produce small lots of a finished product because of cost inefficiencies. Those that use the lean concept, however, are likely to welcome small order batches. This is often because machine set-up times are minimal and the labor force is ready to work.
Some companies are successful with integrating MRP and lean practices. This combination often works well when implementation of one or the other does not meet all production needs. Managers are likely able to strategically plan before production needs are determined, while inventories and costs remain at a minimum. In this manner, independent demand is likely based on an expected level of capacity.