MRP vs. MPS: Choosing the Right Planning Approach for Your Manufacturing Business

Balancing supply and demand in manufacturing is essential to avoid stockouts, costly overages, and production bottlenecks that delay deliveries. The right plan can help. Material Requirements Planning (MRP) and Master Production Scheduling (MPS) are two foundational strategies manufacturers use to maintain control over inventory, demand response, and production timelines.

Understanding MRP and MPS

To choose between MRP and MPS, you should understand demand, as it ultimately drives decisions in your manufacturing business. There are two main kinds of demand:

• Independent demand refers to customers’ desire for a product. You can determine independent demand by looking at forecasts, market reports, pre-orders, and orders.
• Dependent demand is the demand for raw materials and parts needed to produce the final product. A bill of materials can help you determine dependent demand.

MPS is driven by independent demand and establishes which products you need to produce, when, and in what quantities. MPS is the “big picture” roadmap that creates better workflows by aligning your manufacturing capacity with demand. It ensures customers get products on time while reducing overstocking or stockouts.

While MPS focuses on the finished product, MRP is a micro-level system that determines the parts, materials, and subassemblies required to produce it. MRP answers to the MPS because it’s driven by dependent demand. MRP improves supply chain transparency and minimizes bottlenecks by making sure parts are available when needed.

For example, let’s say you make winter coats. MPS can help you determine when to produce the most coats for winter sales, how many coats to produce, and which types to produce to meet demand. MRP can help you determine when you need to order zippers, down material, fabric, buttons, and other materials (and in what quantities). 

When to choose MRP or MPS

Both MRP and MPS play an important role, but one may better suit your situation than the other. 

What Are the Benefits of MRP?

MRP may be right if you have a product with many materials, especially perishable materials, or components you need to manage. Owners who are concerned about reducing overstock and like a comprehensive approach to inventory may also choose MRP.

• Improves inventory control: MRP processes make supply chain management easier. They use real-time data to display current supplies, so managers can identify materials that need replenishment before they run out.
• Boosts production efficiency: MRP provides managers with significant insights into the time and materials required to keep production flowing smoothly. They can track and use raw data to minimize delays and miscalculations.
• Reduces purchasing costs: This process automates searches, enabling businesses to access the most cost-effective solutions. By minimizing purchasing costs, companies can offer better product cost-efficiency and reap the bottom-line benefits.
• Implements emergency strategies: MRP helps ensure efficient stock management. It sets strategies to prevent excess inventory by ordering when stock needs replenishing. You can also maintain safety stock in case of emergencies.
• Prevents common production bottlenecks: Businesses can maintain uninterrupted production by identifying potential bottlenecks before they occur.

What Are the Benefits of an MPS?

You might use MPS if you manufacture products driven largely by predictable customer demand. You may also lean more on MPS if you need careful scheduling. The main perks are increased profitability and reduced shortages.

• Simplifies order promises: The MPS provides accurate lead times, ensuring everyone knows how long it takes to create a product. It also prevents utilization-dependent exhaustion that may occur due to work intensity.
• Enhances communication: An MPS serves as a communication tool that helps manufacturing share production plans with other departments.
• Boosts efficiency: An MPS enables analysis and identification of potential bottlenecks, improving customer satisfaction and sales in the long run.
• Streamlines supply chain: An MPS reviews supply chain requirements and prioritizes them, boosting supplier relationships through timely delivery.

When to use both MRP and MPS

While both MPS and MRP are useful in different ways, some manufacturers use both because the two systems complement each other — MPS sheds light on your ultimate production goal, and MRP ensures you can meet it. Integrating them reduces the risk of inventory inaccuracies and missed orders by providing a clearer understanding of the final product’s production goal and what’s needed to meet it. 

If you manufacture bicycles, you may use MPS weekly or monthly to determine how many bicycles to produce and which types, based on seasonal demand, orders, trends, and market research. You might run MRP daily to make sure you have the gears, tires, lights, and bells needed to produce bicycles and meet demand. Using both prevents silos. You can be sure you have everything you need to produce the right amount of bicycles, on time, and in the varieties customers want.

The ERP advantage

Enterprise resource planning (ERP) systems like Microsoft Dynamics 365 Business Central are powerful platforms that help you integrate both MPS and MRP into your business while saving time. An integrated cloud ERP system lets MPS inform MRP using real-time data you can access from anywhere. You get automated processes to improve accuracy, and you can see all your data in one environment to make better decisions about ordering parts and scheduling production of completed products.

With today’s ERP systems, you can track inventory in real time, visualize data, and improve communication between production and other departments.

Learn how ArcherPoint can help

Whether you’re implementing a new ERP system or migrating from a legacy platform, ArcherPoint by Cherry Bekaert has deep industry expertise in Microsoft Dynamics 365 Business Central, Dynamics NAV, LS Retail, Azure, Microsoft 365, and Power Platform. We handle implementation, integrations, training, updates, and IT support, so you can focus on your business. Contact us today for a free consultation.

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