What is Manufacturing Resource Planning (MRP II)?

Manufacturing Resource Planning is important just as Material Requirement Planning in an organization. But if you are not aware of what exactly Manufacturing Resource Planning or MRP II is, here’s everything you need to know about it.

What is Manufacturing Resource Planning?

Manufacturing Resource Planning is the operational and financial planning of the manufacturing process of an organization. This is an integrated system and an extension of MRP or Material Requirement Planning. The idea here is a single entity for planning and controlling purposes of the manufacturing process. MRP II covers all the areas from finances and general accounting to machine and labour capacity planning and quality, allowing companies to plan and work with more efficiency.  

Let’s have a look at the difference between MRP and MRP II.


MRP or Material Requirement Planning has some considerable differences than MRP II or Material Resource Planning. In MRP the main focus in on schedule and handle inventory such as raw materials, components and other parts. 

In MRP II, the system addresses a broader area. From man, material and machine, all areas involved in the manufacturing process is planned and operated in MRP II. MRP II is the successor of MRP, and basically, the difference between the two systems is the additional features MRP II comes with that the MRP doesn’t have. 

Let’s look at some of the critical functions and modules of MRP II.

  • Master Production Schedule (MPS)
  • Bill of Materials (BOM)
  • Item master data
  • Inventory control
  • Purchasing management
  • Shop floor control
  • MRP
  • Capacity planning and demand management
  • Sales and forecasting
  • Input/out control and more

Master Data for MRP II

Master data is a vital factor in MRP II just as in MRP. It lays a strong foundation to plan MRP II operations around. From routing, operating facilities, resource lists to forecasts, having a system in place to manage master data strategically can improve the entire resource management planning process.

Here data related to products, customers, production, machinery, labour, purchase, transport, orders, bill of materials, financial data will be used. In simple words, data that tells you who does what from where will be managed to ensure more efficiency and speed in operations. Thus, data in roles and responsibilities, processes, and policies should be governed, assuring the quality of data for reporting and transactional requirements.   

With this, organizations will be able to easily comply with regulations ensuring a standardized manufacturing process and quality for their customers in the end product. Master data in MRP II will also help reduce costs in many ways, as the data help predict and plan the material and machinery requirements, manufacturing lines, the workforce and facilities required with higher accuracy. With this, you will reduce wastage.  

Another benefit of master data in MRP II is that it helps you have better control over your Material Resource Planning operations; thus, you can expand, expect improved growth rates and scalability. On top of all, it will reduce risks, offering you risk-free profits while improving the competitor advantage.   

Closed Loop MRP Vs MRP II

Initially, MRP was all about scheduling materials. However, over time MRP evolved catering to the requirements of the manufacturing companies for higher efficiency. This is where closed-loop MRP comes in. Built around MRP, the system is where a feedback loop is incorporated from the executive functions to ensure that the planning is valid at all times. Closed-loop MRP allows plans to be checked easily against the capacity and identify whether they are achievable and realistic. 

Taking this to another step forward, MRP II or Manufacturing Resource Planning was introduced, expanding the scope of production resource planning. MRP II includes everything from marketing, finances, to engineering. These functions are seamlessly integrated with all the impacted areas in the manufacturing process, providing insight into the other function performance and plans. With these, companies get the ability to keep up with the demands with no delays, scale up the production process and clearly define job expectations and guidelines for workers while optimizing the performance. 

So MRP II helps you achieve better efficiency reducing wastes in many ways than with closed-loop MRP. 

Lead-time scheduling

Lead time is a critical aspect that you need to pay attention to material resource planning. Here companies have to adopt an appropriate lead time scheduling model that suits their manufacturing and production process the best. 

Mainly there are two lead time scheduling methods. They are forward to scheduling and backward scheduling. With forward scheduling very first available time slot is assigned for production as soon as all the resources are available.  

Backward scheduling starts with a delivery date from the customer, and then the production schedule is made backwards to meet the deadline effectively. Both scheduling methods have their pros and cons. With forward scheduling, you might have to hold finished products in inventory for a more extended period of time which will cost you money. However, this method ensures you a high labour utilization rate and more room for the unexpected workload to accommodate. Low material cost and low risks are two of the main benefits of backward scheduling, although it can be quite cumbersome to plan manually as many things have to take into account. Some of them are workstation loading, planned maintenances, holidays…etc. 

Recently, many companies are successfully using a combination of both forward and backward scheduling methods, which can be an option for you as well if you think just using one method is not for you. 

Reducing lead time can reap you many benefits for your organization from faster order processing, increased customer satisfaction to improved cash flow. Thus, companies must always look into effective strategies to reduce lead time without compromising the quality of the production process or the finished products. Some of the easy actions you can take to reduce the lead time are, choose nearby vendors to the company location, remove unreliable suppliers, automate your order processing workflow, complete multiple processes at a time, bring external processes inhouse and improve internal communication.  

For companies who use a made-to-order model, will have to be very strategic with their lead time scheduling to ensure the highest possible customer satisfaction. Here some companies use a different delivery time quoted to customers based on the capacity load. In contrast, others quote a fixed lead time and vary their production rates to accommodate the fluctuations. Regardless of the model you choose to follow, Material Requirements Planning (MRP) and Master Production Scheduling (MPS) are the key aspects you need to keep in check to ensure controlled lead time scheduling.  

Capacity load levelling

Overproduction and under production are a huge issue that required to be handled effectively in manufacturing resource planning. It’s important to have a clear understanding of capacity variations depending on fluctuating absences, vacation periods, outright plant closures during holidays and other manufacturing requirements of the company.

This is where capacity load-levelling comes in handy. It ensures that enough products are available in the inventory or current production schedule will fulfil on time on requested dates. Capacity load levelling usually expressed as a percentage. Here working with capacity profiles can make things super easy as it will provide you with an overview of available capacity of a handling resource per day from the current moment to the end of the resource’s validity period for both standard available capacity and capacity variants.

Order release

Order release is an essential document in the Material Resource planning process. It’s the official document that provides the authorization to the host, to release the items ordered to the customers. It is released to the warehouse marking the beginning of production activities. An order release is what converts a customer order to a production order. Here’s an availability check of materials, capacity and production resources/tools is critical.

Shop control

Staying informed with real-time data across the entire manufacturing processes ensures a smooth MRP process in your organization. Thus you need to have a strategic and effective shop control system in place that will update you of data from estimates to shipping and returns. With shop floor control, you will easily be able to track, evaluate, schedule, prioritize, manage, and report the progress of your manufacturing plant. 

Usually, shop floor control includes everything from staff, materials, machines, to production time. Here detailed scheduling and advance detailed scheduling tools are used to scheduling materials, availability of resources, tooling, and other sources of scheduling limitations.

Product costing

Product costing is another critical aspect of MRP that ensures you have accurately calculated the expenses that accrued to develop the final product. Here all the costs from raw materials, purchases, shipping and delivery to retail establishments are taking into account. In product costing, identifying an effective method, that works for your organization depending on whether you do made to stock production or made to order production is essential. 

MRP II or Manufacturing Resource Planning is truly can transform your manufacturing process, giving you many benefits. No matter the industry you are in or the size of your business, it will help you simplify things allowing you to reach your business goals fast and smoothly.