Manufacturing Resource Planning (MRP II): Definition and Example

What Is Manufacturing Resource Planning (MRP II)?

Manufacturing resource planning (MRP II) is an integrated information system used by businesses. It evolved from earlier materials requirement planning (MRP) systems by including the integration of additional data, such as employee and financial needs. The system is designed to centralize, integrate, and process information for effective decision-making in scheduling, design engineering, inventory management, and cost control in manufacturing.

Both MRP and MRP II are seen as predecessors to enterprise resource planning (ERP), which is a process by which a company, often a manufacturer, manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, and human resources. ERP is most frequently used in the context of software, with many large applications having been developed to help companies implement it.

Understanding MRP II

MRP II is a computer-based system that can create detailed production schedules using real-time data to coordinate the arrival of component materials with machine and labor availability. MRP II is used widely by itself, but it’s also used as a module of more-extensive ERP systems. It is an extension of the original MRP system, which is one of the first software-based integrated information systems designed to improve productivity for businesses.

An MRP information system is a sales forecast–based system used to schedule raw material deliveries and quantities based on assumptions of machine and labor units required to fulfill a sales forecast. By the 1980s manufacturers realized they needed software that could also tie into their accounting systems and forecast inventory requirements. MRP II was provided as a solution, which included this functionality in addition to all the capabilities offered by MRP.

Real-World Examples of MRP II Software

The following is a small sampling of some popular MRP II software providers:

• DELMIAworks (formerly IQMS)
• Fishbowl
• Factory Edge
• Prodsmart
• Abas Forterro
• Oracle NetSuite
• Epicor
• VAI S2K Enterprise

MRP vs. MRP II

For all intents and purposes, MRP II has effectively replaced MRP software, as most MRP II systems deliver all of the functionality of an MRP system. However, in addition to offering master production scheduling, bill of materials (BOM), and inventory tracking, MRP II provides functionality within logistics, marketing, and general finance.

For example, MRP II is able to account for variables that MRP is not—including machine and personnel capacity—providing a more realistic and holistic representation of a company’s operating capabilities. Many MRP II solutions also offer simulation features that allow operators to enter variables and see the downstream effect. Because of its ability to provide feedback on a given operation, MRP II is sometimes referred to as a “closed-loop” system.

MRP included the following three major functionalities:

• Master production scheduling
• Product structure records
• Inventory status records

MRP II includes those three, plus the following:

• Machine capacity planning
• Demand forecasting and management
• Input/output control (quality assurance)
• General accounting

MRP II systems are still in wide use by manufacturing companies today and can either be found as stand-alone solutions or as part of an ERP system, which is regarded as the successor of MRP II software.

ERP suites include applications well outside the scope of manufacturing. These can include everything from human resources and customer relationship management to enterprise asset management.

The Bottom Line

MRP II is an integrated system used by businesses involved in manufacturing to anticipate their needs. Among its functions are master production scheduling, bill of materials (BOM), inventory tracking, and functionality within logistics, marketing, and general finance. It replaced MRP, a simpler system, and is incorporated into even broader-based ERP systems as one component.