Materials and Resource Requirement Planning – Objectives, Advantages and Disadvantages

Introduction

Success of an operation department of any organization is dependent upon an efficient production plan. One of the key essential of a production plan is material and manufacturing planning system. Material requirement planning plays a pivotal role in assembly-line production. Material requirement planning is a system based approach, which organizes all required production material.

Material requirement planning is an information system for production planning based on inventory management. The basic components of material planning are:

• Material planning provides information that all the required raw material and products are available for production.
• Material planning ensures that inventory level are maintained at its minimum levels. But also ensures that material and product are available whenever production is scheduled, therefore, helping in matching demand and supply.
• Material planning provides information of production planning and scheduling but also provides information around dispatch and stocking.

Objective of Material Requirement Planning

Material requirement planning is processed which production planning and inventory control system, and its three objectives are as follows:

• Primary objective is to ensure that material and components are available for production, and final products are ready for dispatch.
• Another primary objective is not only to maintain minimum inventory but also ensure right quantity of material is available at the right time to produce right quantity of final products.
• Another primary objective is to ensure planning of all manufacturing processes, this scheduling of different job works as to minimize or remove any kind of idle time for machine and workers.

Advantages and Disadvantages of Material Resource Planning

As with every system based process, material resource planning also has its advantages and disadvantages, and they are as follows:

Advantages of Material Resource Planning

• It helps in maintain minimum inventory levels.
• With minimum inventory levels, material planning also reduces associated costs.
• Material tracking becomes easy and ensures that economic order quantity is achieved for all lot orders.
• Material planning smoothens capacity utilization and allocates correct time to products as per demand forecast.

Disadvantages of Material Resource Planning

• Material planning is highly dependent on inputs it receives from other systems or department. If input information is not correct than output for material planning will also be incorrect.
• Material planning requires maintenance of robust database with all information pertaining inventory records, production schedule, etc. without which output again would be incorrect.
• Material planning system requires proper training for end users, as to get maximum out of the system.
• Material resource planning system requires substantial investment of time and capital.

Material Resource Planning - Inter dependency of Business Function

Material planning not only benefits operation department but is also beneficial to the other department of organization. They are as follows:

• Material planning is useful in determining cash flow requirement based on material requirements and final dispatch schedules.
• It helps procurement team in scheduling purchase of necessary material.
• It helps the sales team in determining delivery dates for final products.

Implementation of Material Resource Planning

Implementation and success of material resource planning dependent on following factors:

• Acceptability of by top management about advantages and benefits
• Proper training and participation of all workers and personnel
• Precision and accuracy of input data for accurate and reliable results