MRP vs. MPS—Two Key Aspects of Production Planning

By Anne Kaese | September 27, 2023

Modern manufacturing is a balancing act between meeting customer demand with reasonable lead times and managing your supply chain, inventory, and manufacturing processes. The landscape is replete with pitfalls. For example:

  • Is your demand forecast accurate? If it’s too high, you may end up with extra stock sitting in a warehouse. Worse yet, if you’re a food, beverage, or cosmetic manufacturer, you may end up throwing out ingredients or chemicals that sit past their expiration dates. If the demand forecast is too low, you may lose business because you don’t have products ready when your customers need them.
  • If demand spikes, will a supply chain bottleneck prevent you from ramping up production? An international supply chain may give you the best prices on raw materials, but overseas shipping increases procurement times. In addition, the unexpected—war, a natural disaster, a global pandemic—can disrupt your supply chain without warning.
  • Are you carrying excess inventory of components or finished products? Tying up your cash resources in inventory may have spillover effects on other areas of the business.
  • How well does information flow between your teams? Do sales and production communicate well enough to avoid overpromising or under-delivering on finished goods? Is human resources aware of the labor needed to increase production when demand peaks?

Master production scheduling (MPS) and material requirements planning (MRP) are two key components of the manufacturing production planning process.

In this installment of the Stoneridge Software manufacturing blog, we’ll examine how MPS and MRP work together to optimize resources and ensure efficient production, supply chain management, and inventory management.

Whether you’re a small or mid-sized business (SMB) using Microsoft Dynamics 365 Business Central or a larger enterprise using Supply Chain Management, MPS and MRP are built-in functions of your Dynamics 365 enterprise resource planning (ERP) solution.

What Is MPS in Manufacturing?

A manufacturing master production schedule is a dynamic plan that covers:

  • What: Products and product variations to be made
  • How many: Quantities for each product and product variation
  • When: Time frame for production (usually between a few months and two years)

To produce an MPS, companies usually evaluate:

  • Expected demand
  • Availability of raw materials, components, subassemblies, or ingredients
  • Optimal inventory levels
  • Manufacturing capacity (in terms of factory equipment and labor)

The MPS is a nexus for input from teams across your entire operation—sales, supply chain, inventory management or warehousing, and manufacturing operations. Typically, companies formulate a preliminary MPS, assess its feasibility, and then make adjustments before enacting the plan.

As a dynamic document, your MPS will change as the business landscape changes—for example, unexpectedly high demand, difficulty acquiring a certain raw material, or a sudden labor shortage. The MPS is essentially a point of ongoing communication between sales and manufacturing—balancing demand and production optimally.

MPS features are built into Dynamics 365 manufacturing software. In most manufacturing companies, the MPS has too many moving parts to manage on a spreadsheet.

As a single, continuously updated source of truth for your entire enterprise, a Dynamics 365–based ERP can automatically update your MPS with the latest changes to the procurement timeline or sales orders. In make-to-stock contexts, you can set Dynamics 365 to run on an available-to-promise (ATP) engine; in other contexts, you can select capable-to-promise (CTP).

What Is MRP in Manufacturing?

MRP does for the manufacturing process what an ERP does for your business overall—connects systems, optimizes resource distribution, and enables informed decision making.

A material requirements plan is a detailed schedule for manufacturing the products on your MPS. The MRP takes into account:

  • The quantity and timetable for each finished item scheduled for production
  • The bill of materials (BOM) for each product and product variation—that is, the raw materials, components, and subassemblies (or ingredients, for food and beverage manufacturers)
  • Target inventory levels

Based on this input, the MRP system passes action items on to your teams. For example, it might direct procurement to purchase a specific quantity of a particular raw material by a certain date. It also tells your operations team which product (and how many of that product) to manufacture in a given week or month.

What Is the Difference Between MRP and MPS?

A consideration of the differences between MRP and MPS helps illustrate how these two processes work together to streamline the manufacturing process.

Your company’s material requirements plan and master production schedule are both dynamic documents ideally managed by manufacturing ERP software like Dynamics 365.

However, the MPS is more general—it lays out your company’s planned production at a macro level over the coming months. The MPS deals with finished products, not with multilayered BOMs that dictate the raw ingredients or components that go into a saleable item. The MPS is a critical input into the MRP.

Where the MPS is general, the MRP is specific. The MRP takes the macro-level plan set by the MPS and turns it into detailed points of action for the teams supplying and executing your production process.

The MPS says, “We need to make 50 green widgets and 50 red widgets each month.” The MRP gives your supply chain and factory managers detailed information on how to reach those production goals.

For example, the MRP might include:

  • A list of all the raw materials and components that go into a widget, plus the required quantity of each item
  • The labor requirements for each factory shift
  • A schedule for producing widget components or subassemblies from raw materials

Importantly, the MPS is where your production and customer-facing teams coordinate to ensure that you’re making what you need in sufficient quantities when you need it. The MRP is the comprehensive blueprint your supply and production teams utilize to get the job done.

How Does MPS Fit Into the Manufacturing Process?

Master scheduling is used differently in various manufacturing contexts. For example:

  • In custom manufacturing, MPS usually focuses on the top of the build pyramid, aiming to ensure that the required number of assembled products are ready on time.
  • In repetitive manufacturing, where many raw materials are used in several important subassemblies, MPS often focuses on subassembly bottlenecks near the middle of the production process.
  • In commodity manufacturing, where manufacturers differentiate a short list of raw materials into many end products, MPS typically focuses on critically important raw materials.

Streamlining the Manufacturing Process With MRP and MPS

The software tools for creating and maintaining a master production schedule and a material requirements plan are integrated into Microsoft Dynamics 365 ERP solutions—putting these tools within reach of any manufacturing operation, from SMB manufacturers to large corporations.

Dynamics 365 is ideal for a range of manufacturing methods and verticals, including:

Dynamics 365 ERP solutions offer many advantages in addition to their built-in MRP and MPS functions. These benefits include:

  • Software integration of every aspect of your business, from sales, marketing, and financials to supply chain, warehousing, and manufacturing operations
  • Access to AI and Internet of things (IoT) tools that enable 21st-century “smart” factories
  • Cloud-native applications accessible from any web browser, protected by Microsoft’s cutting-edge cybersecurity

Partner With Stoneridge Software to Use MRP and MPS in Your Manufacturing Operation

Stoneridge is an award-winning Microsoft Solutions Partner. We view every client engagement as a long-term collaboration, and we have extensive experience in helping manufacturers implement Dynamics 365 ERP solutions that optimize their operations and position their companies for growth.

To learn more about MPS and MRP functions in Dynamics 365 or to discuss a Dynamics 365 ERP solution, contact us today.

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