An MRP system determines purchasing and production plans from initial demand, valid bills of materials, genuinely available inventory, open receipts, lead times and planning rules. The calculation can be fast, but it is not magic. If material requirements, bills of materials, inventory or lead times are inaccurate, the result will simply present inaccurate assumptions in an orderly way.
Material requirements planning is therefore not only about running a calculation. It is a process in which a company must first decide which data it trusts, how it separates confirmed demand from an estimate, and who reviews proposals before they are executed.
MRP is a calculation of requirements over time. It starts with demand for a finished product or a higher-level assembly, then checks what is needed to make it and when it must be available.
For each item, the calculation compares:
When available quantity and expected receipts do not cover demand, the system creates a proposal. For purchased material, this may be a purchasing proposal. For a semi-finished or finished product, it may be a production proposal or a work order, depending on the defined process.
The distinction between a proposal and a decision matters. An MRP system can show that a certain quantity should be ordered by a certain date. It cannot assess on its own whether a forecast is realistic, whether a supplier can deliver, or whether material should be substituted. Those decisions remain with planners, purchasing and production teams.
MRP starts with independent demand. This can be a sales order, production plan, forecast, service requirement or safety stock target. The system then calculates dependent demand for components, materials and semi-finished products through the bill of materials.
Recording a quantity alone is not enough. For the purchasing plan, the source, date and status of demand are important. A customer sales order, an internal forecast and a plan that is not yet confirmed do not carry the same level of certainty. If the system and planner cannot distinguish them, everything may appear equally urgent.
Practical rules for initial demand include:
If the production plan is maintained outside the system, a clear method is needed to transfer and verify the data. Otherwise, the MRP calculation can be consistent while being based on an outdated plan.
A bill of materials, or BOM, connects a finished product with its components. It determines which material quantities are required, at which level they are used, and whether semi-finished products exist between the finished product and raw material.
For material requirements planning, the BOM must be complete and valid for the planned production date. A product may change, a material may receive an approved substitute, and a new technical version may apply only from a particular date. MRP needs to use the BOM that is valid when production is planned, not merely the one currently visible on the item.
Missing version control or validity dates typically creates two kinds of error:
A third common problem is an incomplete BOM. If a component is missing, MRP will not plan it. If the quantity per BOM is wrong, the requirement calculation will also be wrong. This is not a formula error, but an input data error.
It is also useful to check the relationship between the BOM and the actual shop floor. Is material used in production as the BOM describes? Are there regular scrap, substitutions or additional consumables that have not been maintained in the data? If these differences are resolved verbally, the plan will struggle to identify them reliably.
Book inventory may not be available for a new order. Part of the stock may be reserved for another requirement, under incoming or quality inspection, blocked, damaged, set aside for service, or stored in a location unavailable to planned production.
An MRP system needs to respect availability rules. The planner must know whether a given stock status is treated as available, conditionally available or excluded from planning. Without this distinction, the system may reduce the purchasing plan by relying on material that cannot be used.
The same check applies to open purchase orders and internal production orders. A receipt date may be supplier-confirmed, estimated from an agreed lead time, or entered only for administrative purposes. All are useful data points, but they are not equally reliable.
A useful planner view does not hide this difference behind one date. It should show at least:
Lead time determines when a proposal must become a decision. If material needs to be available on Monday and the full time required to purchase it ends before that day, the planner cannot wait until the requirement date to act.
Total lead time is more than transport. It may include request processing, order preparation and dispatch, supplier confirmation, supplier production, transport, receipt, incoming inspection and material preparation for use. For an internal semi-finished product, it may include waiting for capacity, preceding operations, drying time, inspection and movement between locations.
If one general lead time is used for an entire item group, MRP proposals may systematically arrive too late or unnecessarily early. Rather than trying to perfect all data at once, it is sensible to first check critical materials: those with long lead times, a limited number of suppliers, a large effect on production, or frequent delivery changes.
It is also necessary to determine what happens when a lead time is unknown or not maintained. Such an item should not pass through the plan unnoticed. Its proposal requires an additional review by purchasing or the planner.
Assume a production plan requires a finished product in a specific week. Its BOM contains component A and semi-finished product B. Semi-finished product B has its own BOM containing component C.
MRP first creates gross demand for A and B based on the quantities in the finished product BOM. It then checks available inventory, open purchase orders, lead time and the ordering rule for A. If quantity is missing, it proposes purchasing early enough for A to be available for production.
For B, the system checks whether the semi-finished product can be made or is already planned. If B must be produced, its planned production creates dependent demand for C. The lead time for C must align with the production start of B, not only with the delivery date of the finished product.
This sequence shows why a change at a higher level quickly affects the purchasing plan. Moving the finished product date, changing its quantity or using a new BOM version can change lower-level requirements. The planner should therefore review exceptions rather than assume every new proposal represents a new actual obligation.
An automated proposal can speed up work preparation, but it should not bypass accountability. Planning, purchasing and production teams need to review situations where data or a business decision may change the result.
A daily view is more useful when it shows decisions rather than only a large number of lines. It can highlight:
Purchasing then decides whether to send an order, combine requirements, speak with the supplier or propose a substitute. Production assesses capacity and work sequence. Sales or planning may confirm whether a customer due date can change. The MRP system connects these decisions through the same data, but it does not make them instead of people.
For the connection between material requirements, planning and execution, see ORKA manufacturing and Manufacturing work orders .
The most useful initial check does not require analysing every item immediately. Select ten critical items and manually trace the calculation path from the finished product to the purchasing or production proposal.
For each item, check:
Every difference between the manual check and the result reveals data, a rule or a business assumption that needs attention. Only after this review does it make sense to extend automation to more items, locations or plans.
The next step is to assign owners for key data: who maintains BOMs, who confirms inventory statuses, who updates lead times, and who reviews MRP exceptions. When these responsibilities are clear, material requirements planning becomes an understandable requirements calculation that a planner can verify and use in daily work.