Key takeaways
- MRP takes a bill of materials, current stock, open orders, and lead times, and calculates what to order or produce, how much, and by when.
- A BOM is one input to MRP, not the same thing: the BOM says what a product is made of, while MRP decides when to actually buy or build each of those components.
- Small manufacturers can often run on a BOM plus reorder points; dedicated MRP becomes worth it once you are juggling many SKUs, shared components, and unreliable lead times by hand.
What material requirements planning is
Material requirements planning (MRP) is a calculation process that turns a demand forecast or set of confirmed orders into a time-phased plan for what raw materials and components to order or produce, in what quantity, and by what date, so a finished good is ready when needed.
MRP was one of the first manufacturing software categories, originally built to solve a specific problem: knowing you need to build 100 units of a finished good does not tell you, by itself, when to order the screws, brackets, and sub-assemblies that go into it. MRP explodes the demand for the finished good down through its bill of materials, nets it against what you already have on hand or on order, and offsets each requirement by its lead time.
What MRP needs as inputs
MRP is only as accurate as the data feeding it. At minimum, it needs four inputs working together.
- Bill of materials (BOM) — what components and quantities go into each finished good, including any nested sub-assemblies
- Demand — a sales forecast, confirmed customer orders, or a production schedule for finished goods
- On-hand and on-order inventory — current stock plus anything already purchased or in production but not yet received
- Lead time — how long each component takes to arrive once ordered, used to work backward from the date it is needed
MRP vs. a bill of materials
A bill of materials and MRP are frequently confused because MRP cannot run without one, but they answer different questions. A BOM answers "what is this product made of, and how much of each thing." MRP answers "given what I need to build and what I already have, what do I need to order or produce, and when."
A business can maintain accurate BOMs — for costing and for deducting the right components when a build completes — without running full MRP. MRP adds a planning layer on top: netting demand against supply and time-phasing purchase and production recommendations, which matters more as the number of SKUs, shared components, and variable lead times grows.
When a business actually needs MRP software
Many small manufacturers and makers never need dedicated MRP. If you build a handful of products from a stable set of components with fairly predictable lead times, a BOM for cost and component deduction, plus reorder points or min/max levels per raw material, covers the same ground with far less overhead.
MRP earns its complexity once you are manually cross-referencing multiple BOMs that share components, juggling dozens of open purchase orders against a changing production schedule, or dealing with lead times long and variable enough that ordering "when it looks low" causes either stockouts or excess inventory. At that point, the netting and time-phasing MRP automates stops being optional arithmetic and starts being the actual bottleneck.
Trusted by small businesses
What our customers say
“Super Kind! Quick replies from their support and very easy fixes, changed the dashboard a bit and customized it. Also gave me 450 items extra on the free plan just for me. Highly recommend and again great service!”
“Best customer service! Stockflow's customer support is fast and extremely helpful. They assisted me with customization of the software to improve my experience as a user.”