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in Demand Planning , Supply Chain , Supply Planning

How MPS, MRP, and DRP Help Supply Chains

by Vanguard Software

Supply chains are faced with opportunities and threats daily. To help supply chains overcome their challenges and handle unforeseen hurdles, organizations should implement dynamic supply chain models to increase their agility. Some common terms used in regard to dynamic supply chains are Master Production Schedule (MPS), Master Requirements Planning (MRP), and Distribution Requirement Planning (DRP).

Defining MPS, MRP, and DRP

When supply chains work through the product lifecycle, they target a product from end-to-end: from forecasting through shipment/delivery. Supply chains use different flowcharts that outline their resource plans.

A sample integrated process flowchart can include everything from logistics and shipping to forecasting models.

MPS, MRP & DRP blog graphic

The sub-processes might include:

  • Sales and Operation Planning (S&OP): Helps with making strategic decisions with sales and operations departments to fulfill demand; businesses may use demand planning and demand forecasting software
  • Master Production Schedules (MPS): Involves independent demand with production schedules where employees may be processing orders from forecasts or requirements from customer orders
  • Distribution Requirements Planning (DRP): Focuses on pushing inventory through the supply chain to help meet demand
  • Demand Forecasting: Helps plan for future customer demand and uses forecasting models
  • Material Requirement Planning (MRP): Coordinates materials that are required to meet dependent demand, where materials and resources have already been allocated to produce products; ensures the materials are available and in stock based on the required quantities

Exploring MRP, MPS, and DRP

While it appears that MPS, DRP, and MRP are equal in the graphic above, they do have a distinction:

  • MRP, which meets dependent demand, is based on requirements to produce a product.
  • MPS meets direct or independent demand. It’s tied directly to service and sales orders or forecasting.

MRP is run daily to expedite parts and materials that are needed for production runs. MPS can be run weekly and varies based on the number of customer orders or the forecasting requirements during the defined time frame. They are run separately because they have different functions.

When a business has requirements for finished good planning, it must reduce its change over time when going from the production of one product to another. Hence the need for an MPS schedule, which can run weekly. The MRP is run frequently for suggested action messages that might be required during production. It helps the production schedule stay on track.

Important aspects of MPS, MRP, and DRP

When exploring MPS, MRP, and DRP, remember that MPS is generally a sub-process of MRP. It focuses on the products the company has prioritized based on different criteria or optimization. A company may schedule a separate MPS to run for these products, before an MRP run occurs, to ensure they correctly plan for the items they are using before the MRP takes place.

Another reason that MRP is required is that an MRP list displays the results the business needs based on their last planning run. While some might question why MRP is needed if stock lists are available, changes can take place between runs. To help with this, MRP displays any changes in stock quantities, customer receipts, and current stock lists.

DRP comes into play because it’s integral for inventory details and distribution activities. It helps manage the flow of materials as they go to and from the business, warehouse, and distribution center. DRP’s focus on materials causes it to work similarly to the way MRP works with manufacturing.

DRP, MRP, and MPS play integral roles that help supply chains monitor each product from end-to-end, or from forecasting to delivery.

 

About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on the Vanguard Predictive Planning platform. Vanguard Software is based in Cary, North Carolina.

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