Supply Chain Planning Process Flow: The Importance of MPS, MRP, and DRP

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Daily, your supply chain faces threats, sometimes significant, other times small.  These threats can be internal, such as invalid or outdated data.  And we all know the pain of external threats, such as economic or political instability and unforeseen events, including the global pandemic, Suez Canal blockage, a chip shortage.

To help you mitigate challenges and overcome unforeseen hurdles, consider the increased agility you can realize with a dynamic supply chain model.  The key to that agility is planning process flow models that involve a Master Production Schedule (MPS), Master Requirements Planning (MRP), and Distribution Requirements Planning (DRP).

MPS, MRP, and DRP’s Role in Agile Supply Chain Process Flow

When supply chain planners work through a product’s lifecycle, you target a product from end-to-end within the flow of the supply chain planning process — from forecasting through shipment/delivery.  You can use a variety of flowcharts to outline the resource plan, including everything from logistics and shipping to forecasting modeling

The sub-process might include:

  • Sales and Operation Planning (S&OP):  S&OP helps make strategic decisions with sales and operations departments to fulfill demand; businesses often leverage demand planning and forecasting software.
  • Master Production Schedules (MPS):  MPS involves independent demand with production schedules where employees may be processing orders from forecasts or requirements from customer orders.
  • Distribution Requirements Planning (DRP):  DRP focuses on pushing inventory through the supply chain to help meet demand.
  • Demand Forecasting:  Demand Forecasting helps plan for future customer demand and uses forecasting models.
  • Material Requirement Planning (MRP):  MRP coordinates materials required to meet dependent demand.  Materials and resources are allocated to produce products, ensuring the materials are available and in stock based on the required quantities.

Exploring MPS, MRP, and DRP

MPS, MRP, and DRP each play a distinct role in the flow of the supply chain planning process.

  • MPS meets direct or independent demand.  MPS is tied directly to service and sales orders or forecasting.
  • MRP, which meets dependent demand, is based on requirements to produce a product.
  • DRP determines the number of finished goods to be sent to each distribution center.  DRP depends on actual demand signals, such as customer orders, and translates them into purchase orders.

MRP runs daily to expedite parts and materials 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 period.  They run separately based on their distinct functions.

When a business has requirements for finished goods 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, helping the production schedule stay on track.

Important aspects of MPS, MRP, and DRP

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

Another reason MRP is required is that an MRP list displays the results the business needs based on their last planning run.  While you might question why MRP is needed if stock lists are available, changes can occur 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 is 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.  DRPs focus on materials, which means the process is similar to how MRP works with manufacturing.

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

Make it easier to monitor and improve your supply planning process.  Explore Vanguard Predictive Planning™ and sign up for a demo today.