What’s the Difference Between MRP & MPS?

In the world of manufacturing, two key players—master production scheduling (MPS) and material requirements planning (MRP)—help streamline operations and keep everything running smoothly.

Today, we’ll explore the differences and similarities between MPS and MRP, the business cases that warrant the use of each, and how you can use an enterprise resource planning (ERP) system to harness the full power of MPS and MRP for your business.

Demand Defined: Independent vs. Dependent vs. Hybrid Demand

Demand is a key driver for any inventory planning system, so let’s first start with a few definitions. We’ll use these terms as we explore MPS and MRP.

Independent Demand

Independent demand is driven by customer orders and market trends. It reflects the direct needs of customers for specific products.

For example, if there’s a surge in demand for a popular item, inventory planning will focus on how much of that product to produce.

Dependent Demand

Dependent demand arises from the need for components necessary to manufacture finished products. These are items whose demand is determined by the demand for other products, often detailed in a bill of materials (BOM).

Examples include raw materials and subassemblies, which are consumed during the production process.

Hybrid Demand

Some items exhibit both independent and dependent demand characteristics. For instance, a product that can be sold on its own but also serves as a component in another product requires careful planning to balance both types of demand.

Spare parts and accessories are common examples; they may be used in production but are also sold separately as service items.

What Is a Planning System?

A manufacturing planning system guides you through the complexities of production and inventory management.

At its core, a planning system integrates various components, such as sales forecasts, inventory levels, and production schedules, to create a cohesive strategy for your manufacturing process. It empowers you to make informed decisions based on real-time data, helping you to adapt swiftly to changing market conditions and customer preferences. A well-implemented planning system ensures that everyone—from your production team to your supply chain partners—works harmoniously towards a common goal.

By embracing a robust planning system, you not only enhance your operational efficiency but also empower your team to focus on what truly matters—delivering exceptional products and experiences to your customers.

What Is Master Production Scheduling (MPS)?

Master production scheduling is your roadmap for what needs to be produced and when. Think of it as a friendly guide that helps you ensure the right products are available to meet customer needs.

MPS focuses on independent demand—products that customers order directly, influenced by sales forecasts and market trends. By taking into account your inventory levels, production capacity, and workforce availability, MPS ensures that you’re always prepared to deliver.

Here are a few of the benefits MPS can provide to your organization.

Cost Efficiency

With MPS, you can reduce unnecessary production runs, saving money and resources while optimizing your operations.

Timely Deliveries

By scheduling production accurately, MPS helps you meet customer expectations without the stress of last-minute rushes.

Smart Resource Use

MPS facilitates optimal allocation of your workforce and materials, leading to smoother operations.

Customer Delight

A well-structured MPS aligns production with customer demand, resulting in happier customers and repeat business.

Flexibility

MPS allows you to adjust quickly to changing market conditions, ensuring you remain responsive and agile.

What Is Material Requirements Planning (MRP)?

Material requirements planning is your go-to system for managing the materials and components needed to produce your finished products. Unlike MPS, which focuses on the big picture of production, MRP dives deep into dependent demand—the materials that depend on the production of those finished goods.

Here are some of the ways MRP can benefit your business.

Streamlined Material Planning

MRP ensures that you have just the right amount of materials on hand, helping to reduce excess inventory and minimize costs.

Clear Supply Chain Visibility

With MRP, you gain insights into your supply chain, enabling informed decisions.

Optimal Inventory Levels

MRP keeps your inventory levels balanced, so you avoid both overstocking and stockouts.

Efficient Operations

Automating order generation and inventory tracking through MRP saves time and reduces errors.

Team Coordination

MRP synchronizes manufacturing and purchasing activities, making teamwork easier and more effective.

MPS vs. MRP: What’s the Difference?

While MPS and MRP are closely related, they serve unique functions.

We’ve created a comparison table highlighting the key differences between MPS and MRP to make it easy for you to understand their differences and roles in manufacturing.

Feature	MPS (Master Production Scheduling)	MRP (Material Requirements Planning)
Definition	A plan for producing independent demand items based on forecasts.	A system for calculating material requirements based on dependent demand.
Focus	Independent demand items (finished products).	Dependent demand items (components and raw materials).
Demand Type	Driven by sales forecasts and customer orders.	Driven by the demand for other products as defined in the BOM.
Planning Basis	Plans production to meet forecasted customer demand.	Plans material orders based on scheduled production needs.
Time Frame	Typically set for weekly or monthly intervals.	Operates on a more frequent basis, often daily.
Adjustment Frequency	Requires regular reviews and adjustments.	Adjustments are often automated and can occur in real-time.
Role in Production	Determines when and how much of a product to produce.	Ensures that the necessary materials are available for production.
Collaboration	Requires input from marketing, sales, and production teams.	Primarily driven by inventory and production data.
Complexity	More complex due to the need for accurate forecasting.	Generally simpler; operates on established order parameters.
Outcome	Drives the overall production schedule and capacity planning.	Generates detailed material requirements and purchase orders.

When to Use MPS vs. MRP

Deciding whether to implement MPS or MRP can significantly impact your manufacturing efficiency and responsiveness to market demands. Both systems serve unique purposes and are best suited for different scenarios. Understanding when to leverage each approach is essential for optimizing your production processes.

To help you decide, we’ve outlined key situations that call for MPS or MRP, helping you make informed decisions that align with your business goals and operational needs.

Use MPS when:

• Your production is largely driven by customer demand.
• You have predictable demand patterns that you can leverage.
• You’re launching promotional campaigns and need to adjust production accordingly.
• Your products have variations that need careful scheduling.

Use MRP when:

• You deal with many components requiring careful management.
• Your production process has time-sensitive materials.
• You prefer a straightforward approach to inventory management.
• You need to balance inventory levels effectively to prevent waste.

Use both MPS and MRP when:

• Your manufacturing process requires a combination of planning strategies to meet complex demands.
• You’re managing a diverse product range with both standard and custom orders.
• You need to synchronize production schedules with inventory availability while responding to customer preferences.
• You aim to improve overall efficiency by integrating long-term forecasts (MPS) with short-term materials requirements (MRP).

By understanding these scenarios, you can choose the right approach—or a combination of both—to enhance your production processes and better meet your customers’ needs.

Real-World Scenarios: MPS vs. MRP

In the following scenarios, we show how companies in various industries navigate the complexities of production planning. From custom bicycle assembly to seasonal clothing demands and exciting product launches, these real-world situations illustrate the practical applications of MPS and MRP.

Scenario 1: Assemble-to-Order with Long Lead Time Components

Imagine a company that assembles customized bicycles. If a customer orders a bike on Monday for delivery by Friday, MPS helps plan production to meet this demand.

However, long-lead-time components, like specialized frames, must be ordered in advance. Here, MPS drives the need for MRP to ensure that all necessary materials are on hand when assembly time arrives.

Scenario 2: Seasonal Demand

Consider a clothing manufacturer experiencing a surge in demand for winter apparel each fall. MPS allows the company to plan production well ahead of time based on historical data, while MRP ensures that fabrics and materials are ready for production, helping the company to smoothly transition into the busy season.

Scenario 3: Promotional Demand

A beverage company planning a new product launch can use MPS to adjust production schedules in anticipation of increased demand. Meanwhile, MRP ensures that the necessary ingredients and packaging materials are ready, allowing the company to meet demand head-on.

MPS & MRP Considerations to Keep in Mind

Both MPS and MRP play crucial roles in ensuring that businesses run efficiently and meet customer demands. Let’s explore some important considerations for each approach, which will help you harness their full potential for your organization.

MPS: Tips for Success

When it comes to master production scheduling, several core concepts can make all the difference in your planning efforts. Here’s a closer look at what to keep in mind:

• Production plan (forecast): Keep it dynamic and collaborative among teams.
• Forecast netted: Tailor your MPS to consider various product lines and their unique demands.
• Cumulative MPS: Track planned output over time to stay focused on long-term goals.
• Time fence: Define periods where production changes are limited to stabilize operations.
• Order parameters: Set parameters for lead times, order quantities, and safety stock levels to guide your planning.
• Planning item: Prioritize key items in your MPS to ensure they’re always on the production radar.
• System management: Conduct regular reviews and adjustments, which are crucial for keeping MPS effective.

Each of these elements helps create a robust MPS that can adapt to changing demands while keeping your production on track.

MRP: Tips for Success

Material requirements planning is all about ensuring that the right materials are available at the right time. Here are some key concepts that are vital to making MRP work for you:

• BOM (bill of materials): Keep a comprehensive list of all components needed for your products.
• Lead time: Accurately estimate the time needed to procure materials.
• Safety stock levels: Maintain minimum inventory levels to avoid stockouts.
• Order point: Define inventory levels that trigger new orders.
• Planning horizon: Determine the timeframe for which MRP calculates material needs based on MPS.
• Lot sizing: Optimize order quantities to minimize costs.
• Exception reporting: Set up alerts for material availability issues to stay proactive.

By understanding these concepts, you can leverage MRP to ensure that your production runs smoothly and efficiently, ultimately delighting your customers with timely deliveries.

How ERP Systems Support MPS & MRP

Enterprise resource planning (ERP) systems are the glue that holds your MPS and MRP together. This type of software solution helps integrate data from various departments, ensuring that everyone is on the same page. With real-time data processing, automated order generation, integrated forecasting tools, and enhanced collaboration features, ERP systems make it easier than ever to align MPS and MRP for optimal results.

Implementing an ERP system not only simplifies your operations but also enhances your ability to respond to market demands with agility and precision.

Seamless Integration for Unified Operations

An effective ERP system integrates data from various departments—sales, production, inventory management, finance, and more—to create a centralized hub of information. This single source of truth ensures that everyone in your organization is on the same page, working collaboratively toward shared goals.

With this unified approach, MPS and MRP can align perfectly, allowing for smoother transitions between production planning and material procurement.

Real-Time Data Processing

In the manufacturing world, timing is everything.

ERP systems provide real-time data processing, enabling you to access up-to-date information whenever you need it. This immediacy is crucial for MPS and MRP, as it allows for timely adjustments based on current demand, inventory levels, and production capabilities.

When ERP, MPS, and MRP work together, you can make informed decisions on-the-fly and quickly adapt your strategies to meet shifting customer needs.

Automated Order Generation

One of the standout features of ERP systems is automated order generation. This functionality not only saves you time but also reduces the risk of human error.

With MPS guiding your production schedule and MRP determining your material needs, your ERP system ensures that orders are generated automatically when inventory reaches predetermined levels. You can maintain optimal inventory without the stress of manual tracking, allowing your team to focus on what truly matters—delivering quality products to your customers.

Integrated Forecasting Tools

Accurate forecasting is the foundation of effective production planning. ERP systems come equipped with integrated forecasting tools that analyze historical data, market trends, and customer behavior.

By leveraging these insights, you can refine your MPS, making informed decisions about production schedules that align with actual demand. This proactive approach not only enhances your operational efficiency but also empowers your team to plan ahead with confidence.

Enhanced Collaboration Features

Manufacturing is a team effort, and an ERP system fosters collaboration among your departments.

With features that enable easy communication and information sharing, your team can work together more effectively. Whether it’s production updates, inventory status, or sales forecasts, everyone has access to the same information, facilitating a more synchronized approach to both MPS and MRP.

This collaborative spirit not only boosts morale but also enhances your organization’s overall responsiveness to market fluctuations.

MPS vs. MRP FAQs: Your Questions, Answered

What Does MPS Stand For?

MPS stands for master production scheduling.

What Is MPS in Production?

MPS, or master production scheduling, is the process of planning what and how much of a product will be produced within a specific time frame.

What Is an Example of MPS?

An example of MPS would be an automotive company planning to assemble a specific number of vehicles each week based on projected customer demand and sales forecasts. This schedule would detail the types of vehicles to be produced, such as sedans, SUVs, and trucks, ensuring that the necessary parts and labor are available to meet market needs.

What Does MRP Stand For?

MRP stands for material requirements planning.

What Is MRP in Production?

MRP, or material requirements planning, is a system used to manage and plan the materials needed for production, ensuring that the right materials are available at the right time.

What Is an Example of MRP?

An example of MRP would be a furniture manufacturer that calculates the necessary materials, such as wood, upholstery, and hardware, based on its production schedule for assembling chairs and tables.

What Is the Relationship Between MPS and MRP?

MPS provides the production schedule based on customer demand, and MRP uses this schedule to calculate the necessary materials and components needed for production.

What Is the Difference Between an MRP and an MPS?

MPS focuses on what products need to be produced and when, while MRP determines the materials and components required to fulfill that production schedule.

Unlock the Power of MPS & MRP with ERP Solutions from CAI Software

Understanding the relationship between MPS and MRP can empower your manufacturing operations. These systems work hand in hand to optimize production, ensuring you meet customer needs while using your resources wisely. By embracing MPS and MRP, you can navigate the complexities of production planning with confidence, adaptability, and efficiency, paving the way for continued growth and success.

At CAI Software, we believe in the power of collaboration and proactive planning. With our ERP systems, you can implement MPS and MRP, transform your operations, delight your customers, and watch your manufacturing business thrive.

Contact us today to learn more about how our solutions can help you achieve your business goals.