Manufacturers: Use Material Requirements Planning (MRP) to Run Lean and Avoid Stockouts

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We’ve all felt it: That wonderful moment when a client places a huge order. With dollar signs in your eyes, you and your whole team snap into action to deliver on time and impress the customer.

Then your heart sinks. You simply don’t have enough raw material in stock to fulfill the order.

This all-too-common scenario highlights a series of difficulties that arise when you struggle to manage inventory levels. Worse, one problem leads to another in a painful downward spiral, such as:

  • Higher materials costs: Being in a hurry leaves you at the mercy of your vendors.
  • Missed deadlines: What if your suppliers simply can’t deliver what you need when you need it? You start to run behind – and your new client is not
  • Inefficient production schedule: Your staff has to find other things to do while waiting for materials… then work overtime to catch up when the materials arrive.
  • Overbuying: Many, in fear of such situations, decide to keep extra material in inventory to avoid stockouts, which in turn can lead to excessive investment and even expired stock.

Since inventory is at the very heart of every manufacturing company, there is an obvious need for a comprehensive system that ensures there are enough materials on hand, while not tying up a large amount of capital on your warehouse shelves.

Enter Material Requirements Planning (MRP) software.

With MRP, you get a clear view of your inventory and even your supply chain. How does it help?

  • Increased visibility: Easily monitor stock levels, making sure you’re not buying too much, or allowing levels to fall below a certain threshold.
  • Demand forecasting: Based on production trends over recent years, as well as current orders in the pipeline, MRP helps you predict demand to make smarter direct spend decisions.
  • Proactive procurement: When a possible shortfall is predicted, your purchasing team is notified so they can acquire materials in advance, calculating lead times and helping the production staff stay on schedule.

Learn more about how MRP helps you prevent stockouts in this video.

Would you like to know more about how an MRP solution can help you stabilize your inventory, streamline direct spend processes, and position you for future growth? Contact us at Vicinity Software to start the conversation.

By Vicinity Software,

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