Procurement Glossary
Material Requirements Planning (MRP): definition, process steps and application in Procurement
November 19, 2025
Material Requirements Planning (MRP) is a systematic planning approach for determining requirements and managing procurement in companies. The process enables purchasers to precisely calculate material requirements and optimally schedule orders. Material Requirements Planning (MRP) forms the basis for efficient procurement planning and reduces both storage costs and supply bottlenecks. Find out below what exactly MRP means, which process steps are required and how to implement the method successfully.
Key Facts
- MRP calculates material requirements based on production plans and parts lists
- The system distinguishes between gross and net requirements, taking into account existing stocks
- Lead times and safety stocks are automatically included in order scheduling
- MRP reduces capital commitment by an average of 15-25% while at the same time improving delivery capability
- The method is particularly suitable for companies with complex product structures and predictable requirements
Contents
What is Material Requirements Planning (MRP)? Definition and benefits
Material Requirements Planning is a computer-aided planning method that determines the exact material requirements for production in terms of time and quantity.
Basic principles of the MRP system
The MRP process is based on three key input data: the master production schedule, detailed parts lists and current stock levels. By calculating backwards from the planned completion date, precise order times and quantities are determined.
- Gross requirements calculation from production program
- Net requirements calculation less available stocks
- Scheduling with consideration of lead times
- Batch size optimization according to economic criteria
MRP vs. traditional ordering methods
In contrast to consumption-oriented replenishment processes, MRP is demand-oriented and enables forward-looking purchasing planning. This leads to reduced safety stocks and optimized order cycles.
Importance of MRP in modern Procurement
For procurement organizations, MRP offers the possibility of a systematic material availability check and supports strategic supplier partnerships through predictable call-off volumes and reliable deadline commitments.
Process steps and responsibilities
Successful MRP implementation requires structured processes and clear responsibilities between Procurement, production and logistics.
Data acquisition and system preparation
The first step involves the complete recording of all planning-relevant master data. This includes precise parts lists, current stock levels and reliable supplier lead times. Parameter maintenance forms the foundation for reliable planning results.
Determination of requirements and scheduling
Based on the production plan, requirements are systematically broken down across all BOM levels. The system automatically takes planning time windows into account and creates scheduled procurement proposals.
- Gross requirements explosion according to parts lists
- Availability check against stock levels
- Backward scheduling with lead times
Implementation and monitoring
The order proposals generated are checked by Procurement and converted into specific orders. Continuous exception management identifies deviations from the plan and enables corrective measures to be taken in good time.
Tacto Intelligence
Combines deep procurement knowledge with the most powerful AI agents for strong Procurement.
Important KPIs for Material Requirements Planning (MRP)
Measuring the success of MRP systems requires specific key figures that evaluate both the efficiency and effectiveness of material planning.
Planning accuracy and adherence to deadlines
Planning accuracy measures the deviation between forecast and actual material requirements. Typical target values are 85-95% accuracy on a weekly basis. The delivery date commitment rate evaluates the reliability of the MRP-generated order dates.
Inventory optimization and capital commitment
Inventory turnover and average storage time show the efficiency of inventory management. Successful MRP implementations achieve a reduction in capital commitment of 15-30% while simultaneously improving availability to over 98%.
- Inventory turnover ratio (inventory turnover rate)
- Days Sales Outstanding in Inventory (range)
- Stockout rate (shortage rate)
System performance and planning stability
The MRP runtime and planning frequency influence the responsiveness of the system. Modern systems should complete daily planning runs in under 30 minutes. The order prioritization and exception handling rate measure the quality of the planning results.
Risks, dependencies and countermeasures
Despite its advantages, MRP involves specific risks that can be minimized by taking appropriate measures.
Data quality and system dependency
Inaccurate master data leads to incorrect planning results and can cause costly mistakes. Outdated parts lists, incorrect lead times and inadequate inventory management are particularly critical. A regular schedule deviation analysis helps to identify systematic planning errors.
Planning rigidity during market volatility
MRP systems react slowly to short-term market changes and can reach their limits when demand fluctuates greatly. The integration of freeze fence concepts and flexible planning cycles reduces this problem.
- Implementation of rolling planning cycles
- Definition of planning stability zones
- Development of security capacities
Complexity with multi-level parts lists
Deep product structures can lead to planning instability and the so-called "nervousness effect". Small changes in end product planning are amplified across the BOM levels and create unnecessary order fluctuations. Safety capacities and buffer times have a stabilizing effect.
.avif)
Practical example
An automotive supplier implements MRP for the procurement of 2,500 components. The system analyzes the production plans for three vehicle models and automatically creates order proposals for 450 active suppliers. By integrating available-to-promise functions, customer inquiries can be answered within minutes with specific delivery dates. The implementation led to a 22% reduction in stock levels and 95% adherence to delivery dates, while at the same time improving planning transparency.
- Automated determination of requirements for complex parts list structures
- Integration with supplier EDI for direct order transmission
- Continuous planning optimization through AI-supported parameter adjustment
Trends & developments in Material Requirements Planning (MRP)
Modern MRP systems are constantly evolving and are increasingly integrating intelligent technologies to improve planning accuracy.
AI-supported demand forecasts
Artificial intelligence is revolutionizing traditional MRP logic with self-learning algorithms. These analyze historical consumption patterns and external influencing factors to create more precise demand forecasts. Demand sensing enables dynamic adjustment of planning parameters in real time.
Integration of advanced planning systems
Modern planning systems extend classic MRP to include capacity planning and sales and operations planning. This holistic approach not only optimizes material flows, but also takes capacity bottlenecks and market dynamics into account.
Cloud-based MRP solutions
Moving to the cloud enables more flexible system architectures and improved collaboration with suppliers. Real-time delivery date tracking and automated escalation processes significantly increase planning transparency.
Conclusion
Material requirements planning forms the backbone of modern procurement organizations and enables precise, cost-optimized material planning. The systematic determination of requirements significantly reduces storage costs and improves delivery capability at the same time. However, successful MRP implementations require high-quality master data, qualified employees and continuous system optimization. Companies that meet these requirements benefit from sustainable competitive advantages through optimized procurement processes and increased planning transparency.
FAQ
What distinguishes MRP from MRP II?
MRP focuses exclusively on material planning, while MRP II (Manufacturing Resource Planning) also includes capacities, finances and other resources. MRP II is a further development that enables holistic corporate planning and is now often integrated into ERP systems.
How often should MRP runs be carried out?
The optimum planning frequency depends on product complexity and market dynamics. Standard companies carry out weekly full runs with daily updates. In volatile markets or short product life cycles, daily full runs may be necessary to ensure adequate response times.
What are the prerequisites for successful MRP?
Critical success factors include accurate BOMs (at least 95% accuracy), reliable lead time data and disciplined inventory management. In addition, MRP requires stable production schedules and qualified staff for system support and exception handling. Without these basics, MRP leads to suboptimal results.
How is MRP performance measured and optimized?
Key performance indicators are planning accuracy, inventory turnover and adherence to delivery dates. Regular system audits identify potential for improvement in master data quality and planning parameters. Continuous training and process optimization ensure sustainable MRP success and increase user acceptance.
.png)
.png)
.png)
