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📦 Material Planning & MRP Guide

Never run out of materials again. Learn how to manage inventory, calculate material requirements, and automate purchase orders.

📺 Watch: How to Add Materials

5 minutes • Complete material management tutorial

🎯 What is Material Planning?

Material Requirements Planning (MRP) is a system that:

  • Calculates material needs - Based on production schedule and BOMs
  • Tracks inventory levels - Real-time stock monitoring
  • Generates purchase orders - Automatic reorder suggestions
  • Prevents shortages - Low-stock alerts before you run out
  • Reserves materials - Ensures materials are available for scheduled orders

📋 Adding Materials

Step 1: Navigate to Materials

Click Materials → Add Material from the main menu

Step 2: Enter Material Details

  • Material Code - Unique identifier (e.g., "STEEL-304")
  • Material Name - Descriptive name (e.g., "Stainless Steel Sheet 304")
  • Unit of Measure - kg, meters, pieces, etc.
  • Category - Group materials (Raw Materials, Components, etc.)
  • Cost per Unit - Purchase price

Step 3: Set Inventory Levels

  • Current Stock - How much you have now
  • Minimum Stock - Reorder point (triggers low-stock alert)
  • Maximum Stock - Storage capacity limit
  • Reorder Quantity - How much to order when stock is low

Step 4: Add Supplier Information

  • Supplier Name - Primary vendor
  • Supplier Code - Vendor part number
  • Lead Time - Days from order to delivery
  • Minimum Order Qty - Supplier's minimum requirement
💡 Pro Tip: Set minimum stock to cover lead time + safety buffer. For example, if lead time is 7 days and you use 10 units/day, set minimum stock to 100 units (10 days × 10 units).

🔗 Creating Bills of Materials (BOMs)

📺 Watch: How to Create a BOM

7 minutes • Complete BOM creation walkthrough

Bills of Materials define what materials are needed to make each product:

Creating a Simple BOM

  1. Navigate to Products → Select Product → BOM Tab
  2. Click "Add Material"
  3. Select material from dropdown
  4. Enter quantity needed per unit of product
  5. Repeat for all materials
  6. System calculates total material cost automatically

Multi-Level BOMs

For complex products made from sub-assemblies:

  • Create BOMs for sub-components first
  • Then create BOM for final product using sub-components
  • System automatically "explodes" multi-level BOMs
  • Calculates total raw material needs across all levels

Example:

  • Final Product: "Bicycle"
  • Sub-Assembly 1: "Wheel" (requires rim, spokes, tire)
  • Sub-Assembly 2: "Frame" (requires tubes, welds)
  • Bicycle BOM includes 2 × Wheel + 1 × Frame
  • System calculates all raw materials automatically

📊 MRP Calculation

When you schedule production orders, MRP automatically:

1. Explodes BOMs

Calculates total material requirements:

  • Order: 100 units of Product A
  • BOM: Each unit needs 2kg steel + 1 motor
  • MRP calculates: Need 200kg steel + 100 motors

2. Checks Inventory

Compares requirements vs. available stock:

  • Have: 150kg steel, 120 motors
  • Need: 200kg steel, 100 motors
  • Shortage: 50kg steel
  • Surplus: 20 motors (no order needed)

3. Generates Purchase Suggestions

Creates recommended purchase orders:

  • Material: Steel
  • Shortage: 50kg
  • Reorder Qty: 100kg (from material settings)
  • Suggested Order: 100kg
  • Order by date: Production start date - Lead time

4. Reserves Materials

Once production is scheduled:

  • Materials are "reserved" for that order
  • Reserved qty is not available for other orders
  • Prevents double-booking of materials
  • Releases materials when order is completed

🔔 Low Stock Alerts

System automatically monitors inventory and alerts you when:

  • Stock reaches minimum level - Triggers reorder notification
  • Material needed for scheduled order - But insufficient stock
  • Lead time risk - Not enough time to order before production

Alerts appear:

  • Dashboard notifications (red badge)
  • Email alerts (if configured)
  • Material shortage report
  • On production schedule (red warning icon)

📝 Purchase Order Management

Creating Purchase Orders

  1. Navigate to Purchase Orders → Create PO
  2. Select supplier
  3. Add materials (manually or from MRP suggestions)
  4. Enter quantities and prices
  5. Set expected delivery date
  6. Save and send to supplier

Receiving Materials

  1. Open the purchase order
  2. Click "Receive Materials"
  3. Enter quantity received
  4. System automatically updates inventory
  5. Releases reserved materials if fully received

📈 Inventory Tracking

Real-Time Stock Levels

View current inventory at any time:

  • Materials Dashboard - Shows all materials with current stock
  • Color-coded indicators:
    • Green: Stock above minimum
    • Yellow: Stock at minimum (reorder soon)
    • Red: Stock below minimum (critical)
  • Reserved vs. Available - See what's committed to orders

Stock Movements

Track every inventory change:

  • Material purchases (from POs)
  • Production consumption (BOM usage)
  • Manual adjustments (stocktakes)
  • Waste/scrap reporting
  • Returns to supplier

Inventory Reports

Generate reports for:

  • Stock Valuation - Total inventory value
  • Material Usage - Consumption by product/period
  • Reorder Report - Materials below minimum
  • Turnover Analysis - Fast vs. slow-moving materials
  • Shortage Forecast - Predicted stockouts

🏆 Best Practices

1. Regular Stock Counts

  • Conduct physical inventory counts monthly
  • Update system with actual quantities
  • Investigate discrepancies immediately
  • Use cycle counting for high-value items

2. Accurate BOMs

  • Keep BOMs updated when products change
  • Include waste/scrap allowance in quantities
  • Document any material substitutions
  • Review BOM accuracy quarterly

3. Optimal Reorder Points

  • Set minimum stock = (Daily usage × Lead time) + Safety stock
  • Safety stock = 2-3 days for critical materials
  • Adjust based on supplier reliability
  • Review and update quarterly

4. Supplier Management

  • Maintain accurate lead times
  • Track supplier performance (on-time delivery %)
  • Have backup suppliers for critical materials
  • Negotiate volume discounts for frequent orders

🔧 Troubleshooting

Problem: "Material shortage" warning on production schedule

Solutions:

  • Check if material is actually out of stock (verify inventory)
  • Create purchase order for the material
  • Update PO expected delivery date
  • Delay production start date to allow time for material arrival
  • Use alternative material if available in BOM

Problem: Inventory count doesn't match system

Solutions:

  • Perform physical count of material
  • Check recent stock movements for errors
  • Adjust inventory with reason code
  • Investigate if material was consumed but not recorded

Problem: MRP not generating purchase suggestions

Solutions:

  • Verify BOMs are created for products
  • Check that production orders are scheduled
  • Ensure minimum stock levels are set
  • Confirm material lead times are configured
⚠️ Important: Always receive materials against purchase orders to maintain accurate inventory. Don't manually adjust stock unless doing a physical count correction.

🎯 Next Steps

Related Guides

🎓 Additional Resources: Watch all material management tutorials on our YouTube channel.