What is MRP? Material requirements planning, in plain English

MRP stands for material requirements planning. It’s the discipline — and usually the software — that answers two questions continuously: what do we need to buy, and what do we need to make, to deliver our orders on time? That’s the whole idea. Everything else is implementation detail.

The three inputs

MRP is a calculation, and it only needs three inputs:

1. What you’re committed to building — your open orders and forecasts, with due dates.
2. What those things are made of — your bills of materials, the recipe for every product.
3. What you already have — current inventory, plus what’s already on order from vendors.

From those three, MRP works backward from every due date: explode the BOMs into component demand, subtract what’s on hand and inbound, and what’s left is what you need to buy or make — with a date on every line. When people say “run MRP,” they mean running that computation.

A concrete example

You take an order for 40 wall-mount brackets, due in three weeks. The BOM says each bracket needs one steel plate, four M8 bolts, and a powder-coat pass. MRP explodes that into 40 plates, 160 bolts, and 40 coats — checks stock (12 plates on the rack, 500 bolts, coating is a service) — and concludes: buy 28 plates, with enough lead time to land before the build starts. Done by hand, that’s an afternoon of spreadsheet archaeology. Done by software, it’s the default state of the screen.

MRP, MRP II, and the alphabet soup

The original MRP (1960s–70s) planned materials only. MRP II (“manufacturing resource planning”) extended it to capacity, scheduling, and costing — machines and hours, not just parts. Modern small-shop tools blur the line: TrackFinch, for instance, covers material planning plus the working parts of MRP II (work orders, purchasing, production planning) without the enterprise ceremony. For how MRP relates to ERP — the suite that swallowed both acronyms — see MRP vs ERP.

Does a small shop need MRP?

The honest tell isn’t headcount — it’s time spent reconciling. You need MRP when:

• Someone spends hours a week updating a master spreadsheet nobody fully trusts
• Jobs stall mid-build on parts that “should have been here”
• Expedited shipping has become a line item you budget for
• Quoting means guessing at material costs from memory

If none of that is happening, a clean spreadsheet and discipline are genuinely fine — start with our free BOM template and graduate when it hurts.

What MRP is not

MRP doesn’t schedule machines minute-by-minute (that’s an MES, and you probably don’t need one), doesn’t do your accounting, and doesn’t fix a shop that doesn’t log what it uses — the computation is only as honest as the inventory counts feeding it. That’s why modern light MRP pairs the math with scan-based tracking: keep the inputs true, and the plan stays true.

The one-sentence version: MRP turns your orders, recipes, and stock into a shopping list and a build list — with dates.