Manufacturing & MRP module
The manufacturing module (often called Production Planning or MRP) manages the entire production process. It ensures that raw materials, capacity, and resources are available to meet demand. It generates production orders, tracks shop floor activity, and calculates product costs.
1. Bill of materials (BOM)
The BOM is a complete list of raw materials, sub‑assemblies, and quantities needed to produce a finished product. It can be multi‑level (e.g., a bicycle includes a frame sub‑assembly, which itself requires tubes and welding).
2. Routings & work centres
Routing defines the sequence of operations (cut, drill, assemble) to make a product. Each operation is assigned to a work centre (machine, assembly line, or skilled worker). The routing provides standard times for scheduling and costing.
3. Material requirements planning (MRP)
MRP is the engine that calculates what materials are needed, in what quantities, and when. It uses:
- Sales forecasts / actual orders (from demand management)
- BOMs (explosion)
- Inventory on‑hand & on‑order
- Lead times
MRP generates planned orders for production and purchase requisitions.
4. Production orders
A production order (or manufacturing order) authorises shop floor execution. It contains:
- Item to produce, quantity, due date
- BOM and routing
- Material reservations
- Status (planned, released, in progress, completed)
As work is done, materials are consumed and labour/machine time recorded.
5. Capacity planning
Capacity planning checks whether work centres have enough capacity to execute the planned production. Finite scheduling sequences jobs based on available hours. Alerts identify overloads, allowing adjustments (overtime, subcontracting).
6. Shop floor control
Shop floor control tracks real‑time progress: operations started/completed, downtime, scrap, and labour reporting. Barcode scanning or IIoT devices feed data back to ERP, enabling WIP tracking and performance analysis.
7. Production costing
ERP calculates actual vs standard costs for each production order:
- Material cost: Actual consumption × standard price (or actual).
- Labour cost: Actual hours × labour rate.
- Overhead: Allocated based on machine hours or labour.
Variances are posted to the general ledger for management review.
8. From MRP II to ERP
Manufacturing was the historical core of ERP. MRP II (Manufacturing Resource Planning) added capacity, finance, and simulation. Modern ERP manufacturing modules integrate with sales (demand), procurement, inventory, and finance – providing a complete picture.
| Concept | Role in manufacturing |
|---|---|
| MPS (Master Production Schedule) | What finished products to make and when |
| RCCP (Rough‑Cut Capacity Planning) | High‑level capacity check |
| CRP (Capacity Requirements Planning) | Detailed capacity check for work centres |
| Production order costing | Collect actual costs, compare to standard |
Key Takeaways
- Manufacturing module manages the entire production lifecycle – from BOM to finished goods.
- MRP calculates material needs based on demand, inventory, and lead times.
- Production orders control execution and capture actual costs.
- Capacity planning ensures resources are available.
- Integration with procurement, inventory, and finance makes manufacturing efficient.
What is a phantom BOM? A BOM for a sub‑assembly that is consumed immediately in the next production step – it never goes to stock.
Can ERP handle process manufacturing (food, chemicals)? Yes, with features like co‑products, by‑products, potency, and shelf‑life management.
What is backward vs forward scheduling? Backward scheduling starts from due date and calculates start date; forward scheduling starts as early as possible.
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