MRP (Material Requirements Planning) and its evolution MRP II (Manufacturing Resource Planning) are the planning methods that compute, from demand and bills of materials, what to buy, what to make and when, considering lead times, available stock and production capacity.
How MRP works
MRP takes three inputs: the master production schedule, the bill of materials (BOM) and inventory status. It explodes demand backwards: breaks each product into components, nets existing stock, applies procurement and manufacturing lead times, and generates dated purchase and production order proposals. MRP II adds capacity: whether available machines and shifts can absorb the plan and where bottlenecks appear.
Why it matters for industrial SMEs
For a manufacturing SME, MRP replaces spreadsheet planning (dependent on one person and broken by every rush order) with a reproducible calculation: fewer component stockouts, fewer premium-cost emergency purchases, delivery dates with a real basis. The often underestimated requirement is master-data quality: complete BOMs, realistic supplier lead times and reliable inventory.
Related terms
MRP lives as a module inside the ERP, in suites such as Odoo, and relies on inventory managed by the WMS. Execution of the proposed orders is orchestrated by the MES, and accuracy improves when real production flows in through OT/IT integration instead of manual reports.