Materials Requirement Planning

The BOM carries with it a listing of those items which are not produced by you, but are necessary for completion of the Production Order.

Many companies and manufacturing applications use only the reorder point method for maintaining stock. In this strategy, a reorder quantity is established for raw materials, and a safety stock quantity covers unexpected swings in production. While this sounds good in theory, it does not address the common need to de-expedite orders. When orders get delayed, back logs can occur, and the Purchasing Department should be informed that materials involved can be purchased at a later date, thus benefiting company cash flow.

In many manufacturing companies, the cost of raw materials far outweighs the other costs such as labor and overhead. As a result, an improvement made to the Purchasing process has a dramatic affect on your bottom line. In all likelihood, more money flows through the Purchasing Department than any other in your company. Because of this fact, it is vitally important to make purchasing decisions based on efficient planning.

Key Features

• The BOM carries the information about which items need to be procured.
• Multiple Production Orders can be aggregated to increase your purchasing power.
• Just-In-Time (JIT) ordering allows for minimal inventory costs.