MRP logic & BOM (With lead time consideration)

Nov 24, 22

Every business has one core motive, to consistently generate profits by deploying either own or borrowed capital. To stay relevant in this competitive market, manufacturers need to keep pushing their boundaries and find innovative ways to lower their costs to maximize revenue.

How does having a good MRP system helps?

Materials Requirements Planning or MRP is the backbone of any manufacturing-based company. Not only does a sound MRP system help ensure a smooth product manufacturing operation, but it also saves up a lot of precious resources. BOM can tell you the cost incurred to manufacture the product, but what about the cost to buy and store raw materials? MRP systems handle that.

There is no easy way to figure it all out, but it has been seen in a study that businesses that had a good MRP system achieved more success in managing product costs than those that did not.

MRP logic And BOM relation

Suppose you are a manufacturer and there exists multiple BOM(s) for your product. For maintaining consistency in the production run(s) you have to order raw materials in advance. Many different parts and their sub-parts make together what we collectively call a product BOM.

For example, suppose you need 4 units of part A to make the product X, and for making a unit of part A, you need 16 units of part B and 32 units of part C, and for making 1 unit of parts b and c, you need 10 and 20 units of d and e respectively, So you get the idea right? As your product becomes more advanced the more complicated it’s part management gets.

● Say you get this right, then you have to figure out the cost of making one unit of your product, herein BOM comes into play. This is the the most tricky part, as things can go so wrong so quickly from here. When you order the Raw Materials, it will take some time until you get them delivered, this is called lead time.

● Fixed costs are almost always incurred regardless of Manufacturing activity, so it will be a huge financial loss even if you stop production for a day. This is why parts and raw materials should always be ordered taking lead time and other factors into consideration.

How does Knyo help?

Kyno, the next generation ☁️ PLM has various smart tools and useful features to help you smoothen out jitters in the manufacturing process. You can plan your manufacturing process much easier than before, thanks to the detailed lead time report which Kyno☁️ generates for every part(s) needed in the BOM.

If your product has Multiple BOM(s) and there exist different variants of them, Kyno☁️ can support them all and much more, it can also make them readily accessible with just a click of a button. Additionally, Kyno’s excellent supplier management feature can help you track down the supplier information, the delivery time and also store additional notes, all in one place hence saving up a lot of time.