MRP and JIT are two methods of controlling production and inventory levels. MRP focuses on manufacturing finished products based on anticipated requirements while JIT focuses on manufacturing as a response to actual orders. Both rely on computerized information processing and aim to reduce waste in the manufacturing process. MRP is suited to a batch or special order basis, while JIT works well in an environment of repetitive ordering of similar products.
MRP and JIT (material resource planning and just in time processing) are two methods of controlling production and inventory levels for manufacturers. MRP focuses on manufacturing finished products based on anticipated requirements, while JIT focuses on manufacturing as a response to actual orders. Both MRP and JIT rely heavily on computerized information processing.
Material Resource Planning is a comprehensive system of ordering raw materials and scheduling production of equipment and labor based on projected orders. Incorporate order changes into your planning process to produce a dynamic production schedule. MRP embraces the concept of dependent demand: for example, if the production of finished product A requires three units of product B and the production of product B in turn requires four units of product C and six of product D, then a level of of a specific number of units of product A requires all corresponding units of products B, C and D to reach completion. For a complicated manufacturing process that includes many components, an advantage of MRP is its ability to successfully organize the production of each component so that parts are ready when needed and the manufacturing process does not stop due to lack of finished components. .
In contrast, JIT is a manufacturing process that responds to actual orders. It relies on the timely delivery of the right raw materials to the right place to enable production as orders are received. One benefit of JIT is its reduction in the amount of raw materials and finished goods on hand, which can reduce transportation costs and the likelihood of spoiled or damaged inventory. It focuses on accurate manufacturing and leaves little room for manufacturing errors. A disadvantage of JIT is that if the suppliers do not deliver the raw materials as expected, a production shutdown can occur due to low inventories.
Different goals of MRP and JIT mean that each system performs better under certain conditions. MRP is especially suited to a production line that operates on a batch or special order basis. The system’s ability to constantly adapt to changing needs makes it react well to changing orders. The JIT system works well in an environment of repetitive ordering of similar products. Suppliers can more easily respond to express delivery schedules for routine orders of similar materials.
The emphasis in both MRP and JIT is on reducing waste in the manufacturing process. Both systems get improvements in inventory levels. The intent of MRP and JIT systems is to prevent wasted production time, although MRP is more responsive to production fluctuations as it is a change-based system. Production under the JIT system can be hampered by lack of capacity if unexpected orders are received.
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