MRP (Material Requirements Planning)
A planning method that automatically proposes purchase and production orders based on production and stock targets.
Detailed definition
MRP (Material Requirements Planning) is a planning method that calculates which materials are needed, when and in what quantity, to meet production and stock targets. It evaluates inputs such as demand (sales orders and forecasts), current stock, open orders, the bill of materials (BOM) and procurement/production lead times, then computes net requirements and proposes purchase and production orders. The goal is neither to tie up capital in excess stock nor to halt production through shortages, but to plan the right quantity at the right time. In the SAP world, MRP runs largely in the PP (Production Planning) module and comes in two flavors: classic MRP and HANA-based, real-time MRP Live. Accuracy depends on master-data quality (BOM, routings, lead times, safety stock), forecast quality and correctly tuned parameters. MRP is the core mechanism that drives production planning and typically works as part of a broader ERP system, alongside procurement (P2P) processes.
Related terms
ERP (Enterprise Resource Planning)
Integrated enterprise software that unifies core business processes — finance, procurement, manufacturing, sales and HR — on a single data model.
P2P (Procure-to-Pay)
The end-to-end process from purchase requisition to vendor payment.
O2C (Order-to-Cash)
The end-to-end sales process from customer order capture to cash collection.