Manufacturers rely on efficient production and inventory planning to meet customer demand while minimizing costs. However, many businesses struggle with overstocking, material shortages, or misaligned production schedules, often due to poor planning processes.
In Microsoft Dynamics 365 Business Central, two powerful tools—Material Requirements Planning (MRP) and Master Production Scheduling (MPS)—help manufacturers streamline their inventory and production strategies. But what's the difference between the two, and how can you use them effectively?
This blog will explain how MRP and MPS work, their differences, and how manufacturers can use Business Central to optimize inventory and production planning.
What is Master Production Scheduling (MPS)?
MPS focuses on planning the production of finished goods. It ensures that manufacturers align production schedules with anticipated demand, preventing overproduction or underproduction.
MPS considers:
- Sales forecasts and customer orders to determine how many finished goods to produce.
- Production lead times to ensure goods are available when needed.
- Inventory levels of finished goods to prevent unnecessary production.
In Business Central, MPS is the first step in the inventory planning process before determining material requirements.
Using MPS, businesses can ensure production schedules are balanced with customer demand, reducing bottlenecks and optimizing labour and machine time.
What is Material Requirements Planning (MRP)?
While MPS focuses on finished goods, MRP calculates the raw materials and components required to fulfill production orders.
MRP ensures:
- All components and materials are available for manufacturing orders.
- Purchasing and production align with demand, preventing shortages or excess stock.
- Raw material orders are placed in advance to meet production timelines.
MRP eliminates guesswork by automatically calculating when and how much to order, ensuring raw materials arrive just in time for production.
Key Differences Between MPS and MRP
Many businesses confuse MPS and MRP, leading to planning inefficiencies. The table below highlights the key differences:
| Feature | MPS (Master Production Scheduling) | MRP (Material Requirements Planning) |
| Focus | Finished goods production planning | Raw materials and component planning |
| Input Data | Sales forecasts, customer orders | Bill of Materials (BOM), supplier lead times |
| Output | Planned production orders | Planned purchase orders for materials |
| Goal | Ensure balanced production schedules | Ensure required materials are available |
Understanding this distinction helps businesses prevent overproduction, material shortages, and unnecessary costs.
How Business Central Uses MPS and MRP Together
For optimal efficiency, manufacturers typically run MPS first to determine how many finished goods to produce. Once production schedules are finalized, MRP calculates the raw materials needed to meet production requirements.
Steps to Use MPS and MRP in Business Central:
- Run MPS to generate planned production orders based on sales forecasts.
- Review and adjust MPS recommendations to align with real-world demand.
- Run MRP to calculate the materials needed for production.
- Convert MRP recommendations into purchase orders to procure raw materials.
By following this process, manufacturers can optimize their supply chain, reduce lead times, and prevent material shortages.
Best Practices for Using MPS and MRP in Business Central
To get the most out of MPS and MRP, manufacturers should follow these best practices:
- Align MPS with sales forecasts: Ensure production schedules reflect real demand to prevent overproduction.
- Use accurate supplier lead times in MRP: Incorrect lead times can cause delays or excess inventory.
- Review Action Messages in Business Central: The system suggests order changes, reschedules, and cancellations to maintain efficiency.
- Monitor Item Availability by Event: Ensure materials arrive exactly when needed to prevent production delays.
Implementing these strategies helps businesses maintain lean inventory levels while ensuring production schedules remain uninterrupted.
Final Thoughts & Watch the Webinar
Using MPS and MRP correctly in Business Central can transform manufacturing operations, ensuring accurate production schedules and efficient raw material procurement. By running MPS before MRP, businesses can:
- Reduce inventory waste and overproduction.
- Ensure raw materials are always available.
- Minimize production delays and stock shortages.
Watch the full webinar here:
Microsoft Dynamics 365 Business Central Forecasting & Planning Webinar
For expert guidance on optimizing your production planning, contact WebSan Solutions for more information.