ABSTRACT
This chapter discusses the little more closely at an operational aspect of purchasing known as material requirements planning (MRP), which is a production planning, scheduling, and inventory control process and system used to manage manufacturing processes and generate direct goods requirements. In fact, indirect procurement can range from 15-25% of a company's total revenue. The chapter also discusses using Lean tools and techniques to improve the processes. Lean can also lack visibility into the actual flow of materials through the supply chain, especially if it is focused only on the manufacturing operation. Gables had a pseudo-material requirements planning system based on reorder points which used current customer demand, as well as historical demand, to determine what they needed to buy. The internal mechanics of the MPS and MRP systems are basically the same, with the time phased net requirements from the MPS driving MRP gross requirements via the bill of material file.
