Materials Requirement Planning is an essential step in any manufacturing process, but especially in the recent move to just-in-time manufacturing. Basically, the key to profitable manufacturing is to have on hand just the right amount of inputs to manufacture the requisite outputs. If you have too little in the way of materials and other inputs, you won't be able to meet your production goals, but having excess supplies on hand ties up your capital unproductively. The key element in the process of creating an MRP is the "bill of materials" which is a hierarchical structure with the finished product at the top of the production tree, various subassemblies or intermediate stages of the process in the middle, and the individual components at the bottom; note that tree diagrams are rarely used in BOMs, but are their underlying logical structure.
Most MRP activities now rely on software, much of which is available off-the-shelf. The main tasks manufacturers need to do to make the software function is to gather data about all the inputs to the manufacturing process and the relevant timelines.
Material requirement planning is the most important aspect for the success of any project or any type of industry.
The essence is to procure the right quality of material in the right quantity and price and at the right time. The foremost activity is to develop and evaluate the vendors so as to ensure that we can reliably get the required quality of material at the right time without any delay. Quantity requirements are worked out by experienced engineers/professionals based on industry practices and their experiences. Quantity requirements are worked out considering the wastage and specific type of requirements of the projects. For instance, piping construction projects may consume quantities of gaskets/nut bolts 2 to 3 times greater than the project should require. So it's essential to order the right quantity of material so that there are no excess supplies which may remain unutilized and there are no shortages during production.
Materials are to be ordered at the right time so that they are available when they are needed. Ordering too early will block the money and ordering late may affect the delivery schedule and can delay the start of the activity.
A bill of material in the drawings can be used for working out the material requirements and these days software is available to plan the requirements.
Thank you for this thorough explanation.