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Material Requirements Planning (MRP) is the process used for calculating the materials required to manufacture a product. A common approach companies use is called just in case inventory which requires huge inventories to stock all materials needed for manufacturing a product before they are required (Vonderembse, 2013). This process may sound like a great idea but is very costly in requiring extensive warehouse space and monies tied up in inventory. If companies that utilize MRP they will be able to free up these costs without effecting deliveries to customers and also could provide these products at a lower cost. The MRP is processed with a computerized information system that uses the information from the Master Schedule File, Bill of Materials File and Inventory file to determine a more precise amount of inventory to have on hand.

I work for Sharp Electronics Americas and when it pertains to MRP we need to be sure we have enough supplies and parts in stock for our USA Sales and Service Distributors. In the past we used to utilize the just in case inventory process and have numerous warehouses throughout the United States. We would also encourage our dealer chain to have an extra amount of inventory on hand as well. About 5 years ago we partnered with a company called Tech Data which specializes in a more just in time logistics system. They are able to take an order from one of our dealers and have it delivered to them in 24 to 48 hours. Utilizing Tech Data allowed us to eliminate all of our warehouses, which saved us a tremendous amount of money. This also allowed our dealers to not store and tie up resources stock pilling inventory. We utilize SAP to process the correct amount of product to order from our factory and have in hand at the Tech Data warehouse facility.