New MRP background

“Why do we need New MRP when we have Old MRP?”

Companies sometimes experiences considerable challenges with their daily MRP. The challenges have turned out to be very difficult to overcome. Examples are:

  • Faulty planned orders that build up inventory.
  • Missing stability as items are sometimes not calculated.
  • Slow performance even when adding many helpers.
  • Inadequate inter-company planning capabilities due to lack of possibility to run cross company CTP upon order reception.
  • In general  – the daily planning is bad and insufficient

Other companies struggle with the nightly MRP run that partly fails and leaves the planners and purchasers in a very difficult situation the next morning.

Old MRP builds up stock due to wrong planned orders. The problem occurred in this example because a new demand was added to the net requirement profile after the first MRP rebuild identified with BOM line reference 004821. 

Pain points

The above bullets drills down to just three major pain points.

  • Old MRP runs under the assumption that prior to running, calculating the right item BOM level is possible. This is however incorrect as the item BOM level changes during the
  • Binding receipts and issues hard together by creating coverage records makes planning bad and impossible to change properly to a new demand situation.
  • Inter-company planning is a weak spot in Old MRP. The reason is very simple. Old MRP
    was not originally designed to be able to run across companies. Due to this, CTP
    calculations cannot run cross company upon order reception

Running MRP in BOM level order

Old MRP tries to run the MRP calculation in the right BOM level sequence by calculating BOM levels prior to running the MRP.

New MRP Solutions have however experienced that it is not possible to calculate the right BOM
level in a number of situations. A situation could be a manufacturing company that have factories in
more than one country.

The level problem arises if one of the factories produces a component used in finished products in
several factories. This is caused due to that the correct component level consequently changes
depending on the factory that produces the finished product.

Old MRP runs and completes the MRP calculation company after company. The result is that the component item must be MRP updated more than once during a complete inter-company MRP that also results in that the used BOM level order in the first MRP calculated company by definition was wrong.

The problems with the faulty planned order typical occurs the second time the MRP runs and updates an item as existing receipts and on-hand stock levels have already been used to fulfill demands in the first MRP run.

New MRP does not require any specific sequence order when running. The Real Time MRP responds in this example to the new demand situation by changing the coverage. The current On-hand now covers the new BOM line demand and a new planned order have been created for a later requirement date avoiding unnecessary inventory buildup.

Binding receipts and issues hard together

Old MRP has in this example used the on-hand stock level to fulfill BOM line reference 004737.  However an earlier demand have occurred in the supply chain but Old MRP failed to respond properly to the changed demand situation as the On-hand stock should have been used to fulfill the new demand.

Old MRP binds receipts and issues hard together during coverage by creating pegging records that point to the linked requirements.

The pegging information comes in handy afterwards as is can be used to display how receipts and issues are linked together in the net requirement form.

In Old MRP the hard linking is used for all coverage methods and the pegging system becomes during MRP calculations updated. However, the pegging system also comes with a cost.

There is of course a performance penalty in creating all these pegging records but the main problem is actually that the linking becomes hard and not easy changeable to a new demand situation.

Ax customers have discovered many times wrongly created planned orders. The root cause almost every time boils down to side effect coming from this hard receipts and issues linking

Insufficient intercompany master planning

Old MRP was not originally developed while having a large global operating company in mind.

The original fundamental design decisions made in the first Ax version makes it difficult to run MRP across companies even today.

A complete inter-company master planning in Old MRP is made up of a number of individual company specific MRP runs. The strategy to execute “company after company” has resulted in CTP calculations to only run directly in the current company.

This is a huge limitation in Old MRP.

New MRP have been designed to run across company as easy as running across BOM levels.

This makes is possible for the New MRP to support global operating companies as expected today.


Running inter-company master planning in Old MRP requires a number of iterations are specified
prior to the run. After the first iteration “Net change” is typically used, but that principle results in
incorrect planned orders. Running “Regeneration” in subsequent iterations is typical not an option
as the MRP then do not finish in proper time