Smarter Inventory Management with MRP

Inventory is one of the biggest balancing acts in business. Too much stock ties up your cash and clutters the warehouse. Too little stock means delays, frustrated customers, and missed sales.

The good news? Most modern ERP systems include a Material Replenishment Planning (MRP) routine that can take the guesswork out of managing inventory. When used well, it helps you move closer to a just-in-time (JIT) approach — having the right stock, at the right time, in the right quantities.

Here’s how it can benefit your business.

1. Better Cashflow

Stock is cash sitting on a shelf. MRP routines release that cash by aligning purchasing with real demand. Instead of over-ordering “just in case,” replenishment planning looks at actual daily usage and supply lead times to suggest exactly what you need, when you need it.

The result? Less money tied up in inventory and more available to invest back into the business.

2. Stock Optimisation

MRP helps you avoid both extremes — stockouts and overstocks. It does this by:

• Calculating reorder points based on daily usage and supplier lead times.
• Factoring in safety stock to cover spikes or delays.
• Automatically adjusting recommendations as demand patterns change.

That means inventory levels that are lean, reliable, and sustainable.

3. Warehouse Efficiency

When stock levels are under control, warehouses run smoother:

• Less clutter means faster picking and fewer errors.
• Predictable replenishment reduces urgent “last-minute” deliveries.
• Space is used more efficiently, lowering storage costs.

In short, your warehouse team can focus on moving stock efficiently instead of constantly firefighting.

4. Know Your Lead Times & Usage

The accuracy of MRP depends on two critical inputs:

• Supply chain lead times: How long it really takes for stock to arrive, not just what the supplier promises.
• Item daily usage: How fast items move, based on sales history, forecasts, or production needs.

Get these right, and your replenishment planning will be spot on.

5. Business-Wide Benefits

Good inventory management isn’t just a warehouse issue. When MRP is working well:

• Sales can promise accurate delivery dates.
• Finance sees improved cashflow and reduced holding costs.
• Operations enjoy smoother production with fewer bottlenecks.
• Customers receive awesome service.

Moving Towards Just-in-Time

If you need assistance with running lead time and daily usage reports within your system, updating item data where auto calculations are not available, or running and interpreting replenishment routines, please contact us at Cutcher & Neale Business Systems. While these principles apply to all ERP systems, at Cutcher & Neale, we specialise in maximising the potential of your Ostendo Operational ERP software and Oracle NetSuite Financial ERP system.

Real world scenario - negotiating supplier pricing and minimum ordering 12 months in advance

Our client required a consistent supply of a key item for their finished goods assembly, which had a 120-day lead time due to manufacturing and importing. The supplier proposed that our client commit to an order quantity for 12 months, allowing the supplier to plan their manufacturing and ensure availability in the Australian warehouse, with a delivery time of 5-7 days.

To address this, we utilised the MRP wizard, extending the planning horizon to 52 weeks while considering the previous 180 days of average daily inventory movement. This approach generated monthly forecast data for item purchasing requirements over the next 12 months across the supplier's product range. As a result, our client could compare the supplier's proposals with the MRP's suggestions, make informed adjustments, and confidently commit to the supplier's supply program.