MRP Planning

Running MRP Netting You Can Actually Trust

MRP netting decides cash, freight, and schedule credibility at once. This playbook covers the worked math, the 98 to 99 percent record accuracy it depends on, and the cadence that cuts expedite freight 30 to 50 percent.

MRP netting is where your plant either buys the right material or buys chaos. The formula is simple: gross requirements minus on-hand, minus scheduled receipts, minus other usable supply equals net requirements. Get it wrong by 10 percent on a $40 million annual spend and you either carry $4 million of excess or expedite your way through shortages at 2 to 4 times normal freight. Shortage costs compound: a $3 part missing at assembly can idle a $9,000 per hour line, and plants with poor netting typically run 5 to 15 percent of orders late. The number decides cash, freight, and schedule credibility all at once.

Work the math on one part before trusting the system. Gross demand for part 4471 next month: 2,400 units from the master schedule plus 120 for service parts, so 2,520. On hand: 600, but 80 are on quality hold, so 520 usable. Scheduled receipts: 800 due week 2. Net requirement: 2,520 minus 520 minus 800 equals 1,200 units. The MRP Material Requirements calculator runs this netting so you can sanity-check what the ERP spits out. The discipline is in the inputs: on-hand must mean available, receipts must mean confirmed, and demand must include scrap allowance, typically 2 to 5 percent on fabricated parts.

Netting is only as good as inventory record accuracy, and the benchmark there is unforgiving: world-class plants hold 98 to 99 percent location-level accuracy by cycle count; under 95 percent and MRP output is guesswork. BOM accuracy needs to be 99 percent plus, because one wrong quantity-per propagates to every order. Measure planner override rate too: if planners manually adjust more than 15 to 20 percent of system-suggested orders, they have stopped trusting the netting and you are running informal MRP on spreadsheets. Healthy plants see override rates under 10 percent and falling, with each override coded by reason so the root cause gets fixed.

The levers: first, cycle counting with a real cadence, A items every 30 days, B every 90, C every 180, and every discrepancy over 2 percent root-caused within a week. Second, receipt integrity: purge phantom scheduled receipts monthly; purchase orders more than 5 days past due with no supplier confirmation should not net against demand. Third, quality-hold visibility: holds that sit invisible as on-hand inventory create shortages that look like planning errors, so flag hold stock out of nettable supply the hour it is dispositioned. Fourth, demand hygiene: forecast consumption rules that double-count firm orders and forecast will overstate gross demand 5 to 10 percent in transition weeks.

The classic failure modes: nervousness, where daily regeneration flips order dates and quantities so often the shop ignores the system; fix it with firm planned orders inside lead time and weekly rather than daily action messages on B and C parts. Stale lead times: purchased lead times reviewed annually while actual supplier performance drifted 3 weeks means MRP launches everything late. Safety stock buried in multiple places, in the item master, in the BOM scrap factor, and in the planner's head, inflates net requirements 10 to 20 percent. And unreported floor scrap quietly eats supply until the shortage appears with zero warning.

Run netting as a managed process. Daily: planners clear action messages on A items and expedites, targeting an exception queue under 50 lines per planner; a queue of 500 means nobody reads it. Weekly: shortage review against the next 2 weeks of schedule, an override-rate report, and a past-due receipt purge. Monthly: inventory record accuracy audit, a BOM accuracy sample of 25 assemblies, and a netting spot-check where a planner hand-calculates 5 parts and compares to system output. Quarterly: lead time and lot size parameter review on the top 200 parts by spend. Plants that install this rhythm typically cut expedite freight 30 to 50 percent in two quarters.

World-class MRP looks boring: record accuracy at 99 percent, planner override rate under 8 percent, past-due purchase orders under 3 percent of open lines, and shortage meetings that take 15 minutes because there are 4 items instead of 40. Planners spend 70 percent of their time on parameters and supplier development instead of expediting. New demand nets through to a purchase requisition in one run without human rework. And when the general manager asks why an order is short, the answer comes from the system in 2 minutes, with the failing input named, because the netting is trusted enough to be the single version of truth.

Published 2026-07-02.