Definition

closed loop manufacturing resource planning (MRP)

1. Closed loop manufacturing resource planning, also known as closed loop MRP (CLMRP), is a manufacturing resource planning model that incorporates returned products as part of the supply chain. In such a model, the original equipment manufacturer (OEM) takes responsibility for the return loop (RL) process. Product returns (also known as cores) often come directly from customers or retail channels, but they can also come from production facilities in the form of manufacturing by-products or components that fail to meet the manufacturer's quality control criteria. Returned products are counted as inventory because they can be inspected and resold, refurbished or used for parts. By closing the loop and managing the product lifecycle in a holistic manner, the manufacturer has more control over both supply chain and manufacturing planning. Closed loop MRP planning is often credited to IBM.

2. A closed-loop MRP system is a software application that helps the manufacturer keep track of inventory and use that knowledge, along with other production variables, to adjust future manufacturing plans.

See also: advanced planning and scheduling (APS), supply chain planning (SCP), enterprise resource planning (ERP), supply chain management

This was last updated in November 2009
Posted by: Margaret Rouse

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