A work order is ready to go. The quantity is agreed, the delivery date is committed, and the product structure has already said what the job consumes. Four of the six components are there in full. Two are not, and one of those has a purchase order against it that may or may not arrive in time.
Somebody now has to decide whether this job starts today. That decision is what this page is about. Not the arithmetic that produced the requirement, but the judgement that follows it, and the information a planner needs in front of them before making it.
A production quantity is not yet a material plan
"We need 150 of these by the fourteenth" is a production requirement. It is a statement about output, and it is often treated as though it settles the matter. It does not. Between that sentence and a job running on the floor sit three separate questions, and only the first one is arithmetic.
What does the job need. How much of that is already accounted for. And what should happen about the part that is not. Plants that struggle with material planning are rarely struggling with the first question. They are usually struggling with the third, and finding out about it too late to have any good options.
Where the demand comes from
There is a step people skip when describing this chain out loud. In the chain described here, a customer commitment does not jump straight to work-order release. The production plan sits between them, and it earns its place because the two things it connects are shaped differently: an order book is a set of promises with dates on them, and a work order is a specific quantity of a specific item released to be made.
The plan is where those are reconciled. Planned production quantities come out of the open order book and the dates that were committed, which is what keeps the plan tied to something real instead of to an assumption about what the plant should be busy with. Work orders are then released against the plan, carrying their own start and completion dates. Once a job is released, the question changes from whether it can start to where it has actually reached, which is the subject of work-order execution and shop-floor tracking.
This matters for material planning because the dates travel with the demand. A requirement without a date is only a list of components. A requirement that knows when the job is meant to start is the beginning of a decision.
Where the requirement number comes from
The requirement for a job comes from the product structure. The work order references the bill of materials, the structure is resolved through its levels, and component quantities follow the parent quantity, so planning 40 units and planning 400 is the same operation rather than two different exercises.
That is a subject in its own right, and how the structure is built decides whether the resulting number can be trusted at all. It is covered properly in material structure and multi-level BOM, including how gross requirements are reduced by what is already available or already coming. Only one point from it needs carrying forward here: the requirement is never better than the structure it came from, so a planning problem can be a BOM problem wearing a different hat.
What changes once availability enters the picture
A requirement on its own is a shopping list. It becomes a plan when two further pieces of information are set beside it.
The first is available stock: how much of what the job needs is available now. Comparing the requirement against that is what produces a shortage, and the shortage is the number worth having, because it is small, specific and actionable in a way a component list is not.
The second is different in kind. Material already on order is not stock, and it does not make the shortage go away. What it adds is context: a quantity that has been ordered, and a delivery date to set against the point at which the job is meant to run. A shortage read together with that date supports a better decision than the shortage read on its own.
| Before releasing the job | The question a planner needs answered |
|---|---|
| Production requirement | What are we making, how many, and by when? |
| Material requirement | What does this job actually need? |
| Available stock | How much is available now? |
| Material on order | What is already coming, and when does it land? |
| Shortage | What remains unresolved after comparing the requirement with available stock? |
| Release decision | Can this job sensibly start now? |
The shortage is the decision point
Everything above exists to produce one output, and it is not a report. It is a decision about whether to release.
Knowing that ten pieces are short is useful. Knowing that ten are short and a purchase order for forty is due for delivery before the job is scheduled to run is a different decision entirely. Knowing that ten are short with nothing on order and no supplier contacted is a third. A shortage list without quantities and dates flattens all three into the same alarming line, which is why planners stop trusting it and go back to asking the storekeeper.
So the useful shape of a shortage is narrow: which component, how much is required, how much is available, and what is expected when. With that in front of them a planner can do the arithmetic that matters, which is whether the missing quantity is expected in time for the planned production date.
Being short is not the same as being unable to start. Plenty of jobs are released short quite deliberately, because the missing quantity is on order and expected in time. Others should not be, and the sign is usually that nobody can say when the material is coming. A system that checks availability and shows the shortage before release is doing the useful part. Deciding what to do about it is a judgement that depends on the customer and the situation in front of you, and it belongs to a person.
What a system genuinely owes the planner is that the check happens before release, not after. A shortage found beforehand is a decision with options. The same shortage found mid-job is a stalled work order with material already issued against it, floor time spent, and a delivery date that has quietly moved.
Material is only one of two feasibility questions, though. Whether the operations the plan requires will fit through the capacity available to run them is the other, and it is covered in capacity, routing and process time.
When more than one job needs the same component
When several open work orders need the same component, looking at only one job can hide the overall pressure on that material. Examined individually each job may look adequately supplied. The difficulty shows up when the requirements are considered together.
That is the argument for looking at the position across open work orders and the production plan instead of job by job. Components short can be viewed that way, which is what lets somebody see the pressure at all. Which job should take priority is not a question for the software; it stays with the people who know what was promised to whom.
From shortage to purchasing
A shortage that stays inside production has not finished its journey. Something has to be bought, and it is worth understanding how the two ends connect.
Purchase orders can be raised against production-triggered material planning, and they can equally be raised from a manual requisition where that is the right route. Outstanding purchase orders and pending inward material stay visible to the people planning against them.
Be careful what you infer from that, because vendors are not always careful either. A connection between production-driven material planning and raising a purchase order is not the same thing as automatic purchase-order creation or approval. Nothing described here means a shortage becomes an order on its own, and it is worth asking any vendor to be precise about exactly where the person sits in that sequence.
What to make an ERP vendor demonstrate
Material planning demonstrates badly, because the tidy path is easy to show and tells you nothing. The wider method for running an evaluation of this kind is set out in the ERP selection and evaluation guide; the sequence below is the one specific to planning.
- Start from real demand with real dates, not a work order typed in from nowhere.
- Show the planned production quantity that comes out of it, and where the dates went.
- Show the material requirement attached to that work order, derived from the structure, not entered by hand.
- Show required quantity against available quantity, component by component.
- Introduce a genuine shortage. Watch what the system says about it, and when it says it.
- Show a pending purchase order for that component, and how its delivery date is presented alongside the shortage.
- Ask for the shortage position across every open work order and the plan, not one job at a time.
- Ask exactly what a planner sees before the release decision is made.
- Show how production-triggered material planning connects to raising a purchase order.
- Afterwards, compare what was actually produced against what was planned.
Bring your own difficult component to this. The one that has delayed a job twice this year is worth more than any scenario a vendor prepares.
How exactllyERP plans material requirements
In exactllyERP, sales orders drive production demand, and planned production quantities are derived from open sales orders and delivery dates. Work orders are released against that plan and can carry start and completion dates.
Material requirements are derived from the work order and calculated from the BOM, and are allocated against available stock before production starts. Multi-level structures and quantity scaling sit behind that, and are described in material structure and multi-level BOM rather than repeated here.
Material availability is checked before work-order release, so shortages are identified before production starts, not discovered during it. Components short can be seen against open work orders and the production plan, with quantity required against quantity available and pending purchase-order delivery dates, so the aggregate position does not have to be assembled job by job. Outstanding purchase orders and pending inward material remain visible.
Purchase orders can be raised against production-triggered MRP, or from manual requisitions where that suits the situation better. Afterwards, actual production output can be compared against planned quantities by product and period. The broader manufacturing workflow this sits inside is described on the manufacturing ERP page, and the functional scope across procurement, inventory, production and finance on the features page.
This page describes capability, not configuration. How a production plan should be structured for a particular operation, how planners use the availability information, and who owns the release decision are implementation choices that depend on the business. They are worth settling deliberately, because each one changes what a shortage means when it appears.
Common questions
What is the difference between a BOM and material requirement planning?
A bill of materials describes what the product is made of. Material requirement planning works out what a particular job therefore needs, and whether that need is already covered. The BOM is a structure and it does not change because you are making forty units this week instead of four hundred; the requirement does. That is why the same BOM can produce a comfortable plan one week and a shortage the next.
How do you know which materials are short before production starts?
By setting the requirement for the job against what is actually available before the work order is released, instead of discovering it when the material is called for on the floor. In practice that means a system that can check availability at the point of release and show what falls short, with the quantity attached. The value is in the timing. A shortage found before release is a planning decision with options; the same shortage found mid-job is a stalled work order on a job that has already started.
Should material planning consider stock already available?
Yes, and a requirement that ignores it is close to useless. A gross requirement tells you what the job consumes; it says nothing about what you would actually have to obtain. Setting it against available stock is what turns a list of components into a decision about whether the job can start.
How should pending purchase orders be treated when planning production?
As information with a date attached, not as stock. Material already on order is not available today, but it is not missing either, and treating it as missing can lead to duplicate ordering. The useful figure is the expected delivery date against the date the job needs the material. Ten pieces short with a purchase order expected in time for the planned production need may be primarily a scheduling matter. The same ten short with nothing on order may require procurement action. They look identical on a shortage list that carries no dates.
What should an ERP vendor demonstrate for production material planning?
One job, followed from customer demand to the point of work-order release, with a real shortage in it. Ask to see the production quantity derived from actual demand and dates, the material requirement attached to the work order, required against available quantity, and what the system shows about a component that is short. Then ask for the position across all open work orders, not one at a time, and how the shortage reaches purchasing. A demonstration where everything is in stock proves nothing.
How does exactllyERP plan material requirements and identify shortages?
Sales orders drive production demand, and planned production quantities are derived from open sales orders and delivery dates. Work orders are released against that plan and can carry start and completion dates. Material requirements are derived from the work order and calculated from the BOM, and are allocated against available stock before production starts. Material availability is checked before work-order release, so shortages are identified before production begins, not during it. Components short can be seen against open work orders and the production plan, with quantity required against quantity available and pending purchase-order delivery dates. Outstanding purchase orders and pending inward material stay visible, and purchase orders can be raised against production-triggered MRP or from manual requisitions.
What happens if material is short when a work order is ready for release?
In exactllyERP, availability is checked before release and the shortage is identified at that point, with the quantity required against what is available and the delivery dates of anything already on order. What to do with that is a business judgement, not a system rule. Releasing a job that is short is sometimes right, when the missing quantity is on order and expected in time, and sometimes the reason a job stalls part-way through. The point of checking before release is that the choice is made deliberately by somebody who can see the whole picture.
Where to start
Take the component that most often delays a job in your plant. Not a representative one, the actual troublesome one. Then ask every system you are evaluating a single question about it: what would you have known about this component before the work order was released?
The answers separate quickly. If exactllyERP is on your shortlist, bring that component to the demonstration and ask for the same thing.