Production Planning & MRP in Dynamics 365 Business Central: A Practical Guide for Manufacturers

Manufacturers today operate under constant pressure—shorter lead times, fluctuating demand, rising material costs, and customers who expect on-time delivery every single time. In this environment, production planning and MRP (Material Requirements Planning) are no longer optional. They are business-critical.

This is where Dynamics 365 Business Central stands out. It brings production planning, MRP, inventory, and capacity management together in one connected ERP—without the complexity of traditional manufacturing systems.

This guide explains how production planning & MRP work in Dynamics 365 Business Central, what problems they solve, and why many manufacturers are replacing legacy MRP tools with Business Central.

What Is Production Planning & MRP in Manufacturing?

Before diving into Business Central, let’s clarify the basics.

Production Planning

Production planning ensures:

• The right products are produced
• In the right quantities
• At the right time
• Using available capacity and resources

MRP (Material Requirements Planning)

MRP answers three critical questions:

1. What materials are required?
2. How much is needed?
3. When should they be ordered or produced?

Without MRP, manufacturers often face:

• Overstocking or stockouts
• Production delays
• Emergency purchasing at higher costs
• Poor visibility across departments

Why Manufacturers Choose Dynamics 365 Business Central for MRP

Dynamics 365 Business Central is not just accounting software—it’s a full manufacturing ERP designed for small and mid-sized manufacturers who need control without complexity.

Key reasons manufacturers move to Business Central:

• Single system for planning, inventory, production, and finance
• Real-time visibility across supply chain
• Flexible planning for Make-to-Stock (MTS) and Make-to-Order (MTO)
• Scales as production grows
• Deep Microsoft ecosystem integration

How MRP Works in Dynamics 365 Business Central (Step-by-Step)

1. Demand Planning: Sales & Forecasts Drive Everything

MRP in Business Central starts with demand:

• Sales orders
• Sales forecasts
• Production orders
• Transfer orders

The system calculates future requirements based on actual demand—not assumptions.

2. Bill of Materials (BOM) Explosion

Business Central automatically explodes:

• Production BOMs
• Multi-level assemblies
• Sub-components and raw materials

This ensures accurate material planning down to the lowest level.

3. Inventory & Lead Time Calculation

The MRP engine considers:

• Current stock levels
• Safety stock
• Vendor lead times
• Reorder policies
• Lot sizes

This prevents both overbuying and last-minute shortages.

4. Capacity Planning & Work Centers

Production planning isn’t just about materials—it’s also about capacity.

Business Central evaluates:

• Machine availability
• Labor capacity
• Work center calendars
• Routing times

This helps planners avoid unrealistic schedules and bottlenecks.

5. Planning Worksheets & Action Messages

Instead of automatically changing data, Business Central generates actionable recommendations, such as:

• Create purchase orders
• Release production orders
• Reschedule existing orders
• Cancel excess supply

Planners stay in control while still benefiting from automation.

Key Production Planning Features in Business Central

✔ Production Orders (Planned, Firm Planned & Released)

Manage production at different planning stages without disrupting operations.

✔ Routing & Shop Floor Control

Define:

• Operation sequences
• Setup and run times
• Machine and labor costs

✔ Demand-Driven Planning

Respond quickly to changes in customer demand without manual recalculations.

✔ Inventory Optimization

Reduce excess stock while ensuring material availability.

✔ Cost Visibility

Understand:

• Expected vs actual production costs
• Material, labor, and overhead variances

Make-to-Stock vs Make-to-Order in Business Central

Business Central supports both manufacturing strategies:

Make-to-Stock (MTS)

• Plan production based on forecasts
• Ideal for high-volume, standard products
• Optimizes batch production

Make-to-Order (MTO)

• Trigger production from sales orders
• Reduces finished goods inventory
• Ideal for customized or low-volume products

You can even run hybrid models within the same system.

Common Manufacturing Challenges Solved by Business Central MRP

Why Manufacturers Replace Legacy MRP Systems

Many manufacturers still rely on:

• Standalone MRP tools
• Excel-based planning
• On-premise ERP systems

These systems struggle with:

• Real-time data
• Integration with finance
• Scalability
• Cloud access

Dynamics 365 Business Central replaces fragmented systems with a single, cloud-based manufacturing ERP.

Is Business Central MRP Right for Your Manufacturing Business?

Business Central is ideal if you:

• Are a small or mid-sized manufacturer
• Want better control over production & materials
• Need real-time planning visibility
• Are outgrowing legacy ERP or spreadsheets
• Want predictable production costs and on-time delivery

Final Thoughts: Smarter Production Starts with Smarter Planning

Production planning and MRP are the backbone of manufacturing success. With Dynamics 365 Business Central, manufacturers gain the ability to plan confidently, respond quickly, and scale efficiently—without overcomplicating operations.

If production delays, stock issues, or manual planning are holding your business back, it’s time to rethink how you plan.

Ready to Optimize Production Planning & MRP?

If production delays, inventory issues, or manual planning are impacting your manufacturing operations, it’s time to move to a smarter ERP.

Dynamics 365 Business Central helps manufacturers gain full control over production planning, MRP, inventory, and capacity—all in one connected system.

👉 Contact Dynamics Square UK to:

• Get a free Manufacturing ERP consultation
• See Production Planning & MRP in Business Central with a live demo
• Discuss your manufacturing challenges with Dynamics 365 experts

Start planning with confidence. Contact Dynamics Square UK today.