Why craft sellers need to use an MRP System
MRP sounds like something only factories need. It isn't. Here's why every craft seller who makes products from raw materials needs MRP — and how it actually works in practice.
There is a popular idea in the handmade business community that MRP — Materials Requirements Planning — is something you worry about later. Once you’re bigger. Once you’re more established. Once you’ve outgrown your spreadsheets.
This is, with respect, backwards.
Every craft seller who makes products from raw materials is already doing MRP. The question is whether you’re doing it in your head, in a crumbling spreadsheet, or in a system that actually keeps up with your business. If you’re still getting your head around the core terminology, our manufacturing inventory management guide is a good place to start before diving deeper here.
MRP isn’t factory software. It isn’t enterprise software. It’s the answer to a simple question that every maker asks before they start a production run: do I have what I need to make this?
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Craftybase is MRP software built specifically for small-batch makers: track raw materials, build product recipes, manage manufacturing runs, and know your true costs. It's your production command centre.
What does MRP actually mean?
MRP stands for Materials Requirements Planning — a method for figuring out what materials you need, when you need them, and whether you have enough on hand to fulfil your orders.
The short version: MRP looks at what you’ve sold (or need to make), checks it against your recipes or bills of materials, and tells you what to order and when.
That’s it. There’s no magic here. It’s the same mental process you already go through before a big production run — “okay, I have 12 orders, each needs X amount of ingredient Y, I have Z on hand, so I need to order…” — just done by software instead of your brain.
The reason it matters is that once your business grows beyond a handful of products and a few orders a week, the mental arithmetic becomes unreliable. You start to miss things. You order too much of one material and run out of another. You start a production run and discover halfway through that you don’t have enough of a key ingredient. These aren’t just inconveniences — they’re costs. For a more detailed breakdown of what MRP is in a manufacturing context, it’s worth understanding the full framework before choosing software.
What does MRP do for your business?
At its core, an MRP system does four things that are hard to replicate with spreadsheets:
Tracks your materials in real time
Every time you manufacture a batch of products, the materials used are deducted from your inventory automatically. You always know exactly what you have on hand — not what you had last time you counted, not what you think you have, but what’s actually there right now.
For a maker managing dozens of raw materials across multiple product lines, this alone is worth the subscription price.
Calculates what you need to make before you start
This is the core of MRP. You enter an order (or a planned production run), and the system works backwards from your product recipes to tell you exactly what raw materials you’ll need. It then cross-references that against your current stock levels and shows you the shortfall.
No more starting a run and discovering mid-batch that you’re short on a critical ingredient.
Flags reorder points before you run out
A proper MRP system lets you set reorder points for each material — the stock level at which you need to place a new order to avoid running out before the next delivery arrives. When your stock drops below that point, the system flags it. You get the alert when there’s still time to act, not when you’re already out.
Tracks your true costs
Because the system knows exactly which materials went into each product and how much they cost, it can calculate your cost of goods sold automatically. No more guessing at COGS at tax time. No more discovering at the end of the year that your bestselling product has been quietly losing you money.
MRP in action: a real example
Let’s make this concrete. Say you’re a soap maker and you receive an order for 50 bars of your lavender honey soap. Here’s what happens without MRP, and then with it.
Without MRP:
You look at the order, glance at your shelves, and estimate that you have enough to fulfil it. You start the batch. Three-quarters of the way through, you realise you’re low on beeswax — you thought you had more, but some was used in last week’s run. You order an emergency top-up at express shipping rates, which eats into your margin. The order ships two days late.
With MRP:
You enter the order for 50 bars into the system. Your lavender honey soap recipe calls for:
- 1.2kg of coconut oil per 10 bars (6kg total)
- 0.8kg of beeswax per 10 bars (4kg total)
- 0.5kg of sodium hydroxide (lye) per 10 bars (2.5kg total)
- 60ml of lavender fragrance oil per 10 bars (300ml total)
- 0.4kg of raw honey per 10 bars (2kg total)
The system checks your current stock levels:
- Coconut oil: 8kg on hand — ✓ sufficient
- Beeswax: 2.1kg on hand — ⚠ short by 1.9kg
- Sodium hydroxide: 5kg on hand — ✓ sufficient
- Lavender fragrance oil: 450ml on hand — ✓ sufficient
- Raw honey: 3kg on hand — ✓ sufficient
You see the beeswax shortfall immediately, before you start the run, and place a standard order at normal rates. The batch completes on schedule. The order ships on time.
This is MRP. Not complicated. Not enterprise-grade. Just: know what you need before you need it.
When do craft sellers actually need MRP?
The honest answer: earlier than most people think. Here are the signals that usually mean it’s time:
Your spreadsheet has become the most critical document in your business. If a formula breaks or a cell gets accidentally edited, you lose visibility into your entire operation. That’s fragile.
You’ve had a stockout mid-production run. Running out of a key material after you’ve already started is expensive and stressful. If it’s happened once, it’ll happen again as you grow.
You can’t answer “what does this product actually cost me to make?” without significant effort. If calculating your real COGS requires cross-referencing multiple documents, you’re flying blind on pricing.
You’re starting to scale your production or add team members. The moment someone else needs to access your production data, a personal spreadsheet becomes a liability. MRP gives you a shared, reliable source of truth.
Tax time is painful. If your annual COGS calculation requires hours of manual work, an MRP system pays for itself in accountant fees alone.
You don’t need to be running a factory. You need to be making products from raw materials and caring about whether your business is actually profitable.
MRP vs spreadsheets for makers
Spreadsheets are where most makers start, and there’s nothing wrong with that. The problem is that spreadsheets don’t scale, and the failures tend to be silent until they’re expensive.
Here’s what usually breaks first:
Recipe management. You can store a recipe in a spreadsheet, but updating it when ingredient costs change requires manual edits across multiple cells. Miss one, and your cost calculations are wrong — and you won’t know it.
Inventory tracking. You can track stock levels in a spreadsheet, but deducting materials after each production run requires manual data entry. Every manual step is a potential error. Every error compounds over time.
Multi-product tracking. If you make five products that share some of the same raw materials, calculating total material requirements across multiple simultaneous orders in a spreadsheet is doable — but genuinely difficult and error-prone.
Supplier and purchase order management. Spreadsheets have no concept of supplier lead times, order history, or reorder points in any meaningful operational sense.
The fundamental issue is that spreadsheets require you to do all the thinking. MRP software does the thinking for you. It doesn’t get tired. It doesn’t make arithmetic errors. It doesn’t forget that you used some of that fragrance oil in last Tuesday’s run.
MRP vs ERP: understanding the difference
If you’ve looked at business software at all, you’ve probably encountered ERP — Enterprise Resource Planning. ERP is often mentioned in the same breath as MRP, which causes a lot of confusion.
Here’s the practical difference:
ERP is an all-in-one system designed to manage every part of a large business: finance, HR, sales, purchasing, warehousing, manufacturing, and more. It’s what companies with hundreds of employees and complex supply chains use. Implementing an ERP properly is a six-figure project that takes months.
MRP is specifically focused on the manufacturing and materials side: what you need to make, what you have, what to order, and when. It’s a subset of ERP functionality — the part that actually matters for product-based small businesses.
There’s also a category sometimes called “ERP-lite” or “small business ERP” — tools like Katana or Fishbowl that try to bring ERP concepts to smaller businesses. These can be useful, but they’re still typically designed for operations with dedicated warehouse teams, multiple locations, and complex supplier networks. They’re more than most small makers need, and they price accordingly.
What handmade sellers actually need is MRP: the recipes, the material tracking, the cost calculations, and the production scheduling — without the HR module, the multi-warehouse management, or the implementation consultant.
The maker-specific tools in this space are worth comparing directly. Our guide to the best manufacturing software for small business covers the main options side-by-side.
How Craftybase handles MRP
Craftybase is designed around the MRP workflow, adapted specifically for small-batch makers.
Here’s how the key pieces fit together:
Recipes (Bills of Materials). You build a recipe for each product, specifying the exact quantities of each raw material. Once it’s set up, the system uses this recipe for every calculation — cost, material requirements, inventory deductions. For complex products with sub-components, Bill of Materials nesting keeps everything organised.
Manufacturing runs. When you produce a batch, you log it in Craftybase. The system automatically deducts the correct quantities of each raw material from your inventory and adds the finished products to your stock. No manual entry per ingredient. No spreadsheet updates.
Purchase orders. When material stock drops to your reorder points, Craftybase flags the shortage. You can generate a purchase order directly from the system and track it through to delivery.
Production scheduling. The production scheduling features let you plan your manufacturing calendar — when to run each product, in what quantities — with full visibility into whether you have the materials to support the schedule.
Reporting.Production cost reports show you your actual COGS per product, per manufacturing run, and over time. When tax time comes, the numbers are already there.
One thing worth noting: Craftybase is built around the same SOPs that professional manufacturers use, but without the complexity. You can read more about setting up SOPs for your product business as a complement to having the right software in place.
Getting started with MRP in your business
If you’re currently using spreadsheets, the transition to an MRP system doesn’t have to happen overnight. Here’s a practical approach:
Start with your top five products. Enter your best-selling products and their recipes first. Get the material costs right for these, and you’ll immediately have better visibility into your most important margins.
Set up your raw materials inventory. Do a physical count of your current stock and enter it accurately. This is the foundation — everything else depends on these numbers being correct at the start.
Log your next production run properly. Rather than updating a spreadsheet, record your next manufacturing batch in the system. See how the inventory deductions work in practice. Get comfortable with the workflow before relying on it for critical decisions.
Review your costs. Once your first few products are set up with accurate recipes, look at the cost calculations. You may find that some products are more profitable than you thought — or less.
The setup investment is real, but it’s a one-time cost. Once your recipes and inventory are in the system, the ongoing time saving is significant — and the accuracy improvement is immediate.
Frequently Asked Questions
What does MRP stand for?
MRP stands for Materials Requirements Planning (sometimes called Materials Resource Planning). It refers to both a planning methodology and the software that implements it. At its core, MRP answers the question: given what I need to make, do I have the raw materials to make it — and if not, what do I need to order? For handmade sellers, MRP software automates the material calculations that would otherwise require manual spreadsheet work before every production run.
Do I need MRP software if I'm just a small maker?
If you make products from raw materials — even on a small scale — you're already doing MRP mentally every time you check whether you have enough ingredients before starting a batch. The question isn't whether you need MRP; it's whether your current method is accurate and scalable. Spreadsheets work for a handful of products and low order volumes, but they become unreliable as your product range and order frequency grow. Most makers benefit from a proper system sooner than they expect — typically when they've had their first stockout mid-production run, or when tax time reveals gaps in their COGS tracking.
How is MRP different from just tracking inventory?
Inventory tracking tells you what you have. MRP tells you what you need — and works backwards from your production requirements to figure out what to order before you run short. A basic inventory tool counts units on hand; an MRP system understands your product recipes, calculates material requirements from planned production, monitors reorder points, and flags shortfalls proactively. For makers, the critical difference is recipe-based calculation: MRP automatically deducts the right quantities of each raw material when you log a manufacturing run, rather than requiring you to manually update stock levels per ingredient.
Does Craftybase have MRP?
Yes. Craftybase is built around the MRP workflow, adapted for small-batch makers rather than factories. It covers the core MRP functions: product recipes (Bills of Materials) with accurate cost calculations, manufacturing runs that automatically deduct raw materials from inventory, reorder point tracking with shortage alerts, and production cost reporting for COGS and tax purposes. It connects with Etsy, Shopify, Amazon, and other sales channels so orders flow in automatically — closing the loop between what you sell and what you need to make.
