MRP software for Xero users in Australia (and why Xero has no BOM)

Xero has no bill of materials, no work orders, and no MRP run. That is by design.

The fix is not to leave Xero. It is to add a production layer that syncs back to it.

Here is how MRP for Xero actually works in an Australian manufacturing business.

If you make things in Australia and run your books on Xero, you have probably hit the wall. You can track stock items. You can raise a purchase order. But the moment you want to say "one finished unit consumes 3 of part A, 2 of part B and 0.5 hours of assembly", Xero has nothing for you. There is no BOM. There is no work order. There is no MRP run that looks at demand, on-hand stock and lead times and tells you what to buy and build.

That is not a flaw. Xero is an accounting platform, and it is a very good one. Manufacturing resource planning is simply a different job. This post explains what MRP actually does, why Xero and MYOB do not do it natively, what your real options are as an Australian manufacturer, and the architecture we think most operators should land on: keep Xero for the ledger, add a production layer on top.

Why Xero has no BOM (and MYOB only in Premier)

Xero's inventory is deliberately flat. An item has a cost, a sell price, a quantity on hand, and an account it posts to. That model is perfect for buy-and-resell businesses and for tracking finished goods you purchase. It falls apart the instant a product is assembled from other products.

• There is no parent-child relationship between a finished good and its components. Xero cannot "explode" a sale of 100 units into the raw materials it consumes.
• There is no work order — no document that says "build 50 of SKU-X, reserve these components, and book the labour and overhead into cost".
• There is no MRP calculation. Xero will not net demand against supply, respect supplier lead times, or suggest a purchase plan.
• Backflushing (relieving component stock automatically when a build is completed) does not exist.

MYOB is only marginally different. MYOB Business has no real build function. You have to be on MYOB AccountRight Premier to get the "Auto-Build Items" feature, and even then it is a single-level assembly tool — it builds one finished item from a fixed component list. It is not multi-level MRP, it has no work-order shop-floor concept, no routings, no capacity planning, and no demand-driven planning run. It is fine for a kit. It is not a manufacturing system.

So if you are an Australian maker on Xero or MYOB and you have been told to "just use the inventory module", that advice runs out of road the day you start assembling.

What MRP actually does

MRP — material requirements planning, the older sibling of full manufacturing resource planning — answers one deceptively hard question: given what we have promised to ship and what we hold in stock, what do we need to buy and make, and by when? A real MRP system gives you a handful of capabilities your accounting platform never will.

Bills of materials (BOMs)

A BOM is the recipe. It defines the components, quantities and units that go into a finished good. Multi-level BOMs let a sub-assembly be a component of a higher assembly, so a sale of the top-level product explodes all the way down to raw materials. This is the single feature Xero most obviously lacks.

Work orders

A work order authorises a build: reserve these components, produce this quantity of this SKU, and capture the actual materials, labour and overhead consumed. When it closes, finished-goods stock goes up and component stock comes down — and the costed result is what should land in your accounts.

The MRP run

This is the engine. It looks at demand (sales orders, forecasts, minimum stock levels), nets it against supply (on hand, on order, in production), applies supplier and manufacturing lead times, and produces a plan: suggested purchase orders and suggested work orders, each dated. Run it weekly and you stop both stocking out and over-ordering.

Shop-floor and routings

Heavier MRP adds routings (the sequence of operations to build a product), work centres, and capacity planning so you can see whether you can actually hit a date with the people and machines you have. Operators report progress against work orders from the floor, often by scanning.

None of these are accounting functions. They are operations functions. That is exactly why they live in a different system from your ledger.

Xero-integrated MRP options, by approach

There is no shortage of tools that connect to Xero. The honest way to choose is by the shape of the problem, not the logo.

Light assembly and kitting

If you assemble simple kits — a hamper, a bundle, a single-level build with no real shop floor — an inventory-and-light-manufacturing app sitting on Xero is enough. Tools at this end (Cin7, Unleashed, DEAR/Cin7 Core) handle single or shallow BOMs and assemblies and sync to Xero. If MYOB Premier's Auto-Build covers your one kit, you may not need anything extra at all. Do not buy an MRP engine for a problem this size.

True SMB manufacturing

If you run multi-level BOMs, want a proper MRP run, and need work orders your floor can follow, this is the dedicated-MRP zone. Katana and MRPeasy are the usual Xero-friendly names here, and they are genuinely good at production planning. The trade-off is that you now run a manufacturing tool alongside your warehouse, your CRM and your despatch, each with its own sync to Xero — and stitching those together is its own project.

Manufacturing as one layer of operations

If production is one part of a bigger operation — you also pick, pack, ship across multiple carriers, manage inventory across locations, run cycle counts and handle customers — then bolting on a standalone MRP tool just adds another silo. The better shape is a single operations layer that includes production-manufacturing alongside the rest of warehouse and order management, all syncing to Xero through one connector. That is the gap OpsUI is built for.

Full manufacturing ERP

If you are genuinely complex — heavy multi-level BOMs, finite capacity scheduling, multi-entity consolidation, IFRS-grade reporting — then the right answer is a manufacturing ERP (NetSuite Manufacturing, SAP Business One, Acumatica). At that point Xero itself may have to go. Be honest about whether you are really here. "We grew", "we added a line", and "we need barcodes" do not put you here. Multi-entity consolidated reporting and finite scheduling do.

The keep-Xero, add-a-production-layer architecture

For most Australian manufacturers turning over a few million up to mid-market, the right architecture is not a migration. It is a split of responsibilities.

• Xero stays the system of record for finance: invoicing, bills, payments, payroll, GST and BAS, P&L and balance sheet, the auditor's view.
• A production-and-operations layer owns what Xero cannot: BOMs, work orders, the MRP run, shop-floor progress, inventory by location, picking, packing and despatch.
• A bidirectional sync keeps the two in step so finance sees costed output and you are not double-keying.

The win is that your accountant keeps the platform they know, your floor gets a system built for production, and nobody spends a quarter migrating a general ledger to solve what is really an operations problem. You go live in weeks, not through a multi-month, five-figure ERP implementation.

One honesty note on the sync, because it matters in Australia: OpsUI's bidirectional sync is live in production today with NetSuite. The Xero and MYOB connectors are wired during your rollout via the Finance & Accounting module rather than being a pre-built marketplace plug-in — we scope the mapping (items, accounts, tax codes, how costed builds post) with you and stand it up as part of go-live. We would rather tell you that plainly than imply a one-click integration that does not exist.

An Australian worked example

Take a Melbourne contract manufacturer making powder-coated steel fittings. They sell into trade and run Xero for the books, plus a spreadsheet for "production". Here is the before and after.

Before: a sales order for 200 brackets arrives. Someone manually works out it needs 200 blanks, 400 fasteners and a coating batch, eyeballs the shelf, and raises a purchase order from memory. Stock counts drift. Job costs are a guess. When the auditor asks what a finished bracket actually cost to make, the answer is a shrug.

After, with Xero plus a production layer:

• The bracket has a multi-level BOM: blank, fasteners, coating, and the labour operation to assemble and coat.
• The MRP run nets the 200-unit order against on-hand stock and open POs, applies the steel supplier's lead time, and proposes exactly what to buy and when to start the build.
• A work order goes to the floor; operators report progress; component stock backflushes as builds complete.
• The costed finished-goods movement and the supplier bills flow back to Xero, so the P&L and inventory valuation reflect real production, not a guess.
• Dispatch, carrier labels and the customer invoice all run off the same order — and that invoice posts to Xero.

Same ledger, same accountant, same BAS process. A real manufacturing system on top.

How OpsUI fits

OpsUI puts the BOM, the work order and the MRP run on top of Xero rather than inside a new ledger: the production-manufacturing module owns exactly the parent-child, demand-netting work Xero has no concept of, and posts the costed result back to the books you already keep.

For manufacturers that means the production-manufacturing module — BOMs, work orders and production planning — running alongside inventory-management, receiving-inbound, shipping-outbound and order-management, so production is one part of a single operations picture rather than a bolt-on silo. See /solutions/manufacturing for the full shape, and /integrations/xero for how the Xero connector is wired during rollout via the Finance & Accounting module.

Flat modular pricing from A$399/module/mo — full breakdown at /pricing. AUD billing, AU-hosted production data and AU business-hours support.

If you are a heavy multi-level, finite-scheduling, multi-entity manufacturer, we will tell you on the scoping call that a full manufacturing ERP is the better fit, and point you at one. Most Australian makers on Xero are not in that case — they need a production layer, not a ledger migration. If that sounds like you, book a scoping call at /book-demo and we will map your BOMs, your MRP run and your Xero sync before you commit to anything.