MRP vs. ERP: Which Solution is Right for You? Each software solution is distinctive, and it does matter which one you choose. Here are some things to consider.

1. MRP VS. ERP: WHICH SOLUTION
IS RIGHT FOR YOU?

2. Maybe you already know some of the differences between these two products
or perhaps you’re new to the game and thought they were the same. Either way,
you need to be made aware that each software solution is distinctive, and it
does matter which one you choose. Here are some things to consider:

3. What does MRP stand for?
Initially, MRP started out meaning material requirements planning. And as
the name indicates, it was designed to help businesses plan for the types and
quantities of materials they would need for a project. They were useful as
forecasting and ordering tools because they ensured that the right materials in
the right quantities were available for production on the right date.
In addition to providing a bill of materials and tracking inventory, the original
MRP software could produce a master production schedule for manufacturing a
part or component. This MRP software was available during the 1970s and did
not incorporate any other processes.

4. The role of the MRP was expanded in the
1980s
By the 1980s, MRP had evolved into manufacturing resources planning and
was now combining production planning and reporting, human resources and,
of course, inventory into a comprehensive planning process. This new and
improved version of manufacturing software was referred to as MRP II in the
beginning, but it wasn’t long until everyone understood that MRP stood for the
integration of all these processes combined with the help of computer
technology.
The MRP system of 2019 includes capacity planning, scheduling, control on the
shop floor, and a variety of calculations, including financial calculations. It allows
for input from several departments real-time information throughout the shop
and offices. The advantages to manufacturers can be significant, giving them the
means to compare their forecasts to actual data, analyze performance, and
improve their processes for increased efficiency.

5. How does MRP work in practice?
MRP begins with a schedule for a customer order. The system converts the
information into schedules of requirements for the parts, subassemblies, and
materials needed to produce the final product within the established schedule. It
also takes into consideration the shop’s workstation schedule and allocation of
labor throughout the plant.

6. What is ERP and how does it differ from
MRP?
Enterprise resource planning (ERP) came on the scene in the 1970s and was
marketed as a suite of software that would capture all the processes of MRP—
production planning, scheduling, inventory management–while also
incorporating applications such as human resources, payroll, customer
relationship management (CRM), and financial management.
ERP evolved as a financial software, so usually it didn’t replace MRP. While ERP
can support most types of business processes, the software is much better
suited for large businesses. With the integration that is needed for those
processes and departments in big companies, an ERP system might be their
choice of software for its capacity for managing considerable amounts of data.
For the small to medium-sized company (and even some large corporations), a
stand-alone MRP solution will work well.

7. Is it overkill to purchase ERP for your
business?
Of course, the answer to that is subjective. Your business is unique, and only
you understand your processes completely. There is also the matter of your
budget to consider. ERP systems take on more processes but at a price that is
typically prohibitive to smaller companies. Implementing ERP software is
complex and time-consuming while putting an MRP system into operation is
much less involved.

8. Is it overkill to purchase ERP for your
business?
Take a look at the features of a quality MRP software solution:
• Production planning and reporting: Accurate lead times and equipment
utilization
• Automated inventory transactions: Levels reduced and stock-outs eliminated
• Manufacturing accounting: Real-time information on your inventory and the
cost of goods sold.
• Purchasing: Forecast and track your purchases
• Shop floor reporting: Efficient use of workers and equipment
• Sales management (CRM): Track the sales process from quotation to delivery

9. Is it overkill to purchase ERP for your
business?
Here is what you can expect from the typical ERP system:
• Production planning
• Inventory
• Financial management
• Purchasing
• Customer relationship management (CRM)
• Human Resource Management
• Supply chain management (SCM)

10. How does MRP work in practice?
For large businesses, enterprise resource planning software (ERP) might make
sense. It will consolidate your data and integrate your business processes. Your
data will be safe and accurate, and the collaboration between departments will
be improved.
But if you’re a smaller manufacturer, a stand-alone manufacturing resources
planning system (MRP) will benefit your manufacturing organization without the
added modules and extra expenses that come with an ERP system.

11. How does MRP work in practice?
As you can see from the comparisons above, the distinctions between MRP and
ERP might not be a major consideration for the small manufacturer who
primarily wants greater control of the shop floor, inventory, and scheduling.
You may also like our article about 10 Things You Need to Know Before Buying
Manufacturing Software - https://manufacturing-software-
blog.mrpeasy.com/2019/01/08/buying-manufacturing-software/

12. Keep your business’s needs at the
forefront
Remember the particular information you want to be able to access quickly and
in real time so that you can enhance your growing company’s success:
• Workstation capacity
• Workforce planning
• Inventory management
• Shop floor data collection
• Material traceability
• Procurement processes
You need to have a complete and up-to-the-minute picture of where you stand
in all these manufacturing processes. These areas depend on one another and
need to be working together. And they will be included in a quality MRP
software system.

13. What is the “bottom line” on MRP for
your small business?
Small manufacturers can experience the benefits of an MRP solution without the
added costs of an ERP system, which can include a full-time IT department to
support it. Supervisors can issue accurate work orders through the MRP that will
take into account equipment capacity, workforce availability, and material
requirements.
Others in your organization who will reap the system’s advantages are the
salespeople who are responsible for supplying accurate quotes and delivery
dates to their customers, inventory managers, your purchasing department,
production planners and managers, and your workers on the shop floor.

14. How does MRP work in practice?
ERP is a powerful tool for corporations that need and can afford its many
features. MRP systems target the needs of the small manufacturing company
that is looking to become more efficient and profitable.
MRPeasy is a cloud-based self-service production planning software for small
manufacturers (10-200 employees).
https://www.mrpeasy.com/
A remark from the editor: MRPeasy software is a so-called Manufacturing ERP at
present, as it has rich Production Planning and Control functionality together with
a built-in Standard Accounting module.