MRP vs ERP systems – understanding the differences and benefits
The manufacturing industry primarily requires software systems to assist with material planning and manage manufacturing processes. Currently, MRP and ERP systems are the most prevalent – here’s a look at how the two compare.
What are MRP systems?
MRP – Material requirements planning – is software that assists businesses with manufacturing processes by streamlining manufacturing efforts. The MRP system will be able to forecast material requirements to maximise the production rate and reduce spoilage. This will boost the production of a manufacturing organisation, ensuring the right amount of material is available on the correct date.
What are ERP systems?
ERP – enterprise resource planning – is used predominantly by larger businesses in manufacturing (and other) industries as it assists in the management of manufacturing processes including production, planning, scheduling and inventory oversight. ERP software centralises information, allowing businesses to use the accumulated data to make informed business decisions.
Differences between MRP and ERP systems
Although both software systems are used in the manufacturing industry, there are a few key differences that determine where they are best suited.
1. Price of MRP and ERP systems
As with most things in business, the initial cost does factor largely in the decision, and ERP systems are certainly the costlier option. The reason for the extra cost is that ERP systems are able to perform a number of functions that MRP systems cannot, but if your business requires these specific functions then the higher price will be worth it down the line.
2. Solo vs Integrated
One of the reasons for the higher price tag on ERP software is the fact that it is integrated, allowing it to connect with other software systems. Because of the modular nature of ERP, aspects of the software can be selected to suit an individual business’ needs. With MRP, the software is standalone, using only manufacturing tools for its functionality.
3. Number of users
The integrated nature of ERP software means that it will be used inter-departmentally, with an unlimited number of people able to use the system. This allows everyone from HR to the sales’ department to check on the data. MRP is used solely for manufacturing operations which means it only needs to be used by people within the department, such as warehouse managers or warehouse workers overseeing production planning and inventory.
4. Range of features
As an integrated software solution, ERP boasts a range of features, including accounting and HR processes. MPR systems are much simpler as it only focuses on the manufacturing aspect of an organisation.
Questions to consider before choosing ERP or MRP
To narrow down your software selection, here are a few questions to go over before deciding between the two.
- What software programmes are used by the company?
If it’s several that need to be integrated, ERP systems are favourable.
- What processes need to be automated?
If it’s simply manufacturing processes, then MRP systems are the first choice.
- What IT resources are available in the company?
Both systems will require training and IT resources, although more will be needed for ERP systems.
- What is the projected company growth?
If rapid growth is projected, the business might require integrated automation and an ERP system would support this.
- What is the software budget?
ERP is a costlier option but worth the investment if the system will benefit the company in the long-run.
For an organisation requiring an integrated solution, ERP software is the right choice, however, MRP systems are certainly the go-to option for those only seeking a manufacturing solution. Either way, it’s important to consult with industry experts to find out how best to maximise business operations using these valuable software options.