What’s the Difference between MRP and ERP?
November 16, 2022
When it comes to streamlining efficiency, managing inventory throughout the supply chain, and making intelligent decisions in real time, businesses need more than just a plan for their employees to be successful. In this post, we look at two popular types of manufacturing software: MRP and ERP.
Read on to learn more about the basics of these software systems, their fundamental differences, and how they can streamline operations and workflows in manufacturing.
MRP stands for “Material Requirements Planning,” a software solution that can help a firm identify what supplies and materials it needs and when it needs them. Also often referred to as “Manufacturing Resource Planning,” MRP software provides firms with information on raw materials and other bills of materials inventory. Companies can then practice smart/SMART warehouse management and fulfill their production goals, avoid costly unplanned downtime, and minimize lost productivity. MRP can also help with production planning and forecasting.
On the surface, an MRP solution is designed to accomplish four essential business operations goals. They are:
- Ensuring the correct materials are available on-site or on-premise for production.
- Ensuring that production is completed on time and delivered to end users or customers.
- Ensuring proper inventory levels and improving overall warehouse management and inventory control.
- Ensuring that manufacturing operations and processes—such as maintenance plans, sales orders, and purchases—are carried out effectively and efficiently.
MRP has evolved since it was initially conceived. Since then manufacturing companies and the manufacturing industry as a whole have begun to transition from mass production to more customized production. Furthermore, more advanced manufacturing product management is necessary as products become more complex.
Today, MRP II includes advanced functionality, such as financial and general accounting information, to help with overall lifecycle management. For example, by using an MRP, management can improve supply chain management, production schedule planning, and capacity planning.
Specifically, ERP is an acronym for “Enterprise Resource Planning.” It’s built on the functionality of the MRP II program and is designed to help plan, manage, and automate a company’s operations. This includes supply chain and inventory management, project management, staffing, and more. ERP solutions are available for both large businesses and small businesses.
Business leaders often think of ERP as MRP, but more robust and comprehensive overall.
Another significant benefit to adopting an ERP solution is its impact on performance and project management. This is especially true when planning, budgeting, predicting, and reporting on an organization’s financial health and workflow processes.
When implemented properly, an ERP solution offers various benefits, from the shop floor and manufacturing operations up to executive leadership. These benefits include:
- Overall cost savings due to the increased efficiencies from production process automation
- Better overall project management
- Better compliance with rules and regulations, both federal and local
- Enhanced safety-protocol communication and workflows
- Better customer relationship management
Difference between MRP System and ERP System
So, what programs does your firm need to be successful? Let’s first focus on the critical differences between MRP and ERP.
While both programs are designed to plan and automate business management processes and functions, the most significant difference lies in the specific functions that each touches.
MRP tends to focus more on materials management and inventory. ERP software handles a variety of tasks, including customer relationship management (CRM), quality, process and planning, accounting and financial data, and more. In other words, MRP is more narrow in scope compared to ERP’s broad business management and business intelligence focus. MRP also is more of a standalone system compared to ERP.
Again, back to the initial question: Which system will work best for your business? The answer: It really depends.
Be sure to carefully review what your business needs assistance with when it comes to choosing an MRP or ERP program. For instance, if your firm needs to know exactly what spare parts and inventory are on hand at any given moment, MRP is likely the best option.
But if your company needs more wide-ranging assistance, an ERP tool is likely the better bet. Additionally, cost and ROI may be factors. MRP programs tend to be less expensive than ERPs, based on the functions they’re designed to perform.
Implementing ERP and MRP Solutions
So what’s the best way to implement ERP and MRP solutions into your manufacturing business? It all starts with choosing a reliable and quality vendor, such as MaintainX, to help manage employees and shop floor operations.
The right program may well be the one your employees are most comfortable using. The right program also needs to be easy to implement and integrate into your operations. The best choice is the one that streamlines your business operations, reduces the risk of unplanned downtime, and takes your business to new heights.
To get started on your MRP or ERP journey and optimize your firm’s operations, contact MaintainX today.