Understanding the Differences between ERP and MRP Systems
When you’re considering the installation of software to complete vital business processes, two of the most common acronyms you’ll encounter are ERP and MRP. MRP stands for material requirements planning, a manufacturing-related software system that dictates production and purchasing schedules based on a bill of materials. This is the term used for the collection of data that specifies what materials are needed for production, how much of those materials to order, and when to acquire them. ERP, on the other hand, stands for enterprise resource planning, and it is a software platform that covers a wide range of business applications—manufacturing-related or otherwise.
Both ERP and MRP are varieties of software. Both are also widely used in industries that involve manufacturing processes, in addition to having the capacity to assist in core processes like production scheduling and inventory management. But with only one letter separating these two in a software catalog, what are the best ways to tell them apart?
This article will briefly discuss the importance of an ERP system versus an MRP system, how to distinguish between them, and ultimately, how to decide which one of these your business needs more.
MRP versus ERP: Four Defining Differences
In general, there are four main differences between MRP and ERP. What follows is a short breakdown for each one.
- Level of integration possible. Simply put, MRP is a standalone software that specializes in manufacturing-related processes. Generally, it is deployed to work only with a bill of materials, its own inventory files, and master schedules. It’s rare that an MRP has the capacity to integrate with other systems and modules unrelated to the its core manufacturing-related processes. However, the opposite applies to ERP. By virtue of its being an all-around suite of applications, it can link to a greater variety of processes beyond manufacturing. As a result, ERP can manage additional tasks in its unified software system, such as those that have to do with accounting and HR. So between MRP and ERP, it is ERP that enables a wider workflow and broader overall control of the business.
- Scope and range of features. Due to its focus on manufacturing, an MRP’s features are usually limited to handling only manufacturing-related base records like the bill of materials. Meanwhile, an ERP can manage these records alongside features for accounting, HR, and analytics processes.
- Cost of owning and operating the software. As detailed in the previous point, an ERP is capable of doing more types of work than an MRP. That means it’s more or less a given that buying an ERP suite will cost more money than buying just the MRP software. It may also depend on which one of these your company can actually afford. After all, you won’t want to acquire something that’s beyond your current budget.
- User base. The last key difference between MRP and ERP is who the software’s primary users will be, or who in the company is expected to regularly interact with the software. Access to the MRP may be limited to the company’s warehousing and manufacturing staff, such as the warehousing managers and production planners. In contrast, ERP can count the company’s accountants, payroll officers, data analysts, and other employees among its regular users. But whether you choose an MRP or an ERP, remember that you will still need to orient the software’s end users on how it works.
Choosing the Right Software for Your Company
Making the right choice between an ERP and an MRP will depend on your company’s current situation. You have to consider your organization’s budget, size, and industry, along with the scope of business processes you’ll need help with managing. The bigger your company has grown, the more necessary it may be to get an integrated platform. Luckily, ERPs come as all-in-one packages or custom suites of applications and you might even get great software deals by doing your research.
Both ERP and MRP can help you execute core business processes to make your company more accurate and efficient at your work. It is only a matter of choosing which of the two will serve your business better.
