What Are The Differences Between ERP and MRP?

According to statistics, about 74% of businesses use Enterprise Resource Planning (ERP) systems, while only 18% use Manufacturing Resource Planning (MRP) systems. Many people think that ERP and MRP are the same, but there is a clear difference between them.

ERPs are generally used for large companies that need an integrated system to manage all aspects of their business, from finance to human resources to sales and marketing. It allows companies to have a single source of truth instead of having multiple siloed information sources. ERPs also provide reporting and analytics capabilities so managers can make better decisions. 

On the other hand, MRPs are specifically designed for manufacturers and supply chain management needs. They focus on managing material sourcing, production scheduling, inventory management, and quality control. MRPs are especially useful for companies with complex supply chains or those looking to optimize their production process.

What Came First, ERP or MRP?

As the business grows, it often needs more than one system to manage different aspects of its operations. Some may wonder what is an MRP system when ERP came earlier. ERP systems were developed before MRP systems. The first ERP system was created in the 1960s, and it focused on automating administrative processes and accounting for a company’s finances, inventory, and customer data.

However, as manufacturing became more complex with global supply chains, companies needed a better way to manage their production process. That is when MRPs came into play. They were designed to help manufacturers keep track of all the materials used during production, plan the best time for production runs, and optimize the overall production process.

ERPs vs. MRPs: What’s The Difference?

The main difference between ERPs and MRPs is that they are used for different purposes. Here’s a quick rundown of their differences, where they are best used, and similarities that most business owners and IT professionals should be aware of:

• ERPs are used for business-wide activities such as finance, human resources, and sales.
• MRPs manage production processes like materials sourcing, production scheduling, inventory management, and quality control.
• ERPs provide a comprehensive overview of the entire business operations, while MRPs focus on optimizing production processes.
• ERPs have more features than MRPs and can offer analytics capabilities that help managers make better decisions.
• ERP and MRP systems use similar technology to integrate with each other and share data. This allows companies to get a complete picture of their operations from an operational and financial standpoint.

Although there are many similarities between ERP and MRP systems, it’s essential to understand the differences to choose the right system for your business.

Businesses with complex production processes or complicated supply chains should consider using an MRP system and an ERP system to manage their operations properly. With these two systems working together, businesses can get a holistic view of their operations from an operational and financial standpoint.

By understanding the differences between ERPs and MRPs, businesses can better decide which system best suits their needs. This will ultimately help them improve their efficiency and increase productivity.

Ultimately, an effective system is essential for any company that wants to succeed in the modern business world. Choosing the right approach is critical in helping businesses reach their goals and stay ahead of the competition.

MRP And ERP Best Examples

From a practical standpoint, some of the best examples of effective ERP- and MRP-driven processes are supply chain management within an eCommerce organization and production planning in a manufacturing setting.

In an eCommerce business, for example, a good ERP system can be used to manage customer orders, track inventory levels, and provide detailed reporting on sales performance – all while integrating with various payment systems.

Meanwhile, an MRP system can help manufacturers optimize production by accurately tracking materials used during production, scheduling runs accordingly, and closely monitoring quality control.

These are two examples of how ERP and MRP systems can improve operations across different industries. The right combination of these systems will depend on the organization’s needs.

MRP Main Features

Manufacturing Resource Planning (MRP) systems provide a comprehensive approach to operational management for manufacturers. The main features of MRP include the following:

• Materials Sourcing: Material sourcing is an integral part of the production process, and MRPs help with this task by assisting managers in finding vendors, comparing prices, tracking orders, and more.
• Production Scheduling: With MRPs, businesses can track lead times and plan when to start production runs to meet customer demand.
• Inventory Management: An effective inventory management system helps keep raw materials in stock while tracking how much has been used during production.
• Quality Control: Quality control is essential for any manufacturing operation, and MRPs make it easier to ensure that products are up to standard before leaving the factory.

ERP Main Features

Enterprise Resource Planning (ERP) systems are designed to provide an integrated view of a company’s operations and enable managers to make more informed decisions. The main features of ERPs include the following:

• Financial Reporting & Analysis: ERPs provide financial reporting capabilities that allow businesses to track their finances and make better-informed decisions about spending and budgeting.
• Customer Relationship Management (CRM): CRM tools help companies manage customer relationships by providing access to customer information, contact details, sales records, order histories, and more.
• Human Resources Management: Human resources management features such as payroll processing, employee onboarding/offboarding, performance tracking, and more can be managed through ERP systems.

Final Words

ERPs and MRPs are two widely used systems for managing a business’ operations. While their features and functions may overlap in certain aspects, there are distinct differences between the two systems.

By understanding these differences, businesses can make better decisions about which system best suits their needs. Ultimately, an effective ERP and MRP system is essential for any company that wants to succeed in the modern business world.