Difference Between ERP and MRP – How ERP Helps in Managing MRP

If you have ever researched software solutions for manufacturing businesses, ERP and MRP are two terms that you might have commonly come across. Both software is necessary for business growth but do you know that they are not the same in all aspects? Therefore, it’s important to understand the difference between the two. This blog covers insights between both ERP and MRP to help you understand them better.

The businesses operate a different levels and since the level of operations and activities can be different, they might need software that can cater best to their requirements. ERP and MRP are both software used for different businesses. 

A manufacturing company needs to focus on shop floor operations, inventory, and some scheduling parts. Such companies need only the MRP system to perform the tasks related to manufacturing. Therefore, it helps the company to meet larger global demands in real time.  On the contrary, a company that handles much more than manufacturing like accounts, supply chain, process, and planning needs advanced software like ERP.

But is it right to say that ERP in modern times can even take care of aspects related to a manufacturing company? To answer this better in terms of ERP and ERP, ERP or Enterprise Resource Planning software is the right solution for all types of companies as it can manage all back-office business work with precision. This is great for a fast-growing business to keep up with the growth. In short, an ERP can cover MRP functions but vice versa is not true. 

To help you understand better both ERP and MRP, this blog covers in-depth details to guide you better on how ERP helps in Managing ERP.

Understand ERP vs MRP

What is ERP?

ERP stands for Enterprise Resource Planning. It builds the foundation for all local and domestic operations happening in a company. Any day-to-day functional operations cannot be completed without the support of ERP. It’s highly popular among large-scale businesses like industries and departments because they are its major users. Additionally, ERP keeps all data workflow in one place so it helps in centralizing information and data. It compares the efficiency of different productions using analytical tools. 

ERP is a modified version of MRP which has been popular since the 70s. Gartner coined a new term for this modified MRP in 1990. We know it as ERP as ERP is way beyond manufacturing as it helps companies and industries in HR, CRM, finance, inventory, bookkeeping, and more. After several years, more modules were added to the ERP system so that it could handle more manual tasks. Nowadays, ERP outstands MRP in a great way.

Features 

• It helps in your company’s accounting and financial management like analyzing profit and loss, finding general ledgers, and more.
• With ERP, managing existing employees and hiring new ones becomes easy. It also lets you use time, attendance, and talent management to view sick days, and PTO for your employees.
• Whenever required, ERP merges with other systems to centralize more data and communication.
• ERP adds transparency to your supply chain system by showing billing, demand forecasting, freight Matrix, and other components.
• You don’t need to hire teams to balance general ledgers and bank reconciliation because ERP automates these tasks.  
• Creating reports of operations and productivity gets easy with ERP. This gives better control of your business.

Benefits 

• ERP serves you with handy CRM components that help you maintain your customer base easily. It leads to customer satisfaction. 
• You don’t need to re-input data for different departments one by one. ERP offers cloud solutions to keep your data safe and encrypted which gives you accessibility from any device. 
• Since ERP helps automate the majority of your company’s tasks and assignments, you can focus on other responsibilities. This saves you a big part of your time.
• ERP system ensures that your business is running one step ahead of your competitors and you are not lagging by any means.

What is MRP?

If you are a manufacturer who is looking for the best manufacturing solution, MRP can help you right with it. The MRP stands for Material Requirements Planning. It tells you which materials you need, in what quantity, and by when. 2022 is no longer the era when manufacturers take pen and paper to plan and take inventory. 

MRP is again subdivided into MRP I and MRP II according to their functions. MRP I is material requirements planning which looks at bills of materials, raw materials, master production scheduling, and other basic things of the manufacturing sector. On the other hand, MRP II is all about material resource planning which focuses on general accounting, machine capacity scheduling, quality management, and more. Thus, it is not limited to the manufacturing sector but also focuses on other parts of the company. 

Features

• Managing inventory manually is not an easy job but MRP does it with precision.
• It also improves production line operations which boosts the capacity of the manufacturing unit.
• MRP handles general ledgers, receivable, and payable accounts along with reporting tools. This gives a clear idea of your business’s financial status.
• MRP also helps in reviewing transaction reports so that you can track where your money is going. 

Benefits 

• When comparing ERP and MRP, the MRP improves production planning and purchase planning.
• It helps in managing inventory which enhances other industry works like manufacturing, warehouse, and supply chain. 
• MRP ensures that you use the right and latest resources like materials, employees, and machinery in the manufacturing sector. ERP and MRP both can do it well but MRP can be a more focused approach here.

How ERP Helps in Managing MRP

ERP plays an all-rounder role in the business world. Be it a small or large sized firm, ERP can be customized and leveraged to its full potential. ERP software is an integrated system that can be coupled with other systems whereas MRP acts as a standalone system which limits it to only one area. Moreover, ERP has a huge customer base whereas MRP has limited users. This is because MRP can be used in manufacturing operations only but ERP is useful in many departments.

ERP and MRP – Here are some ways how ERP helps in Managing MRP:

• Comprehensive Control over Business: Be it a manufacturing business or raw material processing plant, the ERP can help in managing the end-to-end operations of the business. It can even play the role of inventory management, inventory tracking, material planning, etc. to ensure that the process works well without any failures or obstacles. 
• ERP Can Integrate MRP Module: Rather than using MRP as a standalone solution, one can stack the MRP module into an ERP solution to enable wide reachability of tracking and monitoring business. Not only it will be able to track just business operations, but it can also include aspects of material resource planning to extend the reach of the software. 
• Better Analysis, Forecasting & Reporting: The ERP can offer better analysis and reporting of business if everything right from manufacturing or core process to business operations gets linked within a common platform. From data forecasting to regular analysis, the ERP can deliver a lot more to businesses.

Conclusion

When talking about ERP and MRP, The ERP undoubtedly can outrank MRP as per today’s business requirements. Since a business needs to be away from the hassle of managing multiple software, the ERP can be used as an integrated platform to achieve everything right from tracking all departments to monitoring all aspects of the business. This helps businesses to save both time and money which accelerates their productivity and efficiency.