ERP vs. MRP Systems: What Are the Key Differences?
There are always ways to improve your business operations. Two popular types of software for streamlining business processes are enterprise resource planning (ERP) tools and manufacturing resource planning (MRP). Both are used to improve how your company handles important resources, from labor to inventory. Yet how are their processes different? And which do you need for your business operations?
What is ERP and MRP?
First and foremost, MRP software is generally a stand-alone system used only by manufacturers, while ERP systems can be used in all sorts of industries in a variety of ways. However, there’s a lot more to their difference and similarities.
What is ERP Software?
Enterprise resource planning (ERP) systems are a software suite made up of general business management tools for accounting, human resources, and inventory control. The wide ranging features of ERP make it a popular solution for managing multiple departments within the same company.
With an ERP software, companies can begin optimizing their business processes by streamlining work and using reporting analytics to inform better decision making. This type of solution can be applied to just about any business, even those which are not “enterprise” level. There are ERP systems for small businesses which limit the amount of extra applications to suit a smaller workload.
Read More: What is ERP Software?
What is MRP Software?
Manufacturing resource planning (MRP) software is sometimes known as material requirements planning or shortened to MRP II. The many applications of MRP optimize the manufacturing process in real-time through production planning, scheduling, and inventory control.
By using MRP software, manufacturers can plan and calculate material requirements before the manufacturing process begins, cutting down on raw material costs. Additionally, there are applications to coordinate schedules between labor and machine workloads.
Read More: What is Material Requirements Planning (MRP)?
What is the Difference between ERP and MRP
The main differences between ERP and MRP are:
- Different intended users
- Separate software functions
- Varied integration possibilities
- Implementation and setup costs
Key Difference #1: Intended Users
The first big difference between ERP and MRP is the intended user-base. The business intelligence (BI) tools provided by ERP can be used by entire departments in every industry. There are even specific variants for:
Modern ERP systems can be customized to fit any industry. In contrast, MRP solutions are far more limited. As the name suggests, MRP is only used in manufacturing. The software is suitable for all types of manufacturing:
- Additive
- Discrete
- Process
For different fields:
- Aerospace
- Chemical
- Cosmetics
- Food
- Furniture
- Jewelry
- Medical devices
- Pharmaceuticals
Of course, a manufacturer can still benefit from using an ERP software in their back offices.
Key Difference #2: Software Function
The next difference is in function. Since MRP is based on optimizing manufacturing processes, it includes modules for:
- Inventory control
- Production and maintenance scheduling
- Demand forecasting
- Shipping logistics
- Shop floor control
According to MRP Software Buyer Trends Report (2018), more than 70% of buyers are looking for purchase planning, demand forecasting, and master production scheduling.
ERP, on the other hand, is based around applications used in office settings. Features include:
- Accounting
- Budgeting
- Human resources
- Inventory and supply chain management
There are some areas of overlap between the two. Both have tools to make product purchasing easier, as well as inventory control measures. However, ERP modules streamline overall business operations while MRP is focused on just one facet of the supply chain - the manufacturing process. Some ERP solutions include basic MRP functions.
Key Difference #3: Integration Possibilities
ERP software can be integrated into many other software suites to build a complete package of tools for optimizing your business operations in every possible way. Larger ERP suites can take years to fully integrate into your company processes.
MRP is made only for manufacturing workflow. While there are some ways to integrate with other systems, MRP is meant to operate as a standalone software. As a result, the system is far more limited than an ERP suite.
Key Difference #4: Implementation Costs
SInce ERP systems are incredibly expansive in scope, they can be very expensive and time consuming to implement. Exceptionally broad ERP suites can take years to properly set up. Some Cloud ERP implementations are faster, though can cost more since they include monthly or annual subscription fees.
MRP systems, due to their limitations, are generally faster to install and more affordable. Training sessions may be limited to a few management positions, saving you even more time and money. Once implemented, you can quickly get the system running and start to shorten your lead times.
What is an ERP MRP System?
Despite all the differences, there are still significant similarities between ERP and MRP, to the point some software has fallen under the ERP MRP label. This covers those ERP systems which are designed for manufacturers and include modules more associated with that industry’s needs. And some MRP systems offer the additional functionality of an ERP. Both of these can be called an ERP MRP software.
Which Resource Planning Software is Right for Your Business?
Usually, the type of software system you need all comes down to whether you are a manufacturing business or not. If you need a way to automate back office functions, an ERP is best for you. If you need to improve manufacturing processes, MRP software will help. And even if you are a manufacturing company, you can still utilize an ERP.
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