Don’t you hate it when things are named so similarly that they seem like they’re the same thing? Or at the very least, they’re almost the same thing? Such is the case with MRP and ERP. Unfortunately, although these acronyms are quite similar, in reality, the systems themselves are very different. So what exactly are the differences between MRP vs ERP? Let’s start out with some definitions:
What is MRP?
MRP stands for “material requirements planning.” These systems, as you can gather from the name, help you plan for what and how many materials you’ll need. Used exclusively to help manage manufacturing processes, MRP is a relatively niche software category. Businesses typically manage their production planning with these systems, using them to forecast and order materials. This ensures that when those materials are needed for production, the right amount is available on the right date.
The main features of MRP systems include inventory management and production scheduling software. As AccountingTools points out, your data integrity has to be very high. If it’s not, your material forecasts will be skewed, meaning that you’ll end up receiving either too much or not enough of certain materials. This not only slows down production, but throws off your inventory control.
What is ERP?
ERP, or enterprise resource planning, is one of the more common categories of business software, especially among large businesses. ERP systems, like MRP software, help you manage manufacturing processes like production planning, scheduling and inventory management. But the full use of an ERP goes much further than that.
The main use of an ERP system is for data management. An ERP centralizes all of your data in one place, so all of your data-driven business processes draw data from the same location. This helps ensure data quality, as it never gets duplicated between systems.
The other powerful aspect of an ERP solution is how it centralizes all of your business processes. ERPs come equipped with modules for a range of processes, including general modules and industry-specific ones. For example, common ERP modules include HR, customer relationship management, supply chain management, financial management, inventory management, warehouse management and manufacturing management.
MRP vs ERP: What are the Biggest Differences?
As you can tell based on the definitions above, ERP and MRP have their similarities. That said, they’re still quite different. So how exactly can you tell one from the other? Here are the biggest differences between MRP vs ERP:
Standalone vs Integrated
The biggest difference between MRP and ERP lies in the fact that MRP is more of a solo software, while ERP is integrated. MRP systems are standalone manufacturing software that function by themselves with only manufacturing-related features. ERP solutions, on the other hand, support several modules for total business control.
As we mentioned earlier, ERP vendors provide support for all types of business processes, from HR to supply chain management and financial management. Due to the potentially overwhelming nature of so many departments and processes coming together, an ERP is best for large businesses. The high level of integration required can also be difficult for smaller businesses to pull off. Conversely, a MRP is good for any size business, as long as they’re in the manufacturing industry (obviously).
The people that use each system often varies drastically as well. Since an ERP is common among many industries and is handled by many departments, there isn’t really a limit on who ERP software users are. They could be someone in HR who’s checking on payroll. They could be a sales rep checking the status of a lead. Or they could be a data analyst creating a business intelligence report.
MRP software users are — as you can guess at this point — exclusive to manufacturing operations. This could be a warehouse manager checking on the inventory of necessary raw materials, or it could be a warehouse worker checking on lead times. And it could also be a production planning specialist overseeing the entire operation.
The point is: MRP users are much more limited, as only those related to manufacturing typically use it, while ERP users are much more diverse.
MRP vs ERP: Which Should I Use?
The answer to the question of which software you should use is always subjective. It depends on your unique business, your processes, budget, number of tech savvy users, etc. But there are some general rules that you can follow.
For the most part, if you’re a large business, you should use enterprise resource planning software. It consolidates all of your data while integrating all of your business processes. This makes your data safer and more accurate, and allows better collaboration between departments, including manufacturing.
If you’re a smaller manufacturer, however, you may want to choose a standalone material requirements planning system. For one thing, it’s a cheaper option since it doesn’t come packed with as many features. Additionally, you don’t need to worry about integration with other departments’ processes and planning, which can get tricky for smaller businesses (oftentimes because of the cost factor).
Like we said, however, ultimately the choice depends on your unique business requirements. If you’re already using an ERP or a MRP, which one do you use, and why? Let us know below.