The manufacturing world is filled with acronyms and it can be hard to keep up. But when it comes to investing in manufacturing software solutions, your team can’t afford to be confused. Two vital software solutions are Enterprise Resource Planning (ERP) systems and Materials Resource Planning (MRP) systems.
In this article, we’ll explain the differences between ERP vs MRP, the use cases and benefits of each, and help you determine which system best suits your company. After all, each manufacturing business is unique and has its own specific needs. Even small companies need to discover the bleeding edge of manufacturing tech if they are to prosper in today’s rapidly advancing world.
ERP vs MRP: Key Differences at a Glance
This table breaks down the facts and key features of ERP vs MRP software.
| Feature | ERP | MRP |
| Focus | Comprehensive business management | Inventory management and production planning |
| Scope | Includes all departments, such as finance, HR, sales, manufacturing, and more | Limited to manufacturing operations |
| Integration | Integrates all business areas including third-party systems | Standalone or integrated with third-party systems |
| Complexity | More complex | Less complex |
| Implementation Timeline | Longer | Shorter |
| Cost | Higher | Lower |
What Is Materials Resource Planning (MRP)?
Materials Resource Planning (MRP) refers to any system designed to manage manufacturing and production processes. MPR systems incorporate inventory and warehouse data to make sure that materials and components are in stock for production.
They make lean manufacturing a breeze by helping your team dial in the exact amount of material needed for your production requirements. This means you can maintain the lowest possible material and product levels in the warehouse and save money on space and maintenance.
But that’s not all. Use MRP systems to manage delivery schedules, track purchasing activities, monitor the supply chain, and manage vendors.
The purpose of MRP systems is to save your team time and money by streamlining production processes, reducing labor, and providing real-time data so you can make smarter decisions at a moment’s notice.
Benefits of MRP Systems
MRP systems have many benefits for manufacturing and production processes. To name a few:
- More accurate inventory management: MRP systems offer more accurate inventory tracking than traditional methods, helping you maintain optimal levels, reducing excess stock, and minimizing stockouts.
- Make sure production goes to plan: Use MRP to schedule and plan manufacturing jobs so they’re more likely to be done on time.
- Save money (and energy): Because MRP systems optimize inventory levels and production schedules, you can enjoy lower carrying costs and labor costs while increasing efficiency.
- Delight customers: If you’ve ever had a bad production run, you know the pain of unhappy customers. The benefits of MRP systems, like better production planning and inventory management, will help improve delivery times ensuring happier customers. And happy customers are repeat customers!
What Is Enterprise Resource Planning (ERP)?
While MRP systems focus on manufacturing and production processes, Enterprise Resource Planning (ERP) systems are comprehensive software solutions that include modules for all departments across your business.
In other words, ERP software acts as a central database that unifies all business operations, from accounting to human resources to sales to procurement, and everything in between. If you think of it like a wheel, the ERP system is the hub with each spoke connected to an individual department. All data lives in the hub where it can be analyzed and disseminated in real time.
ERP systems ensure that all departments are working with the same information. One hand knows what the other is doing, as the saying goes. This increased collaboration results in streamlined processes, fewer errors, and a culture of communication.
Benefits of ERP Systems
The benefits of ERP systems can be summed up as “increased efficiency”. Here are some of the benefits that make increased effiiciency possible.
- A single source of truth: ERP systems integrate all business processes, unlike MRP systems that focus solely on production processes.
- Automate anything: ERP systems are designed to streamline operations by making automating tedious tasks easy, such as reporting, analysis, ordering, procurement, and much more.
- Use data to make decisions: ERP systems collect a vast amount of data across departments that you can use instantly to make smarter decisions.
- Grow your business: ERP systems like Infor SyteLine ERP are designed specifically to help manufacturers grow, and to grow with them. The best ERP systems are fully scalable.
- Stay in compliance: ERP systems include features to help manufacturers comply with industry regulations. This is especially important for manufacturers in government, medical, pharmaceutical, and life sciences industries.
Choosing Between ERP vs MRP Solutions
While it’s not uncommon for manufacturers to implement and integrate ERP and MRP software, some businesses may only have the need or budget for one or the other. Here are some factors you should consider when choosing between ERP vs MRP software solutions.
Business Size, Needs, and Goals
Small manufacturers simply may not have the staff to justify investing in a comprehensive ERP system. Use the “hallway” rule of thumb; if you can no longer communicate with your team by hollering down a hallway, it’s time to upgrade your systems. Of course, we don’t recommend yelling down hallways. But the point is that growing teams that require more space need to communicate quickly and that can be achieved through ERP.
However, if your administration team is small but you’re manufacturing and production teams are large, an MRP system will help you focus on tightening up inventory management, production and assembly lines, and assist with other manufacturing-specific needs.
Budget
Both ERP and MRP systems are investments that can help your business grow.
In general, ERP systems are more expensive because they offer more functionality. Each ERP module belongs to a department. Many ERP solutions come with MRP modules including inventory management and logistics. Fortunately, ERP systems are fully customizable so you can pick and choose which features you want and upgrade as needs arise. Additionally, cloud-based ERP systems are typically provided as monthly subscription plans, making the up-front cost more manageable.
Companies on a tight budget may find MRP software more affordable as it’s less extensive; it solely focuses on production processes.
Implementation Timeline
While all implementation timelines vary based on scope, company size, and the expertise of the consultants, MRP systems tend to have shorter implementation timelines than ERP systems. Again, this is because MRP systems don’t affect the company at large, only the manufacturing portion of it.
Need Help Choosing a Software System?
At Godlan, we have 40 years of experience helping companies leverage the latest technologies to simplify processes and grow faster. If you’re interested in learning more about ERP vs MRP software, we’re here to help. Contact our experts to schedule a consultation today.
