MRP vs ERP: Which is the Right fit for your company?
MRP (Material Resource Planning) and ERP (Enterprise Resource Planning) sound so similar as if they are rhyming words. But are they the same in any way? Let me tell you, they aren’t the same but entwine each other and present different performances concerning different industries. If you are assuming that ERP has replaced MRP, then you are highly mistaken. Well, let’s get you further to clear this concept and acknowledge the difference between MRP and ERP systems.
What is MRP?
MRP, which is also known as Material Resource Planning, is a software solution widely used by manufacturers in order to manage their procurement process in smart way for Small and Medium-sized companies (SMEs). It includes features like inventory management, capacity planning, and scheduling as well to give a helping hand to the manufacturing industries.
What is ERP?
ERP, as you know, stands for Enterprise Resource Planning; a better way to control business operations in the company, and helps in improving and managing their sales, quotes, accounting, Customer Relationship, Human resources, project management, and much more. It is a beneficial software for all sizes of companies. Be it small, medium, or large enterprises; ERP has everything that an organization needs.
History of ERP:
Gardner Group created the MRP in 1990; a software company that first developed this software to help small and medium manufacturing units. They launched MRP to help manufacturers monitor inventory and reconcile their balance. It included basic features like manufacturing, purchasing, and delivery. After some 10-odd years, many manufacturing companies started implementing the MRP software, as it made their work easier. Soon after that, they added more and more modules to meet the needs and requirements of companies and upgraded the software to the MRP II (Manufacturing Resource Planning) system. They increased MRP’s capability to handle the scheduling and inventory delicately by adding a handful of features. ERP was rooted in manufacturing companies. They provided other industries wanting to implement the software with the ERP software as it had more features to add to the company’s unique needs.
MRP vs MRP II vs ERP
ERP was created by expanding MRP. Material Resource Planning helps manufacturers to calculate more precisely what all materials they require, at what time, and in what specified quantity.
MRP was later expanded and MRP II was developed and functionalities were upgraded. MRP II was named Manufacturing Resource Planning. It included detailed capacity planning, scheduling, shop floor control, and many other calculations. MRP II helps in comparing forecasts with the actual data, analyzing performance, and improving processes in order to achieve better efficiency.
ERP on the other hand is a more complete software that has a lot more additional features and functionalities that MRP and MRP II do not offer. Enterprise Resource Planning helps to manufacture companies automate and streamline business processes across the entire enterprise.
MRP majorly focuses on the manufacturing process and ERP focuses on the whole organization.
Numerous Manufacturing Companies in the market have many modules like sales, purchase, Inventory Management, finance, etc. but are not included in the MRP. So, the ERP software manages all this. If any company is implementing Material Resource Planning, they’ll receive manufacturing features only. On the other hand, ERP is a comprehensive set of tools that can automate all the processes of the organization and can streamline the information in the company effectively.
ERP was developed after MRP’s extension. ERP was not only made for the inventory and scheduling plans of the manufacturing companies but also for the other industries in the market who look towards implementing an ERP system. ERP looks into various businesses with various aspects and angles and integrates them into a single platform and helps in connecting it with different departments in a business which is not the same game for MRP. With the help of Enterprise Resource Planning, tasks, and processes are also streamlined, and error-free information is shared in the organization.
Facts about MRP and ERP System:
There are still some small manufacturers who use the MRP system to date. MRPs can give companies control over their processes by including powerful tools for production planning, managing bills, machine capacity scheduling, demand forecasting, and quality assurance. In fact ERP system that is being used now, has MRP as a module embedded in it. And hence, manufacturers can take more advantage of the important functions, features, and capabilities that MRP has to offer along with broader functionalities that are included in the ERP systems.
Many other modules of Enterprise Resource Planning systems are used by different industries including Customer Relationship Management (CRM), Human Resource Management (HRM), finance, Supply Chain Management (SCM), etc. ERP has been used by all sizes of companies these days to extend their businesses. Customization of the ERP system has been made available for companies having unique demands to flexibly run their organization.
What is SAP: An MRP or ERP system?
SAP is a name of an ERP system. SAP is an Enterprise Resource Planning implementation provider and has varied modules which cover different aspects of a business. Companies can get customized products according to their unique demands.
Conclusion:
MRP and ERP are closely related. Both of them give different levels of capabilities, and different levels of performance and are different in the scope of services that they tend to offer. MRP and ERP excellently manage different processes according to their capabilities. If you only need assistance with your manufacturing process then MRP is the best option for your company, but if you need it for various business processes in the company then you surely need an ERP system. MRP is focused on various manufacturing processes, whereas ERP provides a broader range of solutions which include accounts, CRM, Project Management, Business Intelligence, sales, finance, and more.
To implement ERP software, and get the best services for your company, book a demo call today with SoftCore Solutions; an SAP B1 ERP provider in Ahmedabad to transform your business and scale high. We offer end-to-end ERP solutions to our customers and help them in making their stories a success.