There are numerous software solutions on the market for manufacturers. Many have such similar features that it can be a challenge to know which is the best for your business -- today and as it grows.
Because material requirements planning (MRP) is such an essential process for manufacturers, an MRP software that automates and connects many of your manufacturing processes can increase productivity. But before you consider an MRP system, take a look at some of the benefits of a dedicated ERP solution.
What’s certain is that automating processes so that they effortlessly interact with each other and help your team perform tasks more easily is key to staying competitive in today’s world. Here we explore the similarities and differences between MRP and ERP software, and give you insights to utilize when choosing a software solution for your organization.
Contents
ERP vs MRP: What's the difference?
Integrated MRP and ERP software
ERP vs MRP: Which system is right for your business?
Material Requirements Planning (MRP) is the process of determining the appropriate types and amounts of materials needed to manufacture a good, and ensuring those materials are available when and where they are needed for production.
The process consists of three primary steps: inventorying materials on hand, identifying what additional materials are needed, and then scheduling their production or purchase so that they arrive on time and in the right place so that operations proceed smoothly.
MRP software calculates the materials needed to meet manufacturing goals and customer demand using data from lead times, sales forecasts and production plans to determine optimal stock levels. With MRP software, companies can easily view production requirements, stock on hand and purchasing or production needs, as well as historical purchasing and production data.
Standard functions of stand-alone MRP software include:
Enterprise Resource Planning actually evolved from material requirements planning, growing to incorporate accounting functions within one, centralized solution. In addition to business areas traditionally covered by MRP, an ERP system incorporates accounting functions that give greater details into production costs as well as enterprise-wide activities, such as sales and customer interactions.
ERP software is a comprehensive solution that centralizes all of the processes that make a manufacturing business run into one electronic platform. It integrates applications to provide efficiencies, such as dynamic data population, which reduces errors and speeds time to delivery.
Typical ERP applications include:
The main difference between ERP software and MRP software is that ERP software includes integrated accounting, while MRP software does not include accounting. ERP software is more comprehensive because it connects manufacturing costs directly to accounting.
MRP software typically includes many of the same features as ERP software, but it traditionally integrates with a third-party accounting system.
ERP software typically includes MRP functionality, making it suitable for businesses that require a full-suite solution for managing operations across multiple departments in addition to manufacturing operations. MRP as a subset of ERP focuses specifically on production planning, inventory control and scheduling. Its goal is to ensure that materials are available for production and products are available for delivery.
Like so much in the realm of business planning, there is a lot to consider for effective material requirements planning, especially at higher production volumes or for products that are more complex.
MRP software seamlessly and systematically evaluates material requirements, production schedules, sales forecasts, customer orders and inventory to calculate the optimal supply of product inputs. This leads to:
Using a centralized database and integrations between production functions, such as purchasing and shop floor management, MRP software is able to simplify the process of ensuring that materials are where they need to be at the optimal time, so that production can proceed on time, in the correct sequence and with minimal interruptions.
MRP software reduces the cost of purchases by determining the most cost-effective materials and components. It can also reduce inventory carrying costs and waste through better alignment of production and demand, and helps manufacturers avoid employee overtime through more efficient scheduling and fewer bottlenecks.
MRP software helps companies reach optimal inventory levels by using real-time and historical data to accurately forecast material needs. The software gives immediate insight into inventory locations and quantities, so you always know what’s on hand and what needs to be ordered or reordered. Inventory capabilities enable the software to automatically update inventory data when shipments arrive or leave the warehouse.
With the more accurate forecasting capabilities of MRP software, it becomes easier for manufacturers to schedule production for optimal efficiency, which keeps order-to-delivery times low and makes customers happy.
Many manufacturers must keep detailed records of product materials. Some MRP systems enable easy traceability using barcoding for lot or serial number traceability. This satisfies regulatory mandates and makes it easier to track products in the event of a recall.
Greater production efficiency means manufacturers are able to get their products to market more quickly, improving customer satisfaction and market position.
When deciding between ERP and MRP software, start by evaluating your business’s specific needs and future objectives. Consider the scope of your operations—are you primarily focused on manufacturing and supply chain efficiency, or do you require a system that integrates financials and accounting?
Small to mid-sized manufacturers with straightforward production processes may find MRP software sufficient, as it provides the necessary tools to manage materials, scheduling and inventory without the added complexity of an enterprise-wide solution.
However, if your business operates across multiple departments or industries and can benefit from seamless data flow between functions, an ERP system will offer greater long-term value. Budget, scalability and integration capabilities should also be key considerations. ERP solutions generally require a higher initial investment but provide more robust functionality to support business growth. Conducting a thorough needs assessment and consulting with software providers can help determine which system aligns best with your operational goals.
When choosing an MRP solution, at a minimum, be sure it has the following features:
MRP software purchasing applications support the original mandate of MRP – calculating material acquisitions needed to meet production plans and customer demand. Modern MRP purchasing applications can also evaluate costs, track suppliers, automate purchase orders, and create quality records, among many other capabilities.
MRP software is designed to support manufacturing production, ensuring materials needed in production are available closest to the when they are needed in the production schedule in order to minimize costs yet maintain efficiency and meet demand and delivery deadlines.
Inventory management works in conjunction with production scheduling to track the location of materials, ensure there is enough on hand for production and facilitate getting that inventory where it needs to be at the right time. Inventory control applications can auto-allocate inventory, synchronize inventory across multiple locations, and create automatic reorder points.
Since all business functions are interconnected within the ERP platform, information from different departments is consolidated and updated in real time. This gives management a comprehensive view of business performance, enabling better decision-making based on more accurate data.
Financial reports, inventory levels and production schedules can be accessed instantly, providing companies with insights that help them respond quickly to market changes or operational challenges.
MRP software incorporates the BOM into its material acquisition or production processes, using data from the BOM to ensure the right materials are available at the right quantities and in the correct order. The digital environment allows manufacturers to easily make changes to the BOM if needed and improves accuracy for complex products.
QT9 can answer both MRP and ERP needs by offering both solutions. QT9 MRP includes a comprehensive materials requirements planning system that also integrates with the most popular accounting applications: QuickBooks, Xero and Sage.
With QT9 MRP, you get:
QT9 QMS Integration offers a broad yet united platform for incorporating quality management into business processes, including nonconformance management, supplier and vendor management, document control and quality assurance.
QT9 MRP works for any size company, in any industry, improving efficiency and accuracy through integrated data and automated operations. It also offers electronic batch record (eBR) and device history record (DHR) applications to address the needs of life sciences companies.
Our MRP software lets you configure processes to best meet your needs and is highly scalable, so you can implement at your own pace.
Reach out today for more information.