Businesses can integrate various types of digital tools to improve their operations. Do you know about the MRP vs ERP software? Their differences? Or how they impact a business? MRP stands for material requirements planning, while ERP is an enterprise resource planning system.
Sometimes it can be challenging to differentiate MRP vs ERP system Malaysia. This read will look at each digital solution for business and its impact in the business setting.
It includes all you need to know about them and if you need to integrate one or both options into your business. The information herein is essential for ERP vs MRP system implementation. Let us get right into it.
An Overview of the MRP System
You are probably wondering what is MRP: It is a business software that is popular with manufacturers. The material resource planning system helps calculate the material requirements to manufacture a product.
The manufacturing resource planning software assists with production and inventory management. The system helps determine the right time to order the materials you need to manufacture a product.
It ensures a business gets the accurate number of required items and observes the timelines according to production needs.
MRP Historical Background
Businesses did not widely use the MRP systems in their processes. Before, enterprises used economic order quantity (EOQ) applications to help with the manufacturing process. Now, more businesses are realising its importance and adopting the system.
MRP was the first integrated business management tool. Its first adoption was in the 1940s and 50s to assist enterprises with inventory management. The digital tool applications were limited to data exploration of production components.
Later, it would support the workforce in their roles as people could input data into the system. However, MRP systems have evolved since the yesteryears: They can do more than EOQ. In 1983, Oliver Wright made significant advancements to the application, adding features like capacity requirements planning, rough-cut capacity planning and master scheduling.
Adopting the technology makes planning and management easier. Material requirements planning MRP system aids production and streamlines operations in the manufacturing industry. Here are some features to look for in the best material requirements planning example;
- Management tool: to improve performance and productivity.
- Inventory management MRP ERP features: for keeping tabs on raw material requirements.
- Accounting tools: general ledgers for simple accounting tasks.
- Master production schedule tools: to simplify and oversee production planning.
- Purchase planning tool: to control resource stocking.
- Capacity planning tool: to improve manufacturing processes.
- Cost reporting tool: to help with financial statements.
- Forecasting tools: to aid with business budgeting and long-term planning.
Here is the benefit of MRP to businesses;
- Improved Order Management: MRP systems provide data to help manage raw materials orders. It streamlines the process and eliminates human error, which can be costly. Management can fully control their orders with the MRP material requirements planning MRP software.
- Planning and scheduling: the system helps with resource planning and scheduling. It gives the management a holistic view of the process for better decision-making. The master production schedule provides information about all company resources from one platform for better planning and scheduling of production tasks.
- Helps with tracking and reporting: MRP system assists in tracking raw materials, improving efficiency, and saving money. Still, users can generate and create reports using the software for business use.
How MRP and ERP systems Differ
MRP and ERP systems are standard digital solutions for businesses in manufacturing process. People find it challenging to differentiate them since their acronyms are almost alike, and their functions may overlap.
Let us use the following parameters to evaluate the differences between MRP and ERP:
Standalone vs Integrated
MRP is a digital business tool you can use independently: It is a standalone software for manufacturing needs. ERP software differs from MRP as it integrates with other enterprise digital tools.
The system is more complex, and service providers customize their plans to fit an enterprise. Its modules cut across business processes and can give you total control of the entire company.
The features to choose from when shopping for an ERP solution are according to the business needs. MRP is ideal for manufacturing processes if you will not integrate the system with other digital tools already in use or in the future.
MRP and ERP software features vary, influencing the types of people using them. ERP systems integration has vast possibilities in their application and attracts an unlimited number of users.
Their implementation is across departments and industries. It is not limited to manufacturing operations, as people from different offices use it. Apart from the manufacturing or management team, an HR officer can check payroll, a person in the sales department can follow up on leads, and analysts create reports using the software.
On the other hand, MRP is limited to manufacturing processes, and only those in the department use it. Its application is in one industry, and its users are from the production team. Managers use inventory management MRP ERP to access resource information, and staff can check lead times.
ERP aids in planning business production operations and supply chain management.
The costs of integrating an ERP system are more than what businesses have to budget for when purchasing an MRP solution. ERP is expensive because of its versatility: The system does not serve the manufacturing department only but supports several business processes.
Its cost will depend on the available features, and it increases with the number of tools in the system. Their components are why small businesses need ERP software. Businesses must dig into their pockets to implement the best digital solutions for their operations. It helps to compare different service providers and have a budget to work with. But do not compromise on the features as you try to save money.
ERP vs MRP: Determining which System is the Best for Your Company
We have no definite answer on the right choice when determining which system suits your business operations. These three factors can help you pick a suitable plan:
Operations to Optimize
The need for a digital solution will depend on the operations you want to optimize in your business. MRP software is the best choice to improve your manufacturing processes. Industry experts can assist with the effective use of MRP and other dependent demand.
However, ERP integration is ideal if you want to automate several faucets in your business operations. The system has multiple tools to aid with all the processes requiring optimization. You can choose the ERP features to suit your company’s needs.
Companies work with a budget when investing in digital tools. The amount at your disposal will influence the system you purchase. Businesses must budget more for ERP solutions which are more expensive because of the available features.
They are affordable when seeking a method to streamline several business processes other than manufacturing. It will be costly for enterprises to purchase independent software for every operation to optimize. MRP price is cheaper than ERP because their applications are limited to manufacturing processes.
When budgeting for a digital tool, it is advisable to factor in all relevant costs. Analyze the initial cost of purchasing the components for each system and its implementation. Also, consider its long-term value and expected returns to the business.
Expected Company Growth
When selecting the right system to integrate into the business operations, it is critical to factor in a company’s projected growth. Suppose you expect the enterprise to grow rapidly and need to optimize other processes in the short term.
In that case, it is best to invest in an ERP solution. The enterprise resource planning software helps grow businesses and supports primary processes as operations expand. You can add features later by upgrading the plan to fit the current business needs.
On the other hand, if you do not expect the company to grow significantly, you can opt for an MRP solution. There will be no need to get extra features you will not use. A company’s growth is critical since the system should support the number of users and their productivity.
Conclusion: Is Your Company an Adaptive Manufacturing Enterprise?
Manufacturers must adapt to consumer preferences or changing political, economic, and societal environments. Integrating digital tools can help enterprises survive the ever-changing and demanding market.
The insights in this article can help determine whether MRP or ERP is the best option for your business.
Bluecrystal has technological solutions to make your company an adaptive enterprise. You can check out different plans on the company’s website. MRP will perfectly fit your needs if you want to digitise the manufacturing department only.
ERP offers a variety of tools to streamline other business operations like accounting, customer relationship management, and human resource management.