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What are the key differences between ERP and MRP systems?

In short, both MRP and ERP systems are pieces of software that help you to run your business better based on historical information, forecasting algorithms and your chosen business priorities. The key difference is the scope; MRP has a much narrower, manufacturing-centric focus than ERP, which provides business-wide benefits as well as supply chain management. To give you a better understanding of the components of each, and to help you to decide which one might be right for your company, we’ve set out some of the detail below.

 

Find out more about MRP and ERP, through a series of articles looking at the differences between these tools and which system is right for you and your business.

 

Production Planning MRP ERP Industry 4.0 Supply Chain

Posted 07/11/2019

 

ERP systems integrate every piece of the complex jigsaw that makes up a manufacturing business. Data from one part of the business can accurately inform decisions taken elsewhere. This means that real costings taken from manufacturing and purchasing can be used to generate accurate quotes at chosen margins with realistic lead times, even running ‘what-if’ scenarios within the scheduling software to understand the impact of new demand on the existing plan.

Read our article on 'What is ERP and what does it do?'

 

The accounts team can see a full breakdown of current and historic customer purchases and trends in receipt of cash, allowing for open discussions with customers using accurate information, as well as forecasting and effective management of creditors. Business leaders can use insights to drive strategic decisions; the data available from a full ERP system provides a holistic picture of the company’s – as well as its customers’ and suppliers’ - activities. If your objective is supply chain management, an ERP system will give you the tools to achieve absolute control across the whole process, from the supply of raw material to the logistics of delivery. An MRP module is a crucial component of ERP systems, but it is not the sole focus of the solution.

 

MRP, however, is a tool largely used by production and operations teams to manage the manufacturing and purchasing areas of the business for efficiency gains. It enables the manufacturing facility to meet customer demands whilst meeting stocking KPIs and purchasing economically. Customers benefit from your business’ visibility and control, whilst you will see an improvement in cash flow and a reduction in manufacturing delays. MRP is a stand-alone item of software, so that whilst other departments can use the data (for example, for accurate costing or for chasing invoices), the data will not be linked to their databases. Whilst MRP systems can often be integrated into other software through imports and exports of relevant data, it is a more difficult process than with ERP, which has been developed with total integration and data-flow in mind.

Read our article 'What is MRP and what does it do?

 

ERP vs MRP at a glance:

 

ERP

MRP

Engineering team
  • Detailed BOMs and routings for each product that reflects the intended concept
  • Accurate job and project costing for estimating and continuous improvement
  • Project management tools
  • Document management to enable version control

 
  • Detailed BOMs and routings for each product that reflects the intended concept
  • Accurate job and project costing for estimating and continuous improvement
  • Document management to enable version control

Production team
  • Drawings and product/material specifications direct to workstation devices
  • Work-to list based on the finite schedule for most effective production
  • Consistent information on production methodology and timings direct from the engineering team
  • Drawings and product/material specifications direct to workstation devices
  • Work-to list based on the finite schedule for most effective production
  • Consistent information on production method and timings direct from the engineering team

Operations team
  • Accurate BOMs for economic purchasing and JIT stockholding
  • Automated and integrated purchasing for reduction of administration
  • Accurate planning for efficiencies and improved customer service

 
  • Accurate BOMs for economic purchasing and JIT stockholding
  • Automated and integrated purchasing for reduction of administration
  • Accurate planning for efficiencies and improved customer service

 

Sales team
  • Instant access to customer history, sales records and pricing whilst on the move
  • Detailed costing for accurate pricing
  • Lead and opportunity management tools for improved conversion rates
  • Automated customer updates and feedback, reducing administration and unnecessary communications
  • Detailed costing for accurate pricing

 

Finance team
  • Access to customer credit history, work in progress and control over new business accounts
  • Purchase invoices receipted directly against POs for accuracy
  • Automated invoicing and statements
  • Accurate payroll information for faster salary runs

 

 

Senior team
  • Business insights that ensure daily and strategic decisions are data-driven
  • Facility to set and monitor specific KPIs
  • Full supply chain management for competitive advantage
  • Peace of mind
  • Facility to set and monitor specific production-based KPIs
  • Partial supply chain management for competitive advantage
  • Peace of mind