ERP vs MRP: understanding the key differences
ERP? MRP? What’s the difference? Does your business need one, both or neither?
Sometimes it can feel like the world of enterprise IT is rife with acronyms. ERP? MRP? What’s the difference? Does your business need one, both or neither?
Understanding ERP and MRP
First, a primer. An Enterprise Resource Planning (ERP) system is a modular system, meaning it incorporates a series of different modules which integrate together. These modules manage and automate many back-office processes, such as accounting, finance and payroll, human resources, sales and customer service and so on. Theoretically, most or all of the departments within a business can use the same ERP system, so information can flow seamlessly between them. In turn, this means that, say, when a customer contacts the business with a query about a recent purchase, it is quick and easy for the customer service agent to access a full record of the customer’s history, deal with the query effectively, and add it to the system for colleagues to see.
MRP stands for Material Requirements Planning. This is a system with a much more specific focus – it manages production planning, scheduling and inventory control for manufacturing organisations. An MRP system is used to forecast and order materials for manufacture so that they arrive at the right time, in the right volumes and in the right order. If it integrates with suppliers’ databases then it can also be used for the supply chain management.
The key differences
We can see, then, that ERP systems are much broader and more complex than MRP systems. They are used by organisations across a wide variety of sectors – essentially, any business which has grown large enough to want to move away from manual or disparate processes will benefit from ERP. And this is because ERP systems integrate the myriad different functions and processes which make up business operations – and enable them to smoothly share information with each other.
MRP systems, by contrast, are used specifically by production and operation teams within manufacturing organisations. They are still business-critical – they ensure that the raw materials are in place to complete production, and they ensure that products are in place to reach customers in a timely manner – so MRP systems absolutely underpin the success of manufacturing organisations. But that’s the point – they are manufacturing-specific.
Which one is right for your organisation?
It might seem that if your primary goal is managing the manufacturing process more efficiently, then an MRP solution is most appropriate. Likewise, it might seem that if your business is in the manufacturing sector, then deploying an MRP system is a no-brainer. After all, they are specifically designed for your type of business. If you don’t need one, who does?
However, this approach overlooks the fact that ERP systems are modular – that is, they are designed for organisations to be able to pick and choose different functions, and build up an ERP deployment that is tailored precisely to their needs.
And provided a module is available which carries out those MRP functions, then this can be the best choice.
Why? Because then you are using a single system for most or all of your business processes. You don’t need to worry about integrating your MRP system into your ERP system, should you deploy one or the other at a later date. Information from your MRP system will be automatically pulled into other modules within your ERP system, and vice versa, giving you a truly seamless flow of data throughout your business.
If budgetary or other business constraints mean that you are not ready to deploy a full-scale ERP platform, then it still makes sense to look for an MRP module which is part of a wider ERP system, because it gives you greater flexibility for the future. As and when you are ready to automate other business processes, you can build up your ERP in a modular way.
This is exactly how Odoo works. Its MRP incorporates a range of sophisticated processes, across management, scheduling and planning, quality control, maintenance, and reporting. It is highly flexible and can be made bespoke to your needs.
The key takeaway, then, is that the best ERP systems have the ability to incorporate an MRP module, meaning you can gain all this functionality from a single platform, which scales seamlessly as your business grows. And this is something which Smart IT is best-placed to advise on.