MRP & ERP Systems

Written by tamara wilhite
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MRP & ERP Systems
(plan detail image by jimcox40 from Fotolia.com)

MRP stands for Material Requirements Planning. In more advanced applications, MRP represents Material Resources Planning. ERP stands for Enterprise Resources Planning. At each increasing step, from MRP to MRP2 to ERP, more functional areas are brought into the resource planning system. MRP, MRP2 and ERP are steps of increasingly complexity aimed toward managing corporate resources effectively and efficiently. MRP is the simplest resource planning system, while ERP is the most complex.

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Definition of MRP

MRP originally stood for Material Requirements Planning. Material requirements planning ensures the right materials are in the right place at the right time and in the correct volume. MRP, both in material requirements planning and material resources planning, aims to minimise bottlenecks in production from material shortages, prevent excess inventory and keep work in progress to a minimum.

Definition of MRP1

An MRP1 application is the most basic level of material requirements planning software. An MRP1 software application provides software control for production planning, inventory control and management of basic manufacturing processes, such as kitting processes and work instructions for assembly.

Definition of MRP2

MRP2 stands for Manufacturing Resource Planning. MRP2 software includes MRP1 functionality. MRP2 expands upon MRP1 because it allows for planning of labour as well as materials. Another feature within MRP2 includes running "what-if" scenarios of forecasted demand. MRP2 systems also allow for integrated financial planning and management, with labour tracked per assembly operation. This information is fed to the financial system, simplifying time keeping and payroll.

However, MRP2 also has more advanced data analysis functionality built in. MRP2 systems typically have built-in data analysis modules allowing for forecasting and modelling based on actual production data within the MRP system.

Definition of ERP

ERP stands for Enterprise Resource Planning. An ERP system encompasses all manufacturing, design, engineering, planning, ordering, financial and even legal information within a single software system. Some ERP systems also include customer relationship management modules and sales force management systems.

Similarities Between MRP and ERP

MRP and ERP are both designed to minimise bottlenecks in production from material shortages, prevent excess inventory and keep work in progress to a minimum. MRP and ERP are often used interchangeably. They are similar, since both MRP and ERP are used to ensure the right materials are in the right place at the right time and in the correct amount. ERP systems include all purchase information, recorded contracts, proposals and even customer contact databases. However, ERP is an implementation of MRP principles across an entire company, not just finance. Thus, ERP grows until it encompasses all corporate finance, planning, manufacturing and contract management functions, in addition to basic material procurement and manufacturing production planning.

How To Support an MRP or ERP System

When an MRP or ERP system is deployed, it is necessary to scan or upload all drawings, test procedures and work instruction documents. In-process change notices, often called CNs, must also be captured. Parts lists, part information, part lead time, purchasing information and preferred vendor lists must also be uploaded to the planning system.

After the ERP or MRP system is in place, the system must be maintained. This includes creating and tracking change notices, updating parts lists and editing vendor information. In ERP systems, customer relation management information, such as customer contact information, must also be kept up to date.

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