The Difference Between ERP & MRP Software

Written by kenneth hamlett
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The Difference Between ERP & MRP Software
MRP was designed for production environments. ERP improves upon MRP's usage. (manufacture image by Sergey Goruppa from Fotolia.com)

Material Requirements Planning (MRP) systems became one of the first stand-alone technological software improvements in the manufacturing and production environment. With the introduction of Enterprise Resource Planning (ERP) software, companies evolved from using multiple stand-alone applications such as MRP, to using full-featured integrated applications across the entire organisation. Both MRP and ERP systems increased an organisation's information visibility and availability.

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MRP

MRP software's main role is to better calculate the requirements needed for manufacturing production. MRP software calculates the correct materials required for production, the optimal quantity of materials required and at what time the materials are needed. This data remained only in the MRP system and not visible to other departments within the organisation. When initially introduced in the 1970s companies immediately saw the benefits of this new tool. Raw material consummation dropped, wastes reductions occurred and manufacturing became leaner.

Expansion

MRP software grew into MRP II software and given the name manufacturing resource planning. Manufacturing resource planning software realised the need for the software to take on more than just a functional production role. MRP II software incorporated vendor management, capacity planning and billing. MRP II software eventually morphed into ERP software.

ERP

ERP software goes beyond MRP II software in a number of areas. ERP software works through all departments of an organisation or enterprise. It allows for collaboration between departments and let's each department's data "speak" to another. For example, purchasing buys the raw materials required for production based on the data received from productions daily usage information and the forecast generated by the forecasting team. Receiving and warehousing see the order quantities the purchasing department bought and plans the receiving labour and warehouse storage around the expected quantities. At the same time, accounts payable can prepare payment based on vendor terms as soon as the shipment arrives and quality control as entered the inspection data into the system. Each department's data affects additional departments within the enterprise.

Integration

Most MRP software exists as a stand-alone application. The software does not integrate well with legacy systems or purchased applications or if it does it requires many hours of IT support to make it work. ERP software has various modules that integrate into a complete software package. Companies purchase the initial modules they require and purchase additional modules when needed. The new modules easily integrate into the existing ERP backbone structure.

Advantages

Most companies rely on enterprise wide data and intelligence. One of the big advantages of ERP systems remains its ability to see an organisations entire supply chain, from offshore suppliers to the needs of the customer in its hometown. ERP systems combine data from multiple sources within an organisation to create an overall view of a company's health and it also provides analytical tools for process improvement.

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