IT is the fastest-growing sector in the world right now. It has revolutionized the old traditional methods. From the business point of view, MRP and EPR are two software that you will likely come across. These are effective ways to automate many tasks in the manufacturing business. They help complex organizations to keep a systematic record of their daily operation. Scalability and convenience is the ultimate goal of these products. The article will help you with MRP vs EPR analysis. You will have a deep understanding of both the services and their utilization. Further, you can visit Microsoft Dynamics Partner for more details, especially regarding ERP implementation.
What Does MRP Stand For?
MRP is an abbreviation for Material Requirements Planning. It assists in managing manufacturing processes such as production planning, inventory control, and scheduling. It ensures the highest rate of production in your organization by measuring the following:
- what material is required
- how much it is required
- when it is required
A commonly known manufacturing assisting tool is MRP. Many use it to increase their inventory profitability and financial calculations. They were able to manage cost reporting and production planning with the help of computer technology. It helps them with prediction and ordering materials. Overall, MRP is responsible for ensuring the availability of the right equipment in the right amount for production on the desired date. MRP II is the new generation of old MRP.
It allows real-time input from many departments of any organization. While working with MRP software, you have to be vigilant about providing the perfect data or information punctually. Whereas, old and incorrect data can make the forecast skewed. This situation could ultimately lead to losses, and MRP may lose its charm of ensuring profitability.
What is an ERP System?
ERP is the abbreviation for Enterprise Resource Planning. As the name says, it is one of the most commonly used software in the business, especially for large enterprises. ERP, just like MRP, assists you in managing manufacturing-related processes such as scheduling, production planning, and inventory control. ERPs emerged from MRP, but they can go way beyond manufacturing. It incorporates a wide range of processes like human resources, customer relationship management (CRM), payroll, warehouse management, and financial management. It comes equipped with general modules and industry-specific business processes.
ERP is a smart way to organize and centralize your data. It keeps all of your work in one place hence providing easy data management for workflow. This way, your business can retrieve data from a remote centralized location to form predictions. This way, the quality of the data is maintained, and it is never replicated between systems. Moreover, it provides a unique number to each information hence making data access convenient across the internal organization. With its back-flow feature, it can be connected to other systems effectively.
ERP is well suited for large businesses. It is an evolved version of MRP that cover companies’ functions more effectively. It can manage a considerable amount of data with high efficiency. By using its various components, ERP can automate data collection and workflow. Hence it helps to decrease human error and to increase annual revenue.
MRP VS ERP – Key Differences Between ERP and MRP
ERP is an extended version of MRP with much more capabilities. From layman’s perspective, they might be similar things. But they differ a lot when it comes to the professional market. Some of the critical differences MRP and ERP are listed below.
Users:
There is a noticeable difference in the users of both the software. ERP shows the bigger pictures and covers more departments than MRP. MRP can be helpful in the manufacturing department of the business. It has limitations because of its features specific to manufacturing processes. It can be used by a warehouse manager to check upon required raw materials or a warehouse employee to check available quantities. Production planners might use this to get an overview of the entire process.
ERP is not limited to specific users because of the enhanced features it has to offer. More users can take advantage of ERP because of its diverse functions. Apart from manufacturing processes, it can be used by
- an HR to check on payrolls
- A data analyst for creating a report
- Estimate the revenue in the finance department
- Data Science department for making accurate insights
Integrated vs Standalone:
Another significant difference between MRP and ERP is that MRP is more like a standalone software, whereas ERP is a fusion. It indicates that ERP integrates easily with other products and software. MRP also can combine with other software, but it is a tedious task. New ERP software is much compatible. Many companies, therefore, use it. ERP is much more modular as compared to MRP. ERP supports the business from different angles, whereas MRP works with manufacturing-related tasks.
Enterprise Solution vs Medium-to-Small Business Approach:
ERP does much more than MRP. Due to its nature of incorporating many departments at a single place and smooth workflow, it is, therefore, the right solution for enterprises. Today, ERP is also becoming popular among small businesses. The organization of any size can use MRP. It works well as long as the firm does not need integration with other software. MRP mostly assists the company with manufacturing needs, whereas ERP provides an extension to it by integrating many different domains.
Cost:
Another critical difference between MRP and ERP is the price. ERP, due to its multiple features, is more cost expensive. It makes sense since it does a lot more than controlling manufacturing processes. Although MRP cost as well and works fine, ERP is usually costly. For this reason, ERP is most suitable for large enterprises. MRP is also the right solution if you are short on budget.
Cost to Value Ratio:
The cost of MRP is less as compared to ERP. But in terms of functionalities, ERP is more flexible and modular. ERP offers a wide range of features in a single software. Although its cost is high, if we calculate the cost to value ratio of both products, we see that its higher for ERP. It means that ERP has much more to offer in a one-dollar as compared to MRP.
All in one Bundle:
Since the cost of ERP is higher, it comes with much more software included in its bundle. These include customer management relation (CRM), human resource management (HRM), supply chain management (SCM), financial management (FM), and human capital management (HCM).
MRP is limited to manufacturing processes only. It cannot afford scalability. While getting MRP, if you need something other than manufacturing tasks, you need to look into other solutions.
Scope:
MRP and ERP both have to offer a different set of features. MRP is much simpler and straightforward. It only focuses on material requirements and manufacturing processes. On the other hand, ERP provides a handful of software that are suitable for various businesses such as HR and accounting. MRP is a part of ERP. If you want a solution to several business processes, then ERP should be your priority. But be wise about your decision, it might be too much for your company.
MRP Versus ERP: Pre-Requisite Steps Need to Be Taken Before Any Implementation
One crucial question comes in mind here, ‘Which one should I use.’ The answer to this question is ‘it depends.’ It depends on the number of departments, users, your requirements, and the budget. ERP offers a wide range of modules with a centralized source for data sharing. It ensures more control, along with productivity. Reports say that about 93% of ERP users use custom packages. It means that you can modify the software so that it is in line with your business needs.
MRP can help your company to analyze its manufacturing processes carefully. By forecasting the sales, it can give an estimation of material requirements.
Your business’ needs to determine which software is best to use. You need to ask yourself the following question before buying the software.
Which process needs automation?
If you need a solution to handle your manufacturing tasks only, then MRP it is. Otherwise, if you need software to automate other processes and need assistance in other domains, you should opt for ERP. It is due to the abundant features ERP has to offer. It is integrated easily with other programs as compared to standalone MRP. Go for ERP if you need to do stuff more than manufacturing.
Which programs does my company use?
The type and number of programs that are currently used by your company is also a critical factor in determining which solution you should adopt. If you are not using any software, then MRP is more suitable. Because in such cases, ERP’s smooth amalgamation might not be advantageous for you. But in case you are using numerous software and systems, ERP would be a good option as it provides a convenient connection.
What is my budget?
Budget is the most determining factor in deciding the right software for you. ERP offers a suite of software and is expensive. Whereas MRP only contains manufacturing-related assistance and costs less. In such a situation, you need to take into consideration the pros and cons of both the software. ERP might cost you high but can be beneficial for your company in the long run as compared to MRP.
What are the available IT resources?
It is a critical question before deciding the right software for your company. Using any of this software will require dedicated IT resources and specialized training. Since ERP is more complicated, you need to spend extra time and money on its implementation. Because without proper training, the software will be useless for your company. So its better to analyze the resources before getting the desired software pack.
What are the concerns related to the company’s growth?
Your company’s growth rate is an essential factor in deciding what software to buy. If your company is increasing in size, then ERP will be a better solution. It can be an effective solution if your company is planning to expand its operation since it is integrated easily in other domains and supports scalability. It will also increase your workflow, hence providing acceleration to your growth. In case you have limited growth and relatively fewer employees, you should go for MRP.
MRP Vs ERP Alternatives
Software is an ever-changing field. Every day new advancements and improvements override previous technologies. There are the following alternatives to MRP and ERP.
Cloud-Based System:
The world is extensively moving towards cloud-based solutions. It affects the foundation of the software world. In the past, the only way to obtain software is by using its installer. Since the dawn of cloud computing, all such complexity of installing and maintaining the software vanished. As market trends are changing, many ERP providers switch towards providing cloud-based ERP solutions.
The benefit of the cloud-based system is that it is less expensive, both in terms of cost and maintenance. Upfront costs have heavily reduced because of it. This type of solution is useful for most businesses. In case you do not have internet access, then you might want to consider an on-premise installation.
Demand-Driven MRP:
Demand-Driven MRP is a new model of MRP with increased reliability. Conventional MRP could survive only in a steady state. New MRP aims to focus on providing viable forecasting tools for material requirements. It is less affected by variables and fluctuations in supply and demand of the market. It uses the actual data for prediction hence making accurate inventory assumptions. It could help the company to lower its bottom line.
Conclusion
Both MRP and ERP have given businesses wings to fly off and do much more that they can. However, there is some difference between the working of both software. ERP comes with a bunch of software, whereas MRP is a standalone system. Both the software provide excellent services in their forms. Which software is best for you entirely depends upon your needs.
FAQs:
Which is considered a primary report in an MRP system?
The primary report in an MRP system is the maintenance of records of manufacturing-related processes.
ERP’s primary value comes from which applications?
ERP’s primary value comes from the MRP application. However, it also has more features to offer than simple MRP software.
What is the difference between MRP II and SAP AND ERP?
MRP II is an extended version of MRP, launched in the 1980s. SAP is a module-based software that focuses on the service end of the process. It aims to provide people with the most up to date information, whereas ERP offers a bunch of software for managing different departments of a business such as HR, CRM, Marketing, Data Science, etc.
Is MRP Part of ERP System?
Yes. ERP offers a suite of software. One of its parts is the MRP, along with other components. But you can get MRP separately if you do not need additional features of ERP.
