ERP vs. MRP: What’s the Difference?

Manufacturers and distributors require a different level of management technology than many other types of businesses. Managing materials and inventory, planning procurement and scheduling production activities gets complicated and will either make or break profit margins.

There is no shortage of business management technology available, from enterprise resource planning (ERP) to material requirement planning (MRP). It’s also difficult to determine which type of technology will best support your business operations. ERP vs. MRP? What’s the difference? Here’s what you need to know.

What is ERP?

ERP is a popular business management technology used by companies of all sizes and in many different industry sectors. This single, comprehensive system is used to manage accounting and financial processes, inventory, supply chain, manufacturing and distribution operations, human resources and payroll, and the other many moving parts of a business. The more robust ERP solutions deliver time-saving automations, such as workflows, alerts and automatic notifications. The highlight of ERP can be found in the business intelligence features. Dashboards, reporting features and powerful analytics provide businesses with a 360-degree view of business performance and operations.

What is MRP?

Manufacturers and distributors rely on MRP systems, which help businesses gain even greater control and insight over inventory and procurement needs. Understanding inventory movement and customer needs is necessary for strategic planning and forecasting decisions. Inventory management and warehouse management each play a pivotal role for many manufacturers and distributors and it becomes even more important with business growth. Having the right inventory, in the right quantities at the right time is a challenge to say the least. Overstocking the warehouse ties up cash flow and raises the risk of maintaining inventory that becomes obsolete, expires on the shelf or becomes damaged or unusable. Under-stocking introduces other risks, such as interfering with production when inventory is unavailable and frustrating customers with backorders, stock-outs and related delays.

Do I Need Both ERP and MRP?

As noted above, ERP is a comprehensive, turnkey management solution. It integrates the business processes across your enterprise. MRP is more specific and targeted specifically for manufacturing and inventory management activities. In other words, MRP will not support financial or accounting needs and other core business operations. Do you need both ERP and MRP systems? Well, that depends.

  1. Do you need to dial into inventory management and material planning to reduce waste and protect profit margins?
  2. Do your existing business systems provide comprehensive management capabilities for manufacturing operations, inventory control and strategic planning and forecasting needs?
  3. Do you know whether inventory or material planning management efforts are building profits or draining them?

You may need ERP and MRP, but that doesn’t necessarily mean you need two different business management systems. There are many different types of ERP solutions in the marketplace today and some, but not all, offer MRP functionality or can be customized for it. Having a single, integrated ERP solution that includes MRP features will be more efficient and affordable than deploying two different business management systems.

What Should I Do Now?

Contact The Wolcott Group for additional guidance and questions.