Understanding MRP and ERP Systems: Which Software System is Right for Your Business?

Industry jargon can be overwhelming, especially when many acronyms are involved, like MRP systems and ERP systems. They sound almost alike and are actually a lot alike. It’s no wonder people confuse these two a lot. But wonder no more! Here’s a simple explanation of what they are, how they’re the same, and how they’re different:

MRP Systems

MRP stands for manufacturing resource planning or material requirement planning. It refers to the mechanism manufacturing companies used to determine what materials they need and when they need these, as well as calculate how much of these they need in terms of optimum quantities. MRP systems are designed to automate the whole aforementioned processes.

ERP Systems

ERP stands for enterprise resource planning. Large businesses often use ERP systems to manage various manufacturing processes like MRP systems do and also to manage data in a single, centralized location. With that in place, data can be consistently drawn from one source, ensuring processes don’t duplicate data which is important for both data quality and integrity.

The Similarities and Differences

ERP systems are more business-centric and not just manufacturing-centric. Thus, you can say that MRP systems are an example of ERP systems, but not the other way around. MRP systems are specially designed for manufacturing processes, while ERP systems are made for different kinds of business processes, not just supply chain management or resource management, but also for human resource management, financial management, etc.
Thus, if you’re in the manufacturing industry, you may need both MRP systems and ERP systems depending on the size of your company. If you’re running a large company, working with ERP systems may be more beneficial to you because different solutions for various processes can be integrated together for a more streamlined approach. But if you’re running a small company, working with MRP systems may be the better option because you can pick and choose which standalone software to use for your company’s highly specific needs. It’s simpler and cheaper, and you can always upgrade to ERP systems once your company’s needs expand to include non-manufacturing business processes.
Whether you need MRP or ERP systems, we at Michell Consulting Group are happy to help you. Based on your company’s objectives, we’ll provide you the necessary tools and applications to secure success for your business now and in the future. Contact us now for more information.