Often when we speak to businesses who are considering upgrading their computer systems, they are looking at a combination of different computer software systems including MRP software and ERP software systems. From these conversations over a period of time we have come to realise that many businesses still do not fully understand what the differences are between these different business software products.
What is Material Requirements Planning (MRP) Software?
Material Requirements Planning or MRP as it is often referred to, is a manufacturing production planning, production scheduling and stock control system used to manage manufacturing business processes. For any MRP software there are three main objectives which need to be met:
- To make sure sufficient stock and materials are available for manufacturing of products and products are available for delivery to customers.
- Maintain optimal stock levels so that cash is kept in the business rather than being tide up in slow moving stock located on the shelf.
- Planning tool for manufacturing activities, customer delivery schedules and supplier purchasing activity.
What Functionality Does MRP Cover?
MRP usually covers the end to end process of a manufacturing business and all of the various functions which exist including:
- Prospects / Customers
- Estimating / Quoting
- Customer Sales
- Supplier Purchasing
- Stock Control
- Manufacturing Production
- Quality Management
- Customer Delivery
- Finance (Invoices)
- After Sales
One of big selling points for MRP is in the ability to automate key business functions around purchasing and production. MRP is a demand driven software system. By raising sales orders, work orders and purchase orders, the MRP system will be able to make suggestions as to shortfalls in stock levels required to support planned levels of manufacturing and customer sales.
For MRP to function correctly it is critical that the integrity of key system data is maintained. Here are some of the key data which drives an MRP system:
- Stock levels
- Bills of material
- Manufacturing routes
- Purchase orders
- Sales orders
For example if stock levels are not correct we may be ordering stock from suppliers we don’t need resulting in overstocking and cash flow issues in extreme circumstances.
Who Uses MRP Software?
Generally speaking MRP software is used by small to medium sized manufacturing businesses. MRP software systems tend to be limited to managing the business activities of a single business. They are normally sold on a per user basis. For example £1,000 per user * 16 users = £16,000. Often the software will be modular with different modules included as standard whereas others will be an additional cost.
In addition to the software costs, there will normally be additional costs incurred for any required hardware such as servers, database software, backup solutions, shop floor data capture etc. Also there will normally be a cost associated with the implementation of the software managed by a project manager who will assist with training of staff and system acceptance.
What is Enterprise Resource Planning (ERP) Software?
Enterprise Resource Planning or ERP as it is often referred to, has many similarities of MRP software in that it is used for managing end to end business process of a manufacturing business although this functionality tends to be much more fully featured and customisable. Historically ERP was only used in large sized manufacturing businnesses with multi million pound turnovers although more recently smaller manufacturers are starting to move over to ERP software. ERP tends to be a progressive upgrade solution where a company has outgrown the capabilities of its existing MRP system due to business growth and complexity.
What is the Main Difference Between MRP and ERP Software?
One of the key differences between MRP and ERP is that MRP can normally only manage one single business whereas ERP can handle multiple companies within a large corporate group to give group wide visibility of company performance.
The benefits of ERP tend to be that the functionality which is available is much more comprehensive and fully featured. Often a key requirement for many businesses upgrading to ERP is EDI or electronic data interchange. EDI is a set of communication protocols that allows separate computer systems to exchange data. For example if you were a supplier to Rolls Royce then you would normally download the Rolls Royce schedule weekly report via the Exostar EDI software interface.
Due to the associated complexities with ERP software together with the advanced functionality which is available within the software, ERP software costs do tend to be higher than those associated with MRP software.
MRP Software Limitations
At Business Intelligence Reports one of the main MRP software solutions we have worked with previously is FactoryMaster MRP Software. Whilst the core functionality available within the software was adequate, the main limitations we found with the software over time was in the lack of ability to customise the software and more importantly the business reporting that the software generates.
We have undertaken a significant period of business report development to develop a bespoke suite of business reporting solutions to extend the reporting capabilities of the FactoryMaster MRP software.
ERP Software Consultancy
Business Intelligence Reports can provide a business software consultancy service for manufacturing businesses who are considering upgrading their existing software systems. To request your business software consultation please call 0800 8044 310. Alternatively you can request a business software consultation through our website.by