What are ERP and MRP?

by | Feb 4, 2016 | ERP Services

More and more, we see acronyms replacing industry terminology. In manufacturing, acronyms like ERP or MRP are part of everyday conversation. What are ERP and MRP? Director of Manufacturing ERP Services, Pat Welsh, defines ERP and MRP, and explains how they are critical to successful manufacturing.

Enterprise Resource Planning (ERP)

ERP is an acronym for Enterprise Resource Planning, but that doesn’t really tell you what enterprise resource planning is or what it does. ERP is an activity comprised of multiple processes that are essential for running a business – inventory and order management, production, accounting, human resources, customer service, etc. ERP is about managing the assets of your entire company from a centralized source, enabling you to use human and company resources more productively and coordinate those resources efficiently. Strong ERP processes provide manufacturers a competitive advantage.

In today’s modern manufacturing environment, ERP is often managed using a software solution. There are many ERP software platforms available, all of which strive to consolidate functional areas of the business into a complete, integrated system. The central feature of an ERP software solution is a shared database and platform application that supports multiple functions used by different areas of the business. This means that decision makers across the company can rely on the same information for their specific needs, sometimes referred to as a single source of the truth. Best-in-class software solutions offer the ability to collect real-time information, enabling employees to make more informed decisions quickly and easily. ERP software helps to eliminate redundant processes and systems by synchronizing and automating information and reporting.

Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRP-II)

Originally, the initials MRP stood for Material Requirements Planning, a series of steps and calculations executed manually or by computer programs to estimate materials needed to satisfy customer demand. In other words, original MRP is about making sure you have enough raw materials to meet production demand. Based on the demand of a product, the MRP function checks for available inventory. If there are not enough materials to satisfy manufacturing orders, then the MRP function generates purchase orders and, in some cases, sends the PO to the supplier.

Today, MRP has evolved into what is called MRP-II (Manufacturing Resource Planning) and has become a core component for manufacturing organizations and a standard for manufacturing ERP systems. MRP-II is an evolution of MRP concepts that expands the planning process beyond just raw materials to include scheduling, design engineering, inventory management and cost control. At the core of MRP-II is the concept of creating detailed production schedules that coordinate the arrival of component materials with machine and labor availability. MRP-II works to centralize and integrate the processing of information for more effective decision making.

How are ERP and MRP different?

ERP is an evolution of MRP and MRP II, incorporating more features than either of the MRP options and expanding on the principles of MRP-II. MRP/MRP-II are a now subset of manufacturing ERP. Today’s modern ERP packages include maintenance and tooling management, supply chain management, customer relationship management, and additional human resources functions. This enables a manufacturer to integrate data flow, processes, and reports for operational status and decision making about their entire business, both inside and outside its walls.

Curious about ERP solutions for your manufacturing environment? Revolution Group offers a wide array of Manufacturing ERP Services. Give us a call at 614-212-1111. We would love to change the way you think about ERP.

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