ERP and MRP software systems are closely related. People often get confused between these two terms and so making a selection decision becomes difficult for them and sometimes they end up making a choice that does not help them maximize their returns of investments. These two systems may sound similar but both provide different levels of performance. So how to choose between these two? Let’s understand these two terms and their differences.
Let’s start with MRP(Material Requirements Planning)
MRP is specifically made for handling manufacturing processes. It helps manufacturers to make decisions like what material they need? What amount of material do they need? And at what time? Advanced MRP also helps in better forecasting which helps in maintaining and optimizing inventory. MRP systems are mainly less expensive than ERP and it generally handles less complex tasks.
We can consider MRP as a subset of ERP.
Now let’s understand ERP(Enterprise Resource Planning) systems.
ERP is an evolution of MRP and thus contains more features. Most ERPs have an MRP module in them. And along with it, it provides accounting, human resources, customer relationship management, project management, and much more. An ERP can handle a variety of tasks.
While MRP is mainly made for the manufacturing companies, ERP provides great integration and hence it can be used by other types of organizations too.
For example, ERP provides human resource management, so an organization like healthcare can use an ERP system to keep track of information surrounding human resources, such as payroll.
Another example can be the hospitality industry like hotels, CRM module of ERP can help in providing best services to their customers and improve customer satisfaction.
Key differences between these two software systems
The main difference between these two is ERP is a complete solution with great integration whereas MRP is more like a solo software.ERP provides a broader range of operations as compared to MRP.
What is your immediate need?
If your company needs a system mainly designed to handle manufacturing processes then MRP is going to be the best fit for your organization. But if your organization needs a system that handles more than just the manufacturing process and takes care of overall processes within your enterprise like human resource management, sales and purchase management with automated flow income and expenses details to accounting books, then you should go for ERP.
Now another factor that can be considered is your budget. If you do not have the budget for the ERP system, but handling manufacturing processes is an important business requirement, then go for the MRP system as MRP systems are mainly less expensive than ERP.
But if you want improved supply chain management, ERP can be proved as a wise choice. In the end, it depends on your organization’s requirements and goals that you want to achieve with such digital transformation change in your enterprise.