When looking into ways to optimize your company's production and manufacturing processes, you might consider systems for material requirements planning, or MRP, and manufacturing resource planning, or MRP II (MRP 2). Both types of systems offer shared features that help with optimizing production, tracking inventory and keeping a list of materials needed to make each product. However, they differ in that MRP II systems offer enhanced capabilities when it comes to production scheduling, purchasing management and capacity planning.
TL;DR (Too Long; Didn't Read)
MRP systems offer your company basic functions for controlling inventory, monitoring inputs and planning production. MRP II systems add on to these features with support for advanced production scheduling, capacity planning and financial planning capabilities.
Understanding MRP Systems
MRP systems offer features of basic material requirements planning and are thus a simplified version of manufacturing software. These systems can help you control your costs, optimize production and order supplies upon demand. However, they don't have advanced inventory planning or capacity planning capabilities.
Production scheduling capabilities are limited for MRP systems since they don't access much data to make these decisions. However, these systems can still make it easier to plan your manufacturing so that you have enough stock to handle customer demand and don't fulfill your orders too late.
Since MRP systems are considered an older technology developed back in the 1960s, you won't find it used as often as you will MRP II systems. In fact, today it can be hard to buy manufacturing software with these limited features alone. You'll most often find small manufacturers still using older MRP systems since most companies have moved to more advanced MRP II systems or even systems for comprehensive enterprise resource planning, or ERP.
Exploring MRP II Systems
MRP II systems include all the features of MRP systems, but they offer enhanced manufacturing resource planning capabilities and are helpful for both production and manufacturing. These systems can create optimized master production schedules, make it easy to purchase raw materials, assist with forecasting company sales and automate materials requirement planning.
You also get advanced capacity planning capabilities that MRP systems don't have. These features help your company use just enough resources to meet projected demand with the help of real-time data. This will help you avoid having too much inventory and can reduce your overall costs.
Another notable difference between MRP 1 vs. MRP 2 systems is that MRP 2 systems incorporate data about the company's finances and employees. This data helps whether your company is controlling the shop floor or deciding when to purchase supplies or how to schedule production staff.
Difference Between MRP and ERP
When looking for software for your company, you'll likely come across both MRP and ERP solutions that can help with manufacturing and production. The main difference between MRP and ERP software is that ERP software typically has several integrated modules that provide support for various business functions.
While MRP solutions deal just with production and manufacturing, ERP software can help with those as well as with financial management, human resources, customer relations and overall managerial decision making. Also, you can't easily integrate MRP software with other technologies since it stands alone.
ERP software can help your company manage its inventory, monitor the warehouse, place and respond to materials orders, project demand and forecast your sales and expenses. At the same time, it can help you track your marketing campaigns, create employee schedules, make financial decisions and even automate common business processes. Even better, all data used for the system remains in a central database so all modules can access the data for smarter decision making.
Choosing Between the Systems
When deciding between MRP, MRP II and ERP systems for your small business, you should consider your budget and how you intend to use the software. If you only have a few employees and plan to take advantage of just a few ERP modules, you may not find it worthwhile to pay the premium for an ERP system over an MRP or MRP II system.
However, if you have a larger business and want to boost your productivity and decision making, opting for an ERP system can give you more flexibility and help streamline your operations.
- Planet Together: The Difference Between MRP and MRP II
- Winman Advanced ERP Systems: Top 8 Benefits of MRP Systems for Manufacturers
- Investopedia: Manufacturing Resource Planning Definition
- Software Advice: MRP vs. MRP II: What’s the Difference?
- SelectHub: Benefits of ERP: Advantages and Disadvantages of an Enterprise Resource Planning System
Ashley Donohoe started writing professionally about business topics in 2010. Having experience running all aspects of her small business, she is knowledgeable about the daily issues and decisions that business owners face. She also has earned a Master of Business Administration degree with a leadership and strategy concentration from Western Governors University along with a bookkeeping certification. Some other places featuring her business writing include JobHero, LoveToKnow, PocketSense, Chron and Study.com.