ERP or MRP? What does your manufacturing business need?
Why is Odoo the best solution for your manufacturing business ?
- Which system is best?
You probably already searched online if you should choose an ERP or MRP system. There are hundreds of blog articles explaining the differences. And hundreds IT companies telling why you should choose their product.
So, we’ll start by explaining the differences between each system. Then, we’ll tell you why the best manufacturing system is Odoo.
- MRP and ERP
Their names may be similar, but what they do is different. ERP (Enterprise Resource Planning) and MRP (Material Requirement Planning) systems complement each other.
MRP was created in the 1970s for manufacturing businesses.
It helped companies to be more accurate calculating required materials, quantities, and at what time they’re needed.
The manufacturing industry became more demanding
As the manufacturing industry grew, so did the complexity of operations.
Later, a system that had a broader reach was needed. That’s how ERP came to be. A software capable of managing accounting, HR, marketing, CRM and more.
But, ERP didn’t replace MRP. today you can buy MRP software on its own. This a common practice among smaller manufacturers who don’t need a full ERP system.
- What’s MRP software
MRP allows manufacturing businesses to be accurate when ordering materials. What they need, how much and when they need it.
MRP II is a more recent version of it. It includes scheduling, detailed capacity planning, shop floor control and other calculations. Businesses cananalyse performance to get better efficiency or compare forecasts with actual data.
- What’s ERP software
ERP is a business management software. Companies can collect, store and manage data across departments in the company. The various applications manage sales, manufacturing, HR or inventory. It centralises all your data and businesses processes. ERP systems improve the flow of information in your company.
When installed, every department can access it. They can update and share information with other departments. You can analyse performance, profitability or liquidity when you want.
- The differences between MRP and ERP
ERP has a wider range. MRP is more specific.
ERP handles all business needs. Automates and integrates various systems in an organisation . It covers CRM, finances, quoting, scheduling, sales and a lot more. ERPs will help to define business processes and ensure they’re followed in the supply chain.
MRP has one job. You can’t access your accounting information or HR.
But you have control over manufacturing processes without a full-scale integration.
This system makes sure you have what you need available when you need it.
MRP is a simpler system. It doesn't have capabilities that aren't needed in smaller businesses.
Most ERPs have MRP capabilities. Some choose MRP over ERP because they don’t need all those features. Note that there are industry-specific ERPs as well. They have the general business apps and more specific apps to handle particular needs.
ERPs have a lot of users. It’s accessed by accountants, marketing managers, and salespeople. But, MRPs are used by people directly related to the manufacturing process. A warehouse manager or a production planning specialist, for example.
There are advantages and disadvantages to each software. Every company has their own goals and issues. You have to consider your business goals and issues when looking at what software will help you.
- ERP advantages and disadvantages
Cover most business needs
Only one vendor
Can scale with business
Manufacturing apps might lack important features for some industrial niches
Difficult and costly tocustomise
Might be too much for smaller businesses
- MRP advantages and disadvantages
More likely to meet industry-specific requirements
Better functionality for manufacturing processes
Customisationcan be cheaper
Can have integration problems with other business apps
An ERP might still be needed
Niche manufacturers will need an advanced MRP software or an ERP tailored for their business. Other manufacturers can just havean MRP system or an ERP that can handle their needs.
- Which system should I use
The answer depends on your business, processes, budget...There are a lot of factors you need to consider.
But there are some general rules you can follow.
If you have a large business, you should opt for ERP. It allows you to have more control over your whole business.
All your business data is in one place and consolidates your business processes.
Larger manufacturing companies need to be in control of all aspects of their business. Not just manufacturing.
If you’re a smaller manufacturer, you may want an MRP system. You’ll have more control over the manufacturing process. An MRP is cheaper and doesn’t come with capabilities you don’t need. But, as your business grows so will your needs. Later integrations might be expensive and time-consuming.