Tuesday, May 12, 2015

The relationship between MRP (Materials Requirement Planning) and ERP (Enterprise Resource Planning)


Material requirements planning (MRP) is a computer-based information system that translates the finished product requirements of the master schedule into time-phased requirements for sub assemblies, component parts, and raw materials, working backward from the due date using lead times and other information to determine when and how much to order.
MRP is designed to answer three questions including what is needed? How much is needed? And when is it needed? Whereas, enterprise resource planning (ERP) represent an expanded effort to integrate standardized record keeping that will permit information sharing among different area of an organization in order to manage the system more effectively (William J. Stevenson, 2014). As a matter of fact, these two notions are also quite relevant and related to each other in many different ways and aspect but in this paper we will point out three fundamental relationships between MRP and ERP.

Firstly, majority of ERP applications also contain MRP capabilities built in that include materials management, shop floor management, bills of materials, quoting, and work orders (Ledford, 2014). Additionally, in construction a materials planner might use both ERP and MRP to determine the right amount of concrete, drywall, or other building materials, which might be needed to complete the construction project (Bliss, 2014). Likewise, MRP and ERP systems are spectacularly run on the proposition together. So small shops may have only a single-user system or a small network, whereas larger organizations may have networks with workstations in every part of the facility. Both MRP and ERP systems increased an organization's information visibility and availability.

Secondly, MRP is a part of enterprise resource planning (ERP) as it may cover the period of time when a product is ready to be made; the raw materials will be identified and obtained. Once production steps are planned, resources will be identified. Apparently, ERP and MRP are quite closely related in the world of business since data and scheduling resources located within an enterprise resource planning (ERP) are often used to ease materials requirements planning. Particularly, MRP also processes significantly by engaging with the planning use of materials necessary for manufacturing business products, hence a materials requirement planning is also a common function consist within an ERP. For any growing business enterprises, it is crucial to have a trustful and user-friendly ERP system, which combine with a real and actual MRP module. By all means, ERP and MRP would be able to organize, schedule or even reschedule materials as far in the near future (Material Requirement Planning (MRP), 2010). Equally important, MRP and ERP software also has the same focus, which highly concentrate on increasing efficiencies for the course of a job and ERP takes a wider and longer view, over all jobs from end to end (Adesoba, 2015).

Lastly, ERP and MRP could provide user with an instant picture of projected inventory investment levels plus projected new purchases following with an expected plan. This provides a clearer value-added dimension for directing the plan, which focus on the most remarkable areas of the investment. As a result, this also helps to prove and verify a plan financially and smooth adjustments before committing your cash. On the other hand, ERP and MRP also have a similar purpose, which aim to give information that will allow the company to have enough inventories on hand to fulfill demand, which is available only when needed at a quality level that meets requirement, and at the lowest price. Indeed, ERP and MRP module can contribute to the basic needs of keeping inventory levels low and satisfying customer expectations for on time delivery (Material Requirement Planning (MRP), 2010). Yet, ERP and MRP could assists user in getting material on hand when needed for production or sales.

    On the other aspects, we also assume that MRP and ERP are quite relevant to each other and function similarly or differently depend upon different industries. So MRP typically is used in manufacturing companies, while ERP can apply to any companies.
-For business processes: ERP and manufacturing resource planning could apply to all business processes in a company, which may include manufacturing, planning, finance, order management, inventory, distribution and purchasing. Meanwhile, material requirements planning usually refer to the material planning processes in a manufacturing company.
-For technology: ERP might contain supporting technology including networks, databases and hardware. Normally, it is often viewed as a backbone system that supports other systems or technology. While, material requirements planning usually concentrate on business process-enabling software.
-For project scope: Implementations that involve ERP are broader in scope and give larger impact on processes and people than MRP. Whereas, material requirements planning is often pointed out as a module within either manufacturing resource planning or ERP.


-For complementary technology: Product life cycle management (PLM), customer relationship management (CRM), enterprise asset management (EAM) and supply chain management (SCM) can be viewed or seen as additional software outside the scope of ERP and MRP (Turek, 1993-2015).
























Bibliography

William J. Stevenson, S. C. (2014). Operations Management. MeGraw-Hill Education.
Ledford, J. (2014, July 10). Material Requirements Planning: What's the Difference Between MRP and ERP? Retrieved from it.toolbox.com: http://it.toolbox.com/blogs/inside-erp/material-requirements-planning-whats-the-difference-between-mrp-and-erp-62059
Bliss, H. (2014, December 30). What Is the Difference Between ERP and MRP? Retrieved from wisegeek.com: http://www.wisegeek.com/what-is-the-difference-between-erp-and-mrp.htm
Adesoba, V. (2015, January 14). Compare Manufacturing Resource Planning (MRP) Software. Retrieved from softwareadvice.com: http://www.softwareadvice.com/manufacturing/mrp-software-comparison/
Material Requirement Planning (MRP). (2010). Retrieved from eresourceerp.com: http://www.eresourceerp.com/Material-Requirement-Planning.html
Turek, B. (1993-2015). Difference Between ERP & MRP. Retrieved from ehow.com: http://www.ehow.com/facts_6739090_difference-between-erp-mrp.html

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