What is an MRP system?

An MRP system (or Manufacturing Resource Planning system) is used by manufacturers for the purpose of integrating business data within a single system. This data can be used for activities such as production planning, inventory planning, raw material purchase scheduling, and a range of other useful and important purposes.

The majority of MRP systems are software-based, though there are some instances where this is not the case, for instance, some smaller manufacturers may still use a pen and paper to plan their manufacturing planning.

What are MRP I and MRP II? ( a brief history)

MRP I (or Material Requirements Planning system)  was developed in the 1960-1970s as a form of integrated IT (Information Technology) system that was designed to enhance business productivity through the use of computers and software technology.

The very first MRP systems used in manufacturing were used to extract information from a bill of materials for a particular completed product that would subsequently be used to develop a purchasing plan and elementary production scheduling.

Manufacturing Resource Planning (or MRP II) is an evolved version of the original MRP I system. MRP II provides manufacturers with the ability to develop detailed schedules for production, with access to real-time data for the purpose of coordinating such resources as labor force availability, the delivery of component materials, and more.

MRP II is somewhat two-fold in that it can be used entirely by itself, or as a module within a comprehensive ERP (Enterprise Resource Planning) system. It is also important to note that with the addition of a CRM and an accounting module, an MRP system becomes a form of ERP system.

What is ERP?

ERP (Enterprise Resource Planning) predominantly refers to software that is used for integrated management of core business processes, to streamline processes in order to make them more efficient and to standardize business processes so that they are more effective.

Therefore, it could be said that ERP is mostly a form of software for business management. ERP allows manufacturing firms to keep track of main business processes, make better managerial decisions, together with achieving enhanced functioning within the business.

The key aspects of an ERP system include order handling, which factors in how many disparate aspects there are within an individual order, and organizes order placement according to the entire manufacturing process, taking into account order quantity, stock inventory details, varying distribution channels, and accounting matters amongst other things.

Elsewhere, ERP systems also include integrated financial management resources, enabling manufacturing firms to integrate their sales, overall finances, and more. For example, an ERP accounting module allows a firm to access all of its finances within one place, and then subsequently make changes with ease.

Moreover, ERP systems can also improve the effectiveness and efficiency of a manufacturing firm through the standardization of HR particulars, enabling business owners and employees alike to utilize self-service interfaces that help them to manage personal data, track costs, enable time-tracking, and much more.

Finally, the very best Manufacturing ERP systems enable firms to manage various manufacturing types, to control and manage the flow of client information, and to regularly communicate with clients through the use of highly-efficient CRM systems (Customer Relationship Management).

In addition, they help companies to achieve standardization within their manufacturing processes, they facilitate analysis and tracking for purchases in an organized and streamlined way, and they provide support to processes through reporting, planning, and scheduling, which allows businesses to save valuable time and increase overall productivity in their day-to-day operations.