Material Requirements Planning (MRP): Why Choose a Unified ERP System?

Material requirements planning (MRP) software, also known as material resource planning, was first developed in the 1960s when computers began to become an integral and widespread part of the manufacturing sector.

What is an MRP system?

Material requirements planning is defined as “a production planning, scheduling, and inventory control system used to manage manufacturing processes”. An MRP system also helps integrate information to plan manufacturing, purchasing and delivering activities. (1)

Originally designed to manage cost reporting and materials in the manufacturing process, Material Requirements Planning software added significant functionality throughout the ensuing decades, particularly more sophisticated planning capabilities (e.g., scheduling, capacity, sales and operations) that ushered in the next generation of the manufacturing software, called MRP II.

The three principal functions of MRP software are:

Ensure Material Availability

MRP makes sure that goods and materials are where they need to be when they need to be there; that the correct materials are available for production; and that products are available to customers when they need them.

Drive Down and Control Waste

Material requirements planning reduces waste by optimizing inventory, maintaining the lowest possible material and product levels in stock for efficient manufacturing.

Automate the Scheduling and Planning Processes

MRP systems are a major contributor to the planning and scheduling of manufacturing, purchasing, and logistics functions.

ERP Systems and Material Requirements Planning

MRP systems were the precursors of enterprise resource planning (ERP) systems that first developed in the 1990s to extend the capabilities of material requirements planning beyond manufacturing to all enterprise activities.

Put most simply, ERP is comprehensive business management software that enables coordination and control of every part of the business.

MRP, ERP, or Unified Manufacturing ERP?

Historically, manufacturers often thought in terms of using an MRP or ERP system; MRP was specialized manufacturing software, while traditional ERP did manufacturing (albeit perhaps not at the granular level of MRP) but also all other elements of the enterprise, and particularly those related to finance.

Sometimes the decision was couched in terms of size (a larger manufacturer may have need of the broader and more powerful ERP functionality than a smaller one); sometimes in terms of focus (the company’s need was for a solution focused solely on manufacturing). Often, cost was the overriding factor (ERP solutions were typically much more expensive and difficult to implement than MRP solutions).

The Benefits of a Unified MRP and ERP Solution

Benefits of taking this unified approach to MRP and ERP include:

• Reduced inventory through driving down WIP, with fewer or no shortages. Lower capital costs.
• Better customer service through timely product delivery— higher levels of customer satisfaction
• Enhanced manufacturing production and performance: the power of native manufacturing functionality within the enterprise scope of ERP. Optimizing use of manufacturing resources.
• Elimination of the need for costly and complicated third-party integration to add functionality
• Lower cost-of-ownership
• A single, unified system supporting greater data integrity and less complexity, with simpler operation and maintenance
• Fast ROI

How to Choose a Unified MRP/ERP System

Closely consider the following when selecting an ERP system for your manufacturing enterprise.

#1. Know thyself

Understand your market and your position in the market. What are your specific needs in an ERP solution? Why are you making this decision? What are the expectations for ERP across the company? Have you involved a cross section of personnel and departments in determining these factors? Do you have executive endorsement?

#2. Pedigree of the vendor

How well does the software provider know the manufacturing sector? Was this solution built for manufacturing or was the manufacturing functionality bolted on to a solution whose foundation is elsewhere? Does the vendor have manufacturing customers?

Ask for referrals. Talk to them. Find out their experience with the vendor and vendor’s product. How long have they been with the vendor?

#3. Do a technology check

Check to see how the vendor is keeping up with technology. Are they focused on research and development for future applications, or are they centered on technology that will soon be outdated? While the decision may be imminent, don’t forget to think long term.

If certain features are not in the ERP/MRP package, but functionality specific to those features is offered, is the vendor willing to put it in writing?

#4. Focus on forecasting.

Without accurate forecasting, you won’t be able to accurately plan materials according to demand. A unified MRP/ERP solution ensures that the information MRP needs to plan for and produce product Is accurate and up-to-date.

Consider your production configuration. If you run multiple floors or shifts that produce different product, this must be taken into consideration as you assess potential solutions. The functionality of the unified MRP/ERP software must be able to cope with complex production scheduling.

#5. Participate in the demonstration.

Demand to see the product in action, and be attentive when observing it. Knowing what to look for during a product demonstration provides the clearest picture of what you’re seeing. The system itself is not the only thing on display; so too is the vendor. Consider whether questions are answered clearly and concisely.

Be persistent when gathering desired information (e.g., who writes, develops and supports each system component; are modules interoperable, easy to manage, and cost effective; what functionality is included; and how might the system best support specific objectives?).

#6. Time is money.

Discuss implementation time in detail: When provided with an estimate for the number of days to complete an implementation, ask how that number was determined. When vetting a reference, ask whether the vendor met their implementation schedule. If not, how much longer did it take to complete and why did it take longer than expected?

Strive to be objective throughout the assessment process. If you are employing consultants to help in the decision, make sure they are unbiased and have no affiliation or axe to grind with any particular software provider. Be diligent, and you will get your due.

IQMS Manufacturing ERP

Solving the classic MRP vs ERP dilemma that many manufacturers face, IQMS Manufacturing ERP stands in contrast to those ERP solutions that were built on financials and then added manufacturing functionality to that foundation. Born on the shop floor, IQMS Manufacturing ERP is tailored specifically for the manufacturing environment, integrating into full-featured ERP/MRP systems.

The MRP functions within the IQMS Manufacturing ERP system accurately and effectively manage all resources and requirements necessary to meet manufacturing demand and maintain lean inventory levels. Not only does it manage requirements for manufactured items and sub-assembly processes internally, it also oversees requirements planning for production at alternate locations and through third-party vendors.

The unified structure of IQMS Manufacturing ERP software allows the MRP system to span the entire supply chain to quickly and accurately match availability with demand. The fully incorporated system takes into account all aspects of the manufacturing process, including material requirements planning, labor capacity planning, auxiliary equipment planning, machine and work center capacity planning, and rough cut capacity planning.

This solution offers the largest footprint of ERP, MRP, MES, and Supply Chain software modules in the industry developed by a single software company. Comprehensive and specific to a company’s manufacturing industry, IQMS Manufacturing ERP continues to be developed based on an innovative, focused vision: a single database that eliminates the costly third-party integration so often required to add specific manufacturing functionality to traditional ERP solutions.

To learn more about how IQMS provides strong choices to fit the needs and interests of manufacturers everywhere, click www.iqms.com.