{"id":3695,"date":"2019-05-30T18:03:38","date_gmt":"2019-05-30T22:03:38","guid":{"rendered":"https:\/\/blogs.solidworks.com\/delmiaworks\/mrp-erp-difference\/"},"modified":"2019-05-30T18:03:38","modified_gmt":"2019-05-30T22:03:38","slug":"mrp-erp-difference","status":"publish","type":"post","link":"https:\/\/blogs.solidworks.com\/delmiaworks\/mrp-erp-difference\/","title":{"rendered":"MRP vs ERP – What’s the Difference?"},"content":{"rendered":"\n\n\n

The progression manufacturers are making from MRP to ERP has its basis in how diversified their product lines have become in response to customers’ need for more versatile, configurable and customizable products. Many manufacturers got their start producing the same product using components they sourced locally or made themselves. Customers weren\u2019t given the option of customizing products. Doubling down on manufacturing efficiency, the core process areas of Bills of Materials (BOM), Inventory Tracking and Master Production Scheduling dominated global manufacturing. Automating these three areas became the foundation of Material Requirements Planning (MRP).<\/p>\n\n\n\n

Global\ncompetition became fierce fast, forcing manufacturers to rely on price and\navailability to win more sales. Offering more customized products and\ncapitalizing on the ideas customers had for new, configurable products helped\nmanufacturers escape price wars and becoming a commodity. More feature-rich\nproducts that often needed services also required a new production system, and\nManufacturing Resource Planning (MRPII) was born. Gartner defines closed-loop MRP<\/a> as\na system built around MRP that also includes production planning, master\nproduction schedule, and capacity requirements planning. Once the planning\nphase is complete, and the plans have been accepted as realistic and\nattainable, the execution functions come into play. These include the shop\nfloor control functions of input\/output measurement, detailed scheduling and\ndispatching, as well as anticipated delay reports from both the shop and\nvendors, purchasing follow-up and control, and other functions<\/em>.<\/p>\n\n\n\n

MRP II was\nperfect for the expanding world of manufacturing that had become heavily\ndependent on suppliers. It\u2019s common to find 60% or more of a given new\nproducts\u2019 components are from suppliers and production partners outside the\ncompany. For Engineer-to-Order manufacturers, it\u2019s close to 75% or more.\nProducts are becoming complex exceptionally fast, with a typical new car having over 100 million lines of\ncode according to the MIT Technology Review<\/a>, not counting future Amazon Alexa integration.<\/p>\n\n\n\n

To stay\ncompetitive products have to be managed over their lifecycles, not just month\nto month to meet production targets. The financial implications of changing\nproduction mix need to be predicted first and factored for customer demand, and\nsupplier quality levels and inventories checked for availability. Every area of\na manufacturing business needs to stay coordinated with production costs,\ndirection, forecasts, and plans. Enterprise Resource Planning Systems (ERP) was\ndesigned specifically for this need and continue to expand to meet\nmanufacturers\u2019 requirements today.<\/p>\n\n\n\n

Comparing The Benefits of MRP, MRPII, And\nERP <\/strong><\/p>\n\n\n\n

Designed for an era when mass production dominated manufacturing, MRP systems are designed to make factories as efficient was possible on their own. The greater the product complexity, the more integrated manufacturing needed to be across an entire business, leading to MRP II. The proliferation of new products, greater intensity of global competition, shorter time-to-market, and need for greater cost control and visibility led to ERP platforms being created.  The following compares the benefits of MRP, MRP II, and ERP:<\/p>\n\n\n\n

\"MRP<\/figure>\n\n\n\n

What Motivates Manufacturers To Change from MRP to ERP <\/strong><\/p>\n\n\n\n

It\u2019s common for manufacturers to begin operations relying on Microsoft Excel for production scheduling and Intuit QuickBooks for their financials and it’s the same with how many progress from MRP to ERP. The more they become reliant on outside distributors and suppliers, the more the added advantages of ERP motivate them to migrate from MRP. Having two different systems that aren\u2019t in sync with each other quickly leads to problems including higher than industry average scrap rates, missed customer shipments, limited visibility & control of manufacturing costs and more. Eldon James is an example of a leading plastics manufacturer who chose to migrate away from Microsoft Excel and QuickBooks to an IQMS EnterpriseIQ ERP software system. Here\u2019s what they were able to accomplish:<\/p>\n\n\n\n