ROSELYN T.

DORON MAY 22, 2017

FELYN JOY A. AMBRAY
BS-ACCOUNTING TECHNOLOGY III PRODUCTION & OPERATION MANAGEMENT

WHAT IS THE DIFFERENCE BETWEEN MATERIAL REQUIREMENT PLANNING AND

ENTERPRISE RESOURCE PLANNING?

MRP (Material Requirement Planning) is software solution that helps manufacturing

companies calculate more precisely what materials they require, at what time and in what
optimum quantities. MRP II is a more recent version of MRP and includes detailed capacity
planning, scheduling, shop floor control and other calculations. MRP II gives companies the
ability to compare forecasts with actual data and analyze performance and improve processes to
achieve better efficiency.

Enterprise resource planning (ERP) is a category of business-management software

typically a suite of integrated applicationsthat an organization can use to collect, store, manage
and interpret data from various departments of the organization. ERP solution integrates the key
areas of the business like purchases, sales, manufacturing, human resources, services, inventory,
etc., and improves the business processes and flow of information across the organization.
When ERP software is implemented in the organization, all the departments can access updated
and shared information. In addition to this, the entity is also able to analyze the profitability,
performance, and liquidity at any point in time.

Key Differences between ERP and MRP

ERP does it all. MRP is more specific
ERP is full-business software. It automates and integrates all the systems across an
organization that makes core business processes run smoothly. It covers all aspects of customer
relationship management (CRM) from ordering through payments, including the financial side of
the business that the customer never sees. Its responsible for scheduling operations, keeping
inventory records and financial data. In addition, ERPs also assist in defining business processes
and ensuring they are complied with throughout the supply chain.

MRP is more specific software. With MRP, you dont have access to financial functions
or CRM functions. You do, however, have more control over the manufacturing process without
having to attempt the kind of full-scale integration thats required with ERP programs and
applications.

ERP includes MRP module

MRP may be a single module of ERP. Most ERP applications have built in MRP
capabilities that include materials management, shop floor management, bills of materials,
quoting, and work orders. The question is, does your organization need all these capabilities? In
some cases, the answer is no. And that is why some companies choose MRP rather than ERP.

REFLECTION:

The biggest difference between today's MRP and ERP is that MRP systems are often
standalone applications, where ERP is a backbone that supports multiple modules, including
manufacturing. "It evolved to become the backbone of ERP," said Ferguson. "You can still
just buy an MRP system today; it's usually a smaller company that cannot justify a fully
integrated ERP system."

ERP is software thats used to plan the resources of an organization. Those resources
include everything from finances to workforce and materials to processes and information.
MRP is a more specialized type of software. Its used specifically to plan the resources
that are used during the manufacturing process and can include quoting, work orders, bills of
materials, and purchasing or shop floor management.