What is ERP System and what is MRP System?

What is the difference between ERP and MRP software? What is the relation between MRP and ERP systems? Let us try to understand.

What is ERP System?

ERP Stands for Enterprise Resource Planning. This type of system covers organizational areas, manages them, their related processes and link between them. An ERP software is based on a database for each area (Sales, Purchase, Production, Finance) which maintains relations between the different areas: Products Master Data, Customers Master Data and Suppliers Master Data. This database is used to manage organizational processes; production orders of products, customer orders, and purchase orders. And so when a user enters a sales order:

1. He can select the customer form the customer master data
2. Enter Product from the product master data
3. See if the product is on stock
4. Create a delivery note and an invoice
5. Finance can book the invoice

What is MRP System?

MRP stands for Manufacturing Resource Planning. As it sounds it is a program which uses a methodology to effectively plan all resources for delivering a product to the customer. Normally this program is running
periodically; each 2 minutes, two time a day, or initiated manually, and it uses a method to calculate:

The Requirements –  how much do we need?

• customer orders
• forecasts
• minimum stock levels
• order points

The Procurement – how much we must produce in order to cover our needs?

• How much we have already on stock – the stock situation
• How much is coming in to stock and when – the planned productions and purchase orders
• ow much and when we need to buy – the purchase
• How much and when we need to produce – the production

What is the difference between MRP and ERP?

The difference lays on the scope and the range of the planning.
While MRP deals with planning of the procurement of the product, the ERP deals with planning and managing all organizational processes. Another difference is that an MRP mostly just creates proposals for the user. Something like: “as MRP system I suggest that you to manufacture this on that day and purchase this form this supplier”. With an ERP system the user actually executes actions that create results.

Click here for a short and clear description of how the MPR is calculated!