What is MRP and ERP Systems?

ByShaun Snapp

Executive Summary

  • MRP is a method of supply and production planning, and they frequently work within ERP systems.
  • We cover the relationship between MRP and ERP systems.

Introduction

When MRP systems, which stands for Material Requirements Planning, were first implemented, they were stand-alone systems. But in the 1980s, most of the MRP vendors were purchased by and incorporated into ERP systems. This is typically presented as a positive development due to the benefits of integration. However, a review of MRP-based ERP implementations calls this conclusion into question. In this article, you will learn the real story of how MRP works within ERP.

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How Does MRP Work?

MRP can perform the essential functions of material requirements planning.

  • They can explode the bill of material
  • The connect demand elements to supply elements
  • They perform inventory netting, and so on.

ERP Systems

ERP systems or Enterprise Resource Planning systems are large systems that combine finance, sales, inventory, and production. At this point, most companies in developed countries have ERP systems. ERP systems are mostly clerical, with MRP and DRP (Distribution Requirements Planning – DRP pushes product through the supply chain, while MRP pulls product into the manufacturing company. It is a few of the only planning procedures are used in the ERP system.

MRP and ERP Systems

MRP runs from within an ERP system or from an external supply planning system.

How to Improve the Use of MRP

A company can begin with just one or a few licenses of a specialized MRP system to run MRP and see the results before taking the plunge and implementing the system. This approach has little risk. We estimate that a typical company can get a fast payback on this investment regarding better planning outputs better planner productivity.

External application specialized MRP/DRP provides the following advantages over ERP MRP/DRP:

The Black Box Effect of ERP Based MRP

One reason for this is that the way an MRP ERP system is implemented tends to be a black box.

It is a rare ERP system where much thought has gone into making the MRP ERP system screens usable. By usable, we mean where the system’s output can be reviewed efficiently by planners.

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Conclusion

MRP run from within an ERP system tends to do very little regarding helping a company master MRP. This fact is very rarely covered in articles around MRP run from ERP, which is the predominant way MRP is run today.

However, the following applies to MRP run from within ERP systems.

  • Only a small percentage of companies attempt to implement, and then even fewer successfully implement non-ERP based planning systems.
  • An MRP based ERP systems need to be tuned by external systems even to develop a consistent supply and production plan. This tuning should be performed before a company thinks about migrating to a complex external supply or production planning system to improve the limitations of an MRP-based ERP system.

In response to these issues, we developed a SaaS application that tunes MRP-based ERP systems’ parameters.