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Do you know the Benefits of MRP Planning with ERP?

It can be hard to imagine that the first attempts to automatize the process of manufacturing date back to 1930s. That is when the manufacturers of different goods started to realize that even those simple computers, which they had at their disposal, could improve their work.

Nowadays every big company understands the importance of the efficient collecting and utilizing the data. Even more so, they are aware how crucial it is to monitor the levels of supplies in the warehouses. All of this is possible thanks to introducing the ERP software, especially the MRP systems. If you don't know yet what that is, this article is just for you.

MRP Planning

ERP - to control everything

ERP stands for three words: Enterprise Resource Planning. It's this kind of software that allows to unite the data scattered around all the departments in the company. Thanks to ERP systems, there is no need to visit each department separately in order to retrieve the needed information allowing companies that are spread out across the country or world to come closer than ever, just a few features include:

- Monitor finances (often with a focus on orders and sales)
- Control human resources (scheduling training and working shifts, organizing payrolls)
- Manage contacts with customers (organizing meetings and tasks of the customer service)
- Manage production and warehousing (analyzing level of supplies and planning the production of the goods)

It is safe to say that an ERP system allows the insight into every action taken within the company. It organizes data and makes it easy to analyze it without a troublesome search.

ERP FM Screenshot

MRP - to control production

Meanwhile, the MRP planning is something different. In a way it's a simplified version of ERP. The acronym stands for Material Requirement Planning and in opposition to ERP, it doesn't deal with other information, such as this regarding payrolls or customer service. Only the information regarding production and supplies is part of MRP. Anything that isn't connected to orders of materials or planning the production, doesn't belong to an MRP software.

To put it simply: MRP helps to plan the production and keep in check the levels of supplies and according to the logistics and warehousing theories, the ideal solution is to store only minimal levels of supplies as it helps to reduce the costs allowing an MRP planning system to gather detailed information.

The two primary tasks of MRP

1. Planning the production and monitoring the level of supplies, this is the main reasons for which this kind of software is a vital part of very ERP with it being deployed safely making the planning of the production with use of MRP is possible and effective thanks to what is called a back scheduling which leads us into point two.

2. Back planning - The system analyzes what components are needed to produce a certain item on a given date. Then, it shows what basic materials are needed to construct the components and when they should be constructed so the production is not late. It can be illustrated with the following example.

The product A must be ready on the 30th June. It's made of components B and C. It takes two weeks to produce it so the production process should start on the 16th of June.

The component B is made of basic materials E and D. It takes one week to make them. In order for them to be ready for 16th of June, its crafting process must begin on 9th of June. All the needed materials must be in the magazines on this date.

MRP ERP Software Screenshot

This way, an MRP system calculates how much time it will take from delivering the basic materials to constructing the final product on the demanded day. In the same time, the levels of supplies within the company are monitored according to all the production processes that are happening.

With this type of software it is designed to calculate the general balance and warn when the materials required are lacking. To do so, an MRP planning takes into consideration the production process using the resources, the deliveries, orders and materials already in the warehouses, helping to estimate the final balance in the end of the month after all operations done on it.

ERP or MRP?

The choice between MRP and ERP isn't about which helps to plan the production better. Again: MRP is a vital part of ERP and it's impossible to imagine the latter without the former. The reason why some companies choose to implement only separate MRP software is because they don't need the other functions of ERP. The choice is solely up to the company and its way to maximize the profits.
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