What Are The Differences Between MRP I, MRP II & ERP?
Anyone involved in the world of manufacturing is aware of the many acronyms used within the industry. Over the past couple of months, readers of our blog have been introduced to such acronyms as IPC, WHMA, JIT and 5S. It is our sincere hope that you are not just able to infer what those initials stand for, but also comprehend their significance to the manufacturing world.
You won’t likely be surprised to know that there are
several more acronyms headed your way! And, as the title of this week’s blog
has given away, you’ll now be introduced to MRP I, MRP II and ERP. Firstly,
let’s break down these acronyms. MRP I stands for Material Requirements
Planning. MRP II refers to Manufacturing Resource Planning. ERP is Enterprise
Resource Planning. But what does that all mean and what are the differences
between each?
MRP
I first came into prominence in the 1970s.
It is a business software designed to improve
accuracy and efficiency in basic processes like production scheduling and
inventory management. Its primary objective was to precisely calculate for
manufacturing companies the materials needed, the times they were needed and
the ideal quantities of the materials.
In today’s world of manufacturing, MRP I is
considered limiting as it only offers basic material requirements planning. For
the most part, MRP II is considered the official replacement of MRP I given
that it provides added functionality.
By
the time the 1980s rolled around, MRP II was being utilized.
It helped manufacturers with other important facets of their companies. These included scheduling, payroll, shop floor control, invoicing and detailed capacity planning. As explained by VIENNA Advantage, MRP II gave companies the ability to compare forecasts with actual data and analyze performance and improve processes to achieve better efficiency.
Enter
the 1990s and ERP is conceived.
Coined by research and advisory company, Gartner, ERP is a software that combines allthe benefits of MRP II with added applications for a variety of other operations. They include Financial Management, HR & Payroll management and Customer Relationship Management among others. Today, MRP II and ERP are generally used in conjunction as opposed to having ERP serve as a replacement for MRP II.
ERP solutions are typically used by organizations 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,” informs VIENNA Advantage.
ERP
makes core business processes run smoothly.
It covers all aspects of CRM – yet another acronym.
Standing for Customer Relationship Management, CRM uses data analysis about a
company’s customer histories to improve business relationships with customers,
specifically focusing on customer retention and driving sales.
Pritam Tamang of SoftwareAdvice.com considers ERP to be essential for large manufacturers. “Larger manufacturers typically have a lot of moving parts within their organizations,” he writes, “Thus, they can greatly benefit from a fully integrated system that not only provides deep visibility into manufacturing processes, but also supports important aspects of running a business.”
For more information about how Flux Connectivity has utilized MRP I, MRP II and ERP, please don’t hesitate to give us a call at 1-800-557-FLUX or email us at connect@fluxconnectivity.com.
