M4E #71: MRP vs MRP II vs ERP
More than a year ago (time flies!) we talked about Materials Requirement Planning (MRP) in M4E #29. In the Insights section we briefly presented the concepts of MRP II and ERP, but now it’s the time to know about the differences between the three concepts. Check it out in this video by Dr. Haywood!
Time for Insights
The primary functionality of Material Requirements Planning (MRP) revolves around ensuring efficient inventory management and production planning. MRP aims to maintain the minimum required stock by calculating and managing raw material needs based on the master production schedule (MPS). It strives to guarantee the availability of necessary raw materials for production processes while also orchestrating the timely completion of finished goods to meet delivery deadlines. In essence, MRP plays a crucial role in planning manufacturing activities, delivery schedules, and purchasing activities, streamlining the production process and optimizing the supply chain to enhance overall operational efficiency.
Building upon the capabilities of MRP I, MRP II incorporates material requirements planning, Bill of Materials (BOM), inventory management, capacity planning, Master Production Schedule (MPS), purchasing management, and customer order management. However, its expanded scope includes additional elements such as general accounting, quality management, demand estimations, machine capacity scheduling, and cost accounting. MRP II is designed to provide comprehensive supply chain visibility and strengthen relationships with suppliers.
ERP serves as an extended and integrated solution that incorporates all core business functions and processes. In addition to managing production, inventory, finances, and accounting, ERP expands its scope to cover sales, Customer Relationship Management (CRM), Human Resources (HR), and more. ERP functions as an integrated suite of business management tools, offering a real-time and centralized view of every department within an organization.