A Comparison of MRP and ERP Systems for Manufacturers

CPAs & Advisors

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The evolution of business management solutions for manufacturing companies has spawned many product offerings in the market. As solutions become more technologically advanced and robust, it can be challenging to sift through features required to support growth and those that are cosmetic.

To get the most out of any solution, it’s important to understand the types of systems that are available and how they differ.

What is an MRP system?

Manufacturing resource planning (MRP) systems are often standalone applications that operate in a modular organizational structure. Each module keeps track of and regulates specific characteristics and functions for the company, like product design, quality control, shop floor control, and general accounting. MRP II introduced the closed-loop model, which uses a centrally held data file to record, monitor, and report on various company activities.

What is an ERP system?

Enterprise resource planning (ERP) solutions combine the modules monitored in an MRP system and integrate them to support all business functions, not just those relative to manufacturing.

Manufacturing businesses look at ERP systems to support quality product delivery at a low cost. For example, it should support internal collaboration, so product requirements are clearly defined and communicated, with production coordinated with the delivery and product teams.

Benefits of ERP over an MRP system (or older)

According to Sage, ERP adopters are 44% more likely to have visibility into the status of all processes and 75% more likely to have automated notifications for business events. With enhanced visibility, agility, and efficiency, manufacturers implementing an ERP system can see increases in productivity, profitability and on-time delivery.

A good foundation is the best preparation

The state of manufacturing is increasingly moving towards business models that leverage new processes to increase visibility, agility, collaboration, and efficiency.

By working closely with an ERP vendor, manufacturers can identify key opportunities for their enterprise and adopt a solution that can be easily scaled as needed.

Are you interested in ERP? Contact Yeo & Yeo Technology to learn more about our ERP solutions.

Information used in this article was provided by our partners at Sage.

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