ERP stands for Enterprise Resource Planning. An ERP system supports the coordination of resources, information and processes within a company. It consists of a common database that provides interfaces and information to all areas of the company. Depending on the definition, there are two possible interpretations for an MRP system - Material Requirement Planning (MRP) and Manufacturing Resource Planning (MRP System II), which eventually developed into ERP.
These 4 questions related to MRP systems and ERP are a burning issue for many companies. We explain the basics to do with MRP and ERP.
How does an MRP system work?
Material Requirement Planning (MRP system) - is the predecessor of modern ERP systems. The MRP system was developed in the 1970s and focused primarily on the inventory of production components. The purpose of an MRP system is to check which components are needed for complete manufacturing, when to order them, so there is no interruption in production and how many components are in stock.
Many customers eventually called for these systems to be expanded and thus cover other business areas, such as payroll, capacity and scheduling, and supplier management. Material Resource Planning Systems (or MRP System II) have therefore been developed to meet these requirements. As a result of the growing demand for more specific business information, ERP was born. While an MRP system and MRP II focused on the manufacturing sector, modern ERP systems support countless modules. ERP has become a standard application in industry, trade and service.
Which basic functions are mapped in an ERP system?
As opposed an MRP system, an ERP system should map all business processes as far as possible. Instead of isolated solutions, an ERP system with continuous integration ensures company-wide resource management. The flow of communication is improved and collaboration within the company can be made more efficient. Typical functional areas of ERP software are materials management (procurement, warehousing, scheduling), production or production planning and control, finance and accounting, cost accounting, controlling, purchasing / sales and marketing, master data management, product data management and document management.
Which is the best ERP system?
The best ERP system is the one that best suits your company! But which solution that is depends on a variety of factors. In particular, your specific requirements, your industry and your business model. In any case, you should make sure that the software is flexible and future-proof, so that you can also deal with future needs as they crop up. In addition to the functions of the ERP system, the provider or system house should also suit you, because a reliable and trusting cooperation is the key to success.
How can an ERP system improve business processes?
An ERP can increase a company's performance by optimizing resource planning and management and increasing productivity. For example, work flows are used to simplify processes, carefully review employee performance, and evaluate their results. This provides employers with transparent data, allowing them to identify which processes are most productive and which ones need to be optimized. ERP can also offer the customers of its users’ data transparency, providing them with timely insight into data, helping to improve customer relationships.