MRP,MRPII and ERP

MRP stands for material requirements planning and deals with bringing in the right amount of raw material at the right time to support production. MRPII stands for manufacturing resource planning and builds on MRP by adding shop floor production planning and tracking tools. A third-generation system available at time of publication is called ERP, or enterprise resource planning, which integrates all departments of the business, not just manufacturing and purchasing.

MRP

Material Requirements Planning, or MRP, was developed in the 1970s to help manufacturing companies better manage their procurement of material to support manufacturing operations. MRP systems translate the master production schedule into component- and raw material-level demand by splitting the top level assembly into the individual parts and quantities called for on the bill of materials, which reports to that assembly, and directs the purchasing group when to buy them based on the component lead time which is loaded in the MRP system.

MRPII

Manufacturing Resource Planning, or MRPII, goes several steps beyond MRP. While MRP stopped at the receiving dock, MRPII incorporates the value stream all the way through the manufacturing facility to the shipping dock where the product is packaged and sent to the end customer. That value stream includes production planning, machine capacity scheduling, demand forecasting and analysis modules, and quality tracking tools. MRPII also has tools for tracking employee attendance, labor contribution and productivity.

ERP

A discussion of MRP and MRPII would be incomplete without mentioning Enterprise Resource Planning. ERP is the next evolution of the MRP system. While MRP helped companies plan material purchases, and MRPII added in-plant scheduling and production controls, ERP attempts to integrate the information flow from all departments within a company: finance, marketing, production, shipping, even human resources. While some argue that ERP does not deliver on its promise, according to an article on CIO.com, a properly set up ERP system allows better communication and monitoring than ever before, giving all departments access to the exact status of a customer order at any point in time.

Warnings

MRP, MRPII, and ERP are iterations of the same type of system: A software program that aims to help businesses better manage their costs, control inventory, meet customer delivery expectations, and track and improve their internal processes. However, according to an article by the Business Performance Improvement Consultancy, most implementations of any of the three systems fail to achieve the desired results. This is based primarily on a lack of proper training and understanding on the part of the business managers and the IT managers. A business manager with insufficient IT understanding may set the system up incorrectly, while an IT manager who does not understand the business needs may simply automate the current process flow without improving it. If you are contemplating implementing any of these systems, it is critical to make sure that business management and IT management are on the same page and that proper training has been invested in.