Materials requirements planning software can help companies create products more efficiently, but the software has evolved over time. Company leaders deciding which software to purchase should understand the differences between materials requirements planning and manufacturing resource planning software.
Material requirements planning (MRP) is an early example of industrial computer software. Originally developed in the 1970s, MRP software evolved into manufacturing resource planning (MRP II). MRP II provides a look at all a company's manufacturing resources, potentially leading to more accurate planning and greater productivity. MRP II has also evolved, becoming a key part of many ERP systems.
Here's a deeper look at MRP vs. MRP II and how this software has changed.
What is MRP?
MRP gives insight into the exact amount of materials, components and parts that manufacturers need to create products. MRP is an early version of an inventory management system, which ensures stock is available for manufacture or sale.
MRP systems provide critical information to manufacturers as they are assembling products, including the following data:
- The number of products that need to be manufactured based on customer demand.
- The types of materials needed to create each product.
- The quantity of each component.
- The time when the materials are needed in the production line.
These requirements are compared against several areas, including the following:
- Bill of materials, which lists every part and component required to build a product.
- On-hand inventory, which lists what materials are in stock and available.
- Outputs from a master production schedule system, which provide information on manufacturing requirements.
This comparison enables the MRP software to establish if there are enough materials in stock to manufacture products. If a shortfall exists, MRP integrates with an order management system to create orders for any missing components.
It's important to note that MRP focuses solely on the inventory and materials required to manufacture products based on actual or forecasted customer demand. This focus is in contrast to MRP II, which provides greater insight into all manufacturing resources, such as production line capacity or workforce capabilities.
MRP software was a precursor to the more advanced approach of MRP II. Some manufacturers may still use older MRP software today because of the cost or inconvenience of upgrading to MRP II or ERP software.
What is MRP II?
MRP II advances the inventory management foundations introduced by MRP and is an upgraded version of that approach.
In addition to inventory, MRP II takes into account additional requirements, including the following:
- Manufacturing workforce availability.
- Manufacturing capacity of the production line, including individual machines and the overall production line.
- Production rate of each production line.
- How quickly a product can be manufactured.
- Repair and maintenance schedules.
MRP II software was developed in the 1980s. Each organization can usually add capabilities according to their needs, including the following:
- Automation of common manufacturing processes and business tasks.
- Advanced sales analysis, forecasting and demand management.
- Reporting on every aspect of the manufacturing process.
- HR and workforce requirements and capacity.
Most MRP software that's available today is MRP II software. MRP II has also evolved further into the commonly used ERP software. In many cases, companies may use MRP II tools as part of a more comprehensive ERP software suite.
The following functionalities may be part of MRP II software or ERP:
- End-to-end cost control, financial planning and profitability calculations.
- Integrated purchasing and order management.
The differences between MRP and MRP II
Many differences exist between MRP and MRP II software, as MRP II is effectively an upgrade of the old MRP system.
MRP II gives companies much greater control over their scheduling, forecasting, budgeting and production processes. Direct contrasts between MRP and MRP II include the following:
- Resources. MRP lists only materials requirements, while MRP II lists all needed resources, including equipment and workforce.
- Scope. MRP focuses solely on the manufacturing area of the organization, while MRP II looks at the company as a whole.
- Optimization. MRP focuses on improving material scheduling and production, while MRP II can help boost productivity across all manufacturing operations.
- Configuration. MRP has limited customization capabilities, while MRP II enables users to add on features as required.