This article will take an in-depth look at manufacturing ERP and MRP software.
The article will bring more detail on topics such as:
This section will explore the definitions and functionalities of ERP and MRP software, how they operate, and the key factors to consider when choosing these software solutions.
ERP stands for Enterprise Resource Planning. It integrates all critical business operations into a unified database, facilitating a connected and streamlined business environment. Manufacturing ERP specifically refers to ERP systems designed to plan, oversee, and support various functions and activities within manufacturing enterprises.
These systems specifically offer features that automate the distinct processes within manufacturing businesses. They also integrate various manufacturing functions with essential business processes, centralizing and streamlining all operations.
A typical ERP system is a broad solution with features applicable across different business components. Often, such systems are designed to be universal, which can result in missing critical functionalities necessary for businesses focused on manufacturing or needing comprehensive manufacturing integration.
Without adequate integration, businesses might face limited data insights, highlighting the importance of customizing software to fit specific manufacturing needs. A manufacturing-specific ERP system provides advanced features tailored to industry requirements, connecting core business operations with production processes and giving companies complete visibility and control over their manufacturing activities.
Material Requirements Planning (MRP) is a technique for resource planning and inventory control. In manufacturing, MRP systems gather data from customer demand and the bill of materials for a specific product, using this information to develop purchasing plans and basic production schedules. MRP is widely used for production planning and scheduling in various companies.
MRP's function is to ensure material availability by tracking supply and demand, which helps automatically generate procurement proposals for purchasing or producing items. The core objective of MRP is to determine the necessary materials, their quantities, and the required timelines, focusing on tangible resources.
Manufacturing Resource Planning (MRP II) extends the capabilities of MRP by managing an entire manufacturing organization. This advanced approach facilitates cross-departmental interactions and provides valuable information across all functional areas. It integrates or automates processes related to manufacturing, aiming to improve overall output.
MRP II enhances capabilities for supply chain management, order fulfillment, sales support, and marketing insights. It serves as a comprehensive tool for coordinating resources across marketing, finance, and human resources departments, allowing for alignment and planning from the early stages of project development.
ERP and MRP systems collaborate to enhance business processes. Within an ERP framework, MRP acts as a component that supplies data on resources and materials. This data is then integrated by the ERP system to provide insights for various business departments.
The finance team can leverage the information provided by the MRP system through the ERP to calculate accounts receivable and manufacturing costs, which helps in setting appropriate product pricing. While MRP focuses specifically on material requirements, ERP encompasses a broader perspective on overall business operations. Both technologies have significantly influenced the industrial sector by improving productivity, efficiency, and reducing production times.
The key difference between ERP and MRP lies in their focus: MRP systems are centered on managing materials, whereas ERP systems support the planning and automation of a range of back-office functions. ERP impacts areas such as accounting, production, supply chain management, customer relations, quality control, procedural management, and strategic planning.
MRP’s specialization in materials management means its procurement and planning functions are narrower in scope. Consequently, users of MRP systems typically have a manufacturing-related role, whereas ERP software is utilized across various departments within an organization.
A manufacturing ERP software system helps an organization effectively plan, budget, forecast, and report on its financial health and operational activities. ERP solutions provide a comprehensive, integrated business platform, enabling real-time visibility across all departments and managing various aspects of the business within a single software application.
Below are some of the key components of an ERP system:
For an MRP system to effectively enhance manufacturing operations, accurate data input is crucial. Errors or inaccuracies in data entry can lead to flawed planning and ordering processes.
Implementing ERP or MRP systems can be a complex, costly, and time-intensive process. Choosing new manufacturing ERP and MRP platforms is a significant investment with a potentially long lifecycle, often exceeding that of production equipment. To reap benefits like increased efficiency and enhanced customer service, careful selection and balance of these systems are essential. Opting for the wrong system could result in costly consequences. Here are some key factors to consider when selecting manufacturing ERP and MRP platforms.
The first step in choosing manufacturing software is to identify and document the specific issues the new system should address. The organization should prepare detailed materials that describe its operations, including high-level data maps, process flows, and product specifications, before making any decisions.
Additionally, companies must gather information about their organization’s size, the volume of its operations and transactions, business processes, specific needs, and the strengths and weaknesses of the current system. If the primary goal is to enhance manufacturing processes and manage material requirements, an MRP system may suffice. However, for a broader scope that includes linking, automating, and improving functions beyond manufacturing—such as accounting and human resources—ERP software will be necessary.
MRP systems, with their narrower focus, are generally more cost-effective. To justify the investment in an ERP system, it is crucial to evaluate what benefits it can offer to the company and how it will affect the bottom line and growth. Many businesses find that an ERP system can significantly enhance productivity and efficiency, ultimately paying for itself over time. However, ERP systems are typically a long-term budget consideration, often operating for ten years or more and requiring ongoing maintenance for both the system and its infrastructure. Decisions made now will influence future budgetary allocations.
An often-overlooked aspect of the decision-making process is the potential need for future upgrades. Will the chosen solution require an upgrade within a couple of years? This consideration includes both the hardware necessary to support the software and the software itself used to develop the ERP and MRP systems. Continuous advancements and innovations must also be anticipated and factored into the decision.
Additionally, any third-party products required for the ERP solution might also need updating, which can increase the overall cost. It’s important to consider the future plans for the software’s latest version and whether it is built using a commercially-supported development language that the vendor continues to update and support.
The availability of skilled professionals to maintain the system in the future is another factor that can impact costs. Avoid investing in a system that may become outdated quickly. Instead, choose an ERP provider with a proven track record of staying current with technological advancements and a commitment to ongoing support.
For a business experiencing rapid growth, leveraging automation and maintaining standardized, efficient operations becomes crucial for success. An ERP system is typically essential to achieve this. However, if the business is expected to remain stable without significant changes, an MRP solution might suffice.
Modern ERP systems are based on data collected from numerous clients, meaning that a perfect ERP solution typically doesn't require customization. However, if customization is needed, it should be a key consideration in your selection process, as no ERP or MRP software is likely to be a perfect fit out of the box. Understand the level of customization required and whether it aligns with your workforce's needs.
Customization becomes important if your business has unique aspects compared to others. Evaluate how easy, effective, and cost-efficient it is to customize the ERP systems. Consider how the selected software will manage these modifications.
Assess whether you can use business objects or other validation methods to ensure compatibility with other ERP components. Can changes be made without adversely affecting other parts of the ERP system?
Examples of manufacturing ERP and MRP systems available in the industry include:
abas ERP offers solutions tailored for small to medium-sized manufacturers and distributors. Their primary products include abas ERP, abas Distribution, and abas eB, a suite of web-based e-business solutions.
Customers can browse products, request quotes, place orders, and view their quotes and orders in real time through a customizable customer portal. Vendors have access to a vendor portal where they can view and process purchase orders and requests, as well as track shipping and delivery details. The portal can be customized and integrated with the abas Workflow Editor to manage and control supplier transactions and modifications.
The AccelGrid suite includes fully integrated modules for sales, CRM, inventory, accounting, purchasing, and more. It provides a unified platform that helps businesses minimize data re-entry and enhance accuracy by consolidating all operations.
AccelGrid’s web-based solution is highly customizable to adapt to various business processes and workflows. It is designed to be user-friendly and compatible with multiple devices, and it is typically hosted in the cloud.
For distribution companies, AccelGrid offers robust inventory and order management features that support multiple warehouses and complex bin locations. The system provides comprehensive inventory traceability through serial and batch numbers. With seamless integration across accounting, CRM, and purchasing modules, distribution firms can manage all their operations from a single platform. Additionally, a mobile app for Android™ devices allows sales representatives to work offline for tasks such as invoicing, returns, payment collection, and inventory management. Support is available via online knowledge bases, email, and live chat.
Acumatica is a cloud-based manufacturing ERP software widely used by companies, including General Motors. Acumatica offers various flexible editions suitable for businesses of all sizes. Their software supports a range of functions such as project accounting, financial management, business intelligence, inventory management, and order management. Many manufacturing companies will find Acumatica’s features for manufacturing management, inventory control, order processing, and financials highly beneficial.
Epicor Kinetic is designed to support a wide range of business models, product mixes, and production processes, making it ideal for mixed-mode manufacturing. It offers comprehensive manufacturing capabilities across various industries. However, its native features may not be fully suited for highly regulated or complex manufacturing environments.
ERPAG is a cloud-based enterprise resource planning (ERP) service tailored for small and medium-sized businesses across various industries, such as retail, education, IT, and automotive. Key features include inventory management, sales management, manufacturing management, and financial management.
With ERPAG, users can manage various business operations, including sales, ordering, receiving, and delivery. Additional functionalities include payroll, service management, shipping logistics, user access management, point of sale, and barcode scanning.
ERPAG integrates with a wide array of services, such as Google Calendar, Gmail, Google Drive, Microsoft, Magento, QuickBooks, WooCommerce, Shopify, Square, Stripe, and others. It supports global logistics with over 40 carriers, including UPS, FedEx, and USPS.
Infor Syteline offers a comprehensive suite of features, including field service management, product lifecycle management, project management, financial management, advanced scheduling and planning, as well as quality management and control. Additional benefits include customizable sites, user-role-based interfaces, rapid innovation, optimized purchasing, warranty tracking, and built-in analytics. While deploying Infor Syteline may take up to 16 weeks, this is typical for larger organizations. Infor also provides exceptional customer service with 24/7 support.
Katana Manufacturing ERP provides real-time visibility into various aspects of your business, including sales, inventory, and other operations. Featuring a visual user interface and an intelligent real-time master planner, Katana integrates seamlessly with your existing services, simplifying inventory and manufacturing management.
Real-time master planning – Katana helps maintain optimal inventory levels by automatically tracking stock movements throughout the manufacturing process and across multiple warehouses. For make-to-order processes, you can create Bills of Materials (BOMs) and product recipes to manage materials, monitor availability, and fulfill orders using existing stock.
Full traceability and real-time inventory management – Katana allows you to set order priorities and monitor the supply of raw materials and finished goods instantly. It ensures complete traceability from production to post-sale with features like batch and lot tracking. Easily identify and track goods and materials during receiving, consumption, and counting.
Total control over the shop floor – With Katana's Shop Floor App, gain real-time manufacturing insights. Monitor manufacturing costs based on product recipes and production procedures, and manage shop floor employees with ease, including creating, setting up, and removing personnel.
ECI M1 is an ERP system available both as a cloud-based solution and an on-premises subscription. It automates key business functions, including financial management, inventory control, production, sales/quoting, and production planning. It is particularly beneficial for small to medium-sized businesses engaged in repetitive, make-to-stock, make-to-order, and engineer-to-order manufacturing processes.
The M1 product configurator offers a multi-level, automated setup that generates product configurations from a Bill of Materials (BOM), incorporating all sub-assemblies. After completing the initial setup with the wizard, users can further customize with additional formulas and rules.
The system also supports inventory barcoding, shop floor control, and configurable reporting through its integration with Crystal Reports.
The Manu Online ERP system is notable for its focus on automating business processes, which significantly reduces administrative tasks and enhances the speed and accuracy of customer deliveries. It offers a cloud-based ERP solution tailored for industrial use. Most of their clients range from 5 to 150 employees and have annual revenues between £0.5 million and €25 million (or equivalent in other currencies). Manu Online is particularly suited for manufacturing and cloud-based business process automation, aiming to reduce inventory levels, boost company throughput, increase profits, and improve customer satisfaction.
This software offers a broad array of features applicable both within and beyond the manufacturing sector, with ongoing improvements and enhancements to manufacturing operations. Microsoft Dynamics 365 is often well-suited for larger and more diverse organizations due to its extensive capabilities across various processes, extending beyond just manufacturing. For example, Toyota Industries utilizes Microsoft Dynamics 365 for their ERP needs.
MRPeasy provides manufacturing software tailored for small manufacturers. Its suite includes modules for production planning, CRM, supply chain management, procurement, and inventory control. The software features a drag-and-drop scheduler to help project managers allocate resources effectively for various tasks. The procurement module streamlines purchasing processes by organizing buy cycles and purchase orders.
MRPeasy also integrates order management and billing tools with features for lean manufacturing, serial number tracking, and production control. The CRM functionality gives users access to comprehensive customer data, including account purchases and history. Managers receive regular updates on sales KPIs, market trends, and detailed sales reports from the CRM module.
For industries such as aerospace and military, MRPeasy provides shop floor reporting, manpower utilization, and equipment load monitoring. The system aligns production routing with the engineering bill of materials and supports third-party integrations through APIs, including compatibility with Xero and QuickBooks.
Odoo offers a comprehensive suite of apps, available for a fee, covering a wide range of functions such as point-of-sale, help desks, timesheets, website creation, inventory management, email marketing, and more. Its open-source nature allows for extensive customization and integration, though leveraging its full potential often requires a dedicated software development team. Odoo’s ERP system can incorporate features such as lead management, supply chain management, quoting, accounting, CRM, and inventory control.
Oracle Cloud ERP is a versatile manufacturing system that supports various manufacturing models. However, its design is tailored for large enterprises, which can make its setup and data management processes overwhelming for smaller businesses. While larger organizations with complex information architectures may benefit from its capabilities, smaller businesses might achieve greater efficiency with more streamlined solutions. For instance, Starbucks utilizes Oracle Cloud ERP.
Pilot ERP offers an integrated enterprise resource planning (ERP) solution tailored for small and medium-sized manufacturers and distributors, with options for both on-premises and cloud deployments. Its collaborative features help businesses manage various functions, including sales, customer interactions, production, job costing, inventory, and accounts.
With Pilot ERP, businesses can monitor inventory in real time and continuously track stock levels. The purchasing module allows firms to exchange purchase orders with vendors based on their quotes and receive raw material quotations from multiple suppliers.
Pilot ERP integrates with major shippers such as UPS, FedEx, DHL, and USPS. Its accounting module covers essential functions including accounts receivable, accounts payable, banking, general ledger, and financial statements.
Pilot ERP is available through a monthly subscription, with an option for a one-time perpetual license. Support is provided via phone, email, and online tutorials.
SAP's range of ERP packages allows users to manage all their business operations—including accounting, sales, production, HR, and finance—within a unified environment. Each module's data is stored in a centralized database. This close integration and shared data repository ensure seamless information flow between SAP ERP components, eliminating the need for redundant data entry and facilitating financial, procedural, and legal controls.
The SAP ERP Central Component (SAP ECC) is the most widely implemented SAP system, typically used by medium to large enterprises. It is an on-premises ERP solution featuring functional modules such as project systems, human capital management, production planning, materials management, and sales and distribution. Amazon is an example of a company that utilizes SAP ERP.
QAD is a prominent ERP solution tailored for large and advanced manufacturing companies, including those in the chemical and automotive industries. Known for its robust cloud capabilities, QAD has been leveraging cloud technology for over a decade. One of its most appealing features is its flexibility in software setup, allowing for extensive customization. This versatility enables users to modify and recode the software’s modules to meet specific needs, providing a level of personalization that many find highly attractive.
ERP consultants or specialists are responsible for managing and implementing enterprise resource planning (ERP) systems for both large organizations and small-to-medium-sized businesses. Their role involves assisting with resource planning to ensure that the business's software operates as efficiently as possible.
Large enterprises and organizations must carefully plan their daily operations to manage tasks effectively. To streamline these processes and allow more focus on critical activities, businesses often need a solution for efficient planning and task management. ERP systems are ideal for this purpose. ERP consultants aid organizations by implementing and customizing ERP software to meet their specific needs.
This chapter will cover the implementation and consultancy aspects of ERP and MRP systems.
The steps involved in the ERP/MRP implementation, as can be done by ERP consultants, are:
This includes doing system research and selection, assembling a project team, and outlining specific system requirements. The team is formed to help with system design and configuration. The team may also hire a third-party consultant or ERP implementation partner. As the firm establishes a clear understanding of its requirements, the team may choose and purchase an ERP system during this phase.
Choosing whether an ERP system that runs on-premises or in the cloud is a significant decision. In the company's data center, they would purchase and install hardware and software for an on-premises system. Contrarily, cloud-based ERP is typically offered as a subscription service accessed online, making it easier to adopt and requiring less internal IT expertise.
One may determine which processes one wants to preserve, which ones to automate, and which ones to carry out manually by using this stage to identify troubled areas, find process inefficiencies, and, then, make their decisions. In order to reengineer corporate processes into new standard operating procedures one must first study and assess current operations. Next, a flowchart for the new procedures needs to be created. One also needs to maintain an aggressive yet flexible schedule, and keep a constant eye on the project's development.
The development step can begin once there are definite design specifications in hand. Supporting the updated procedures requires setting and, when necessary, modifying the software. Creating integration with any existing business systems that the organization uses but that the ERP system won't replace is another option. The company must set up the necessary procedures and software if it employs an on-premises ERP system.
Testing and development can happen simultaneously. The project team might, for instance, evaluate specific modules and features, make adjustments or modifications in light of the results, and then retest. While one ERP module is still being built, another could be evaluated. After thoroughly testing each element of the software, the core features of the software should first be tested by allowing some employees to utilize it for all of their daily tasks. End-user orientation instruction should be included at this step as well.
This process' final and busiest step is also one of the most crucial. Companies must be sure to block off time for this stage. They should make a list of the tasks that must be performed before going live. Hardware synchronization, financial and accounting reporting, email client synchronization with ERP/MRP, ensuring proper data migration, and auto-backup procedures are a few things to include on this list. Next, they should test the system using both static and moving data. Finally, these companies need to step back and assess their entire implementation strategy.
After deployment, it's important to maintain the ERP implementation to make sure users are satisfied and the company reaps the expected benefits. The project team may still be in control of the ERP system throughout this period, but its priority will now be on putting together user feedback and making any necessary adjustments to the software. With the addition of new features to the system, further development and configuration may be required. Additionally, the system will require training for new employees. If the ERP system is on-premises, one will need to deploy software updates regularly, and possibly upgrade their hardware as well. If they are utilizing a cloud-based ERP system, their vendor might update the program automatically.
An ERP consultant's primary role involves selecting, implementing, training, and supporting an ERP solution tailored to a company's specific needs, considering both its management style and core business functions. The consultant provides clear and concise recommendations on choosing the right software, selecting appropriate modules, and maximizing the value of the investment.
The consultant is responsible for accurately mapping workflows and customizing the solution to ensure seamless integration at the point of use. They must ensure that all aspects of the implementation are addressed, regardless of who identified the requirements or evaluated the capabilities. Additionally, the consultant must proactively address potential pitfalls associated with the execution of the ERP system.
Consultants help businesses navigate the complex and often confusing process of selecting an ERP software system from numerous options. After thoroughly assessing the organization's needs and conducting extensive research, they recommend a shortlist of top candidates. Once a selection is made, the ERP implementation engineer begins the installation process. This may also involve identifying and securing essential dependencies for the ERP system, such as hardware, network, and database infrastructure.
ERP implementation consultants leverage their expertise to establish connections between internal and external data sources and the ERP software system. This includes managing the data import process, which is crucial for ensuring the new system's effectiveness. Collaborating closely with internal teams, consultants verify and validate the data to ensure it meets configuration, conversion, and transmission requirements. This meticulous approach is essential for ensuring the usability and accuracy of the new system.
User education and process development are critical components in ensuring the successful adoption of a new ERP system, and are managed by ERP implementation consultants. Their training programs may include departmental workshops, instructional videos, and webinars. Additionally, consultants focus on process development, creating user manuals and guidelines to help regular users navigate the system, address common issues, and enhance productivity by effectively leveraging the system’s features.
ERP implementation consultants manage the cutover phase of the installation process, where the software is fully deployed and used by all staff. They ensure that all system components function as expected and address any issues that arise. Consultants collaborate with businesses to monitor the system as end users begin working with it. They also support the follow-through phase, which involves addressing any system or user-related challenges. This includes ongoing user training and support, as well as validating and verifying that the system operates correctly.
This chapter will explore the advantages and uses of manufacturing ERP and MRP software.
ERP solutions are beneficial for any company or organization, including mid-sized and small businesses, that needs to streamline and manage time-consuming daily tasks from a single platform.
In the healthcare sector, ERP/MRP software can be utilized to schedule tests and procedures, improving patient care. By integrating patient identification with medical records management, it helps streamline healthcare operations. Additionally, ERP/MRP systems assist healthcare organizations in maintaining electronic records efficiently.
In the manufacturing sector, MRP is employed for data analysis, inventory management, and tracking. ERP systems enable the monitoring of vendor performance and utilize data from both internal and external sources to enhance the supply chain. Additionally, ERP systems can be used to schedule maintenance effectively.
Performance monitoring of each piece of equipment allows for timely preemptive maintenance. ERP/MRP systems assist with quality control by gathering and analyzing large volumes of data over time. Beyond industrial processes, ERP can also be utilized for HR functions, such as performance reviews.
The energy and utility industry faces several challenges that need addressing. Managing work orders can be difficult with multiple channels and departments, highlighting the need for a comprehensive, unified module. Billing, whether processed physically or digitally, must be efficiently managed. Additionally, the asset management features of an ERP system help minimize human error.
Managing outages is one of the most challenging tasks in the energy and utility sector. An ERP solution aids in geographically-based asset management by handling and tracking tickets related to reported outages. Implementing an ERP software suite also helps in managing and monitoring fuel consumption and supply, which can reduce costs and enhance electricity production.
ERP systems can optimize operations throughout the entire process, from manufacturing to delivery. Manufacturers can use ERP software to manage inventories, track raw materials, and plan packaging effectively. In the pharmaceutical industry, ERP enhances product quality by monitoring every stage, from development through to dispensing. Given the critical nature of this sector, meticulous oversight of each production step is essential to ensure safety and efficacy.
Non-profit organizations can significantly benefit from ERP solutions. These systems help maintain organizational cohesion and efficiency by managing administrative tasks, financial systems, and personnel—whether they are staff or volunteers—across different regions and cultures if necessary.
Implementing a modern, integrated manufacturing ERP and MRP system offers substantial operational and financial benefits. Here are some of the key advantages that ERP systems provide for manufacturers:
While manufacturing ERP and MRP software systems offer significant benefits, they also come with certain drawbacks, including:
Making the decision to deploy an MRP or ERP is a significant step, so you’ll want to be sure you're following the proper route. An ERP system is the perfect choice if you're searching for extensive support for your whole supply chain. By enabling information exchange throughout your organization with such a program, you'll be able to get a comprehensive picture of how each department is performing.
Although manufacturing is a key component of many businesses, they still require assistance in handling the daily administrative duties that take place outside of the warehouse floor. ERP may provide the comprehensive solution required by business executives who require manufacturing controls as well as automation for their finance, sales, and marketing responsibilities.
You may optimize your production schedule using an MRP system to work as effectively as possible.
Your current inventory levels are directly correlated with each order your business receives. In order to guarantee that the proper goods are created and delivered on time, the system can then determine the precise amount of time needed for each production stage.
You can forecast upcoming availability and consumer demand with the aid of an MRP system. This level of agility is essential for a business to survive in the modern world.
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