Pre-requisite – Evolution of ERP System
1. Material Requirements Planning (MRP) :
Developed in 1970s, raw material whenever required by any organization is managed i.e, which materials are required by company gets stored in a database. Also, it tells about shortage of any material. Material Requirement Planning is widely used approach for production planning and scheduling in industry.
Function of MRP is to provide material availability i.e, it is used to produce the requirement quantities on time. This process involves monitoring of stocks and demand, leading to automatic creation of procurement proposals for purchasing or production. Main objective of MRP is to determine which material is required, quantity required and by when it is required. It is Factor material inventory and emphasis on physical assests.
2. Manufacturing Resource Planning (MRP II) :
Developed in 1980s, Manufacturing Resource Planning is an expansion of closed loop MRP for managing an entire manufacturing company. This system provides an information that is useful to all functional areas and encourages cross-functional interactions. In this, tasks which comes under manufacturing unit is automated or co-related so that the production at the end should be increased.
It supports sales and marketing by providing and orders promising capability. It is a broad-based resource co-ordination system involving other areas of a firm in the planning processes, such as marketing, finance and HR.
Difference between MRP and MRP II :
|Stands for Material Requirements Planning.||Stands for Manufacturing Resource Planning.|
|Developed in 1970s.||Developed in 1980s.|
|Widely used approach for production planning and scheduling in industry.||Provides an information that is useful to all functional areas and encourages cross-functional interactions.|
|Aims at releasing and managing manufacturing orders and purchasing requisitions.||Aims to control relevant material flows and production capacity while also taking into account the relationship between these material flows and the required capacity.|
|MRP is simply about ensuring the materials which are available to manufacture a specific part in a specific volume.||It take care of all other aspects of a job including ordering, tracking inventory and ensuring capacity.|
|It takes inputs all in order to make sure you have the right amount of materials/labor/machinery on hand at any given time to satisfy the market or your company production goals.||MRP II uses additional data from accounting records and sales for further analysis and forecasting of manufacturing requirements.|