Why an MRP might not fit your business – start with ERP

What is an MRP system?

MRP stands for material requirements planning, it is a planning software system designed to help businesses understand their inventory requirements and assist with balancing supply and demand. MRP systems are often used in the manufacturing sector for materials handling and stock allocation. A MRP systems speed up the process of manufacturing production by allocating what raw materials, components and subassemblies are required to complete a job. The system works by helping the user to understand what’s needed, how much is needed and when this is needed by. These types of systems are particularly helpful in ensuring stock levels are always accurate. It ensures a decrease in over ordering, minimises disruption in the product cycle and ensures delays due to insufficient raw materials.

However, an MRP system does have fail points when integrated into a large business as it needs connecting with a more advanced system while connects the business from end-to-end.

For manufacturers seeking the best possible solution for their operations, implementing a Materials Resource Planning (MRP) system seems like a great fit on paper. But, drilling down into the nuts and bolts, or bread and butter, of your manufacturing business, it may not be the solution you’d hoped for.

The best MRP system

Depending on the size and demand of you business will dictate whether an MRP system will fulfill your needs or if something more advanced is required. Many businesses around the globe run efficiently and successfully with the assistance of an MRP system. For others, a more advanced software solution is required.

If you’re wanting to know more about your business management software options, and whether an ERP or an MRP system would be the best fit for your requirements, get in touch with our team of experts at OrderWise today.

With over 30 years of delivering solutions and guidance to manufacturers, all while consistently investing in the latest software developments year on year, we’re an experienced and provider proven to support businesses long term on their journey to success.

Issues with MRP systems

MRP does not offer an end-to-end solution

Stand-alone MRP systems thrive for controlling capacity planning for your manufacturing processes, without a doubt. Working at peak effectiveness, an MRP will complete complex calculations, working out the maximum number of finished goods that can be manufactured from your available resources, breaking components and minimising wastage. However, many in the industry consider them to be somewhat of a one-trick pony for this ability.

This is perfect if your manufacturing business has a very large volume of highly complex builds taking place each day, but it shouldn’t be approached as a solution that can manage all of your operations under one system. Moreover, many manufacturers actually don’t require this level of capacity planning until their operations reach a much larger stage further down the line.

What is important to note, is that manufacturers solely operating from MRP systems can often come undone when it comes to communicating with the wider business. With no links to your other departments, you can be at risk of putting all your eggs in one basket – placing all your investment into a specific area of your business and leaving other areas unaccounted for across your business.

You haven’t covered your data inputting

Instead of feeding accurate, real-time data from your sales or accounts team directly into your MRP or manufacturing processes, your team will be stuck manually inputting this information. Resultantly, this approach will consume a much larger amount of their valuable time and expertise on a job that could be automated. Worse still, your business is left wide open to errors and delays that can quickly rack up costs across your operations.

 “If one or two inputs are inaccurate, errors can be magnified at later stages. Data integrity and data management are thus essential to effective use of MRP systems.” TechTarget

Accurate data inputting is essential for an MRP to produce the results your business needs, so the majority of manufacturers will require additional means to ensure seamless data transfer. The pivotal point here is that there is no way within a stand-alone MRP to ensure you can achieve precise inputting. You will always be left open to mounting errors. To side-step this potential issue, many MRP users rapidly find that further software investment is needed to bridge the gap.

Without proper consideration here, it can often result in a patchwork set of solutions that will ultimately fray at the edges of your business operations. No matter how advanced your MRP system, if the quality of the information being fed in is flawed and error-prone, the outcomes will undoubtedly be tainted by these weak links across your stages of operations.

There’s a lack of stock control

While an MRP system is designed to ensure you’re stocked for your BOM capacity calculations, what it doesn’t do is take your fluctuating demands for goods into account. Without monitoring seasonal shifts and trends or ongoing fluctuations in raw material costs, your business could end up over or understocking products, and buying goods at a time where purchasing could hit your cash flow the hardest.

Moreover, MRP systems fall short in terms of finer details of shifts in lead times that could affect your works order planning and production scheduling, ramping up costs and causing blockages and missed opportunities.

A lack of efficient picking methods becomes one of the main blockers for production, reducing your fulfilment levels as MRP’s don’t account for route mapping, employee specialisms, or even basic warehouse layout optimisation based on popularly grouped products or industry compliance standards. Plus without monitoring changes in lead times and delays in the supply chain, or recognising industry purchasing trends, the rigidity of an MRP system becomes its downfall.  What’s often needed is extra support from the likes of an end-to-end ERP system, with reporting features, warehouse management and KPI dashboards, to ensure your business can stay informed about the wider impacts of stock and purchasing management.

With the stock requirements for each manufacturing business so varied, it also helps that many ERP systems for manufacturing come with highly flexible and customisable options, so you can truly make it work across your business from end-to-end.

It’s more expensive

Though no quality software investment can be considered cheap, an MRP system is noticeably on the pricier side of business management technology. If your manufacturing operations have reached a threshold where an MRP is essential, then it makes sense to drop the sizeable investment. However, many manufacturers don’t actually require such an expense for their size or complexity of operations. Locking in your cash flow now on such a large investment that you may not need for some time can hold back your business unnecessarily. This affects your business two-fold, especially when you realise the difficulties of implementing a stand-alone MRP system that requires so many extra plug-ins to ensure your business can achieve the fulfilment you’d hoped to reach.

Consequently, many businesses see an ERP system as the best solution as you evolve.

Ensuring your business processes can cohesively operate first and foremost brings your efficiency up a level across the board. Then, when your business then evolves further down the line, not only will your ERP system adapt to stay in step with your needs, but can also integrate with an MRP system if you decide you need to make that extra investment in the future.

Chat to our team today or, in the meantime, you can see all our latest news, articles and updates via our socials!