What Is the Difference Between ERP and MRP?

According to Investopedia, an Enterprise Resource Planning (ERP) management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance and human resources. In contrast, a Manufacturing Resource Planning (MRP) is a system designed to centralize, integrate and process information for effective decision making in scheduling, design engineering, inventory management and cost control in manufacturing.

MRP was developed in the 1970s as a mechanism for manufacturing companies to calculate more precisely what materials they required, at what time and in what optimum quantities. MRP II is a more recent version of MRP and includes detailed capacity planning, scheduling, shop floor control and other calculations. MRP II gives companies the ability to compare forecasts with actual data and analyze performance and improve processes to achieve better efficiency.

According to Caliach, ERP developed MRP II even further to embrace all business functions, not just those concerned with actual manufacturing. Since its creation, ERP has become an important part in a business's decision making process. An ERP System automates and integrates core business processes such as taking customer orders, scheduling operations and keeping inventory records and financial data. In addition, ERPs also assist in defining business processes and ensuring they are complied with throughout the supply chain.