In the storied history of supply chain management, manufacturers reached a point where physical spreadsheets and paper trails couldn’t keep up with the resources and inventory needed for production. Thus, MRP (Material Requirements Planning) software was created for corporations and manufacturers to wrangle their materials, capacity, and production-related processes — and would eventually expand into software solutions for industries beyond manufacturing as ERP software.
Here in the present, an enormous question looms: ERP versus MRP — which do you need?
If MRPs came about first, what makes an ERP different? More importantly, you may have heard that ERPs can integrate MRPs — it all can seem a bit confusing. We’ll start by breaking down what each system does, discuss how they’re different, and then highlight some key features of each.
An Enterprise Resource Planning (ERP) system is a piece of software that offers a robust suite of tools for managing HR, finance, inventory, supply chains, sales, and more. This enables greater insight into all aspects of your business, while giving you increased control over your workflows, processes, and automations.
With a headless ERP — an ERP that leverages API integration to allow its users to add functionality as they grow — the way that your business grows and evolves is almost unlimited.
A Material Requirements Planning (MRP) system is a specialized technology solution for businesses operating in the manufacturing industry. It’s a must-have solution for tracking your Bill of Materials (BOM), scheduling production, and managing your supply chain.
It’s an important tool for many companies, but it features a much more rigid use case that won’t enable scalable growth if your business operates outside the manufacturing industry. However, if your company has a unique business model that requires the tools of both an ERP and an MRP, MRPs are often an included module within ERP software solutions.
Both MRPs and ERPs exist to streamline your business operations. MRPs accomplish this by specifically supporting manufacturing processes, such as inventory management and tracking BOMs. ERPs offer a wider suite of functionality that touches much more of your business — such as finance, sales, HR, inventory management, and CRM (customer relationship management).
The two systems often work in conjunction with each other, and having a composable ERP system means you could integrate an MRP if the need arose. However, some companies won’t need all the features an ERP offers. In these cases, an MRP may be what they need to maintain steady growth.
Of course, knowing which system integration would benefit the growth of your business may not be so clear! Let’s break down the key distinctions of ERPs and MRPs to help you figure out which would fit your business best:
| Key ERP Distinctions | Key MRP Distinctions |
|---|---|
| Point of sale (POS) integration | Inventory management and BOM tracking |
| Human resources management | Supply chain optimization |
| Financial management and order processing | Production management |
| Tasking automation | Purchase planning |
Based on the key features list, and understanding the differences between an ERP and an MRP, we can better understand which system may be right for your business:
If your business has multiple points of sale or storefronts, is steadily gaining employees, and desires a fully integrated tech stack, a headless ERP is likely the right tool for you to grow your business.
If your business primarily deals in bulk materials, has a complex supply chain process, and/or operates in the automotive, aerospace, healthcare, or electronics industry, an MRP is likely the right tool to maintain your business.
Having a headless ERP solution is the key to the growth of your business. Not only can a composable ERP integrate API-powered MRP solutions, but it can also support the evolution and growth of the other parts of your business.
For many businesses, an MRP may be an integral technology solution, which is why headless ERPs can provide you with an MRP solution that is sized perfectly for your business. Likewise — if you have an MRP that fits your needs — a headless ERP can build around it to provide you with the additional features you may need to continue scaling your business.
If you’re considering integrating an ERP into your business, here are some of the benefits you could experience.
Headless ERP solutions enable your business to do what it does best while allowing you to strike out and try something new. If you see an opportunity within your industry — or even a new market — you can easily design the processes and integrate the tools necessary to jump on it. Considering the future of tech solutions are API-enabled, integrating them into your existing tech stack should be no problem, thanks to the scalable design of headless ERPs.
Unlike legacy ERPs, you won’t be locked into processes that become inefficient over time, or find that your growth is constrained. Instead, a headless ERP remains flexible and grows with your business. And you’ll be able to integrate the MRP modules you need as your business thrives.
Learn more about the impact of scalability on your business.
To properly track inventory, there’s a lot of data that needs to be crunched. Which items moved through your point of sale this week? Did any items get returned? Were this month’s orders on time? Do we have overstock?
With most businesses using several different technology solutions to keep track of those disparate streams of data, it can be extremely difficult to discern how much inventory you have, with any reasonable speed.
This is where a headless ERP can make all the difference. By integrating the APIs for your different inventory-related tech solutions, you can get the data you need all in one place.
Learn more about how an ERP can improve your inventory operations.
As AI-powered ERP modules continue to improve and become more powerful, there are huge opportunities for them to shape the future of your business. From analyzing bulk data to drafting reports and giving projections based on your customer behaviors — there’s a ton of built-in functionality you can take advantage of.
With a tool like real-time data processing, you won’t have to wait for your team or another automated tool to make sense of the numbers and get you a report. Instead, with real-time data processing, your data analysts can be working on the tasks that really matter.
Additionally, AI can help optimize workflows and improve your automation to increase overall efficiency and reduce redundancies.
Learn more about how AI could shape the future of your business.
One of the most important things to consider when choosing an ERP is scalability. Modern ERP solutions have moved toward composability, because the nature of business has become a global, online ecosystem. It’s more important than ever to have an ERP that is designed to maximize your growth potential.
Once your business has scaled enough to need an ERP, there’s a high likelihood that your people utilize a variety of different tech solutions to support daily functions. With a headless ERP, your API-enabled accounting, HR, inventory management, and CRM software can all continue to be used in your business — meaning less time spent learning new workflows.
The key way that a headless ERP enables scalability comes from the ability to integrate new tech solutions, without having to routinely update the ERP to handle it. Legacy ERP solutions often require custom code rewrites as new functionality is added, meaning massive up-front costs, and long development times.
By enhancing your business with a headless ERP, you get all the benefits of having an ERP—without the financial headaches associated with legacy products. By cutting down on recurring maintenance costs, productivity drain, and repetitive tasking, your teams can spend more time doing growth-oriented work.
The process of transitioning from an MRP to ERP can feel overwhelming; your business will be gaining many new features and integrating new technology solutions. By understanding some of the challenges you might face in the process, you can ensure a smooth and low-friction transition.
Let’s dive into some frequently asked questions about this process:
Q: Am I limiting my business by transitioning to an ERP?
A: No, composable ERPs remove limits and bottlenecks in your business! You can maintain the most important parts of your technology stack. Every application your business relies on that is API-enabled will plug into a headless ERP’s user interface — bringing your most important data into one place.
Additionally, headless ERPs are built for scale. As your business evolves and grows, you can integrate any new technology solutions that will give you a leg up in your industry.
Q: How do I convert my MRP automation to work with an ERP?
A: This largely depends on your MRP system. If it’s a new MRP system, it may have an API. If it does, this API can be connected to a headless ERP solution and you won’t have to worry about learning new MRP software. If you’re working with a legacy MRP system (something that may not have an API), there is third-party software you can utilize to make the transition easier.
If third-party solutions won’t work for your particular MRP system, you will need to spend time breaking down your automation processes and prepare to rebuild them in your new ERP solution.
Q: What changes can I expect an ERP to make to my business?
A: You can expect that it will give you more options while streamlining older processes your teams have developed. It’s important to make sure you and your teams identify which processes will need to be adjusted and clarify them. If you’re using a headless ERP, your API-powered technology stack will be accessible in one place and you won’t have to worry about performance issues.
Q: How do I make the most of an ERP if I’m used to only using an MRP?
A: An ERP comes with many solutions that touch the major parts of your business, including automation, human resources, financials, and inventory management. As your business grows, having a way to manage these parts of your business is essential — and making the most of your ERP means having clear processes set up and key personnel to make use of the tools at your disposal.
Q: What can I do to help my team feel the benefits of the transition?
A: One of the pitfalls of integrating an ERP is ensuring that your people working with the ERP interface understand how to optimize their workflows with it. This may require clear and concise training for their particular use cases, and a willingness to let familiar processes be improved. This is largely achieved through positive communication cycles and allowing some time for users to feel confident using the new ERP interface — selecting a user-friendly and intuitive ERP makes all the difference for adoption.
Whether you choose an ERP or an MRP for your business, these are some of the areas we think it’s important to consider when making the decision.
Customer service is important from both a business-to-business (B2B) and business-to-consumer (B2C) standpoint, but the needs of both of these customer service sectors are drastically different. With B2C, customers may have questions about how a product works, care directions, ingredient information, or even initiate a refund process. On the B2B side of the spectrum, customized and detailed communications are frequently necessary.
If you’re operating a business with a storefront, or specializes in retail, an AI-powered ERP solution may be right for you. You can deploy AI as the first point of contact with your customers, delivering answers to frequently asked questions, or giving them access to information about their product — without needing a customer service representative to get involved.
If you’re a B2B business working with retailers, your customers often have complex requirements like advanced or recurring orders, tiered pricing, or partial shipments. In this case, you want to ensure you have a robust customer service team with access to information that a high-quality MRP provides.
The automation solutions provided by both ERPs and MRPs are drastically different. One can tackle repeatable tasks across your entire business, while the other can create automated flows to manage your supply chain.
ERP solutions afford your business the ability to reduce repetitive tasking, ensuring that your people are able to spend more time on their high-priority work. Automation workflows can be applied to any integrated technology solutions from accounting, inventory management, HR, CRM, to point-of-sale (POS) and e-commerce.
MRP-related automation can take complex processes and drastically simplify them. If your business relies on orderly, detailed, and smooth supply chain automation, an MRP is the tool for you.
Data is the lifeblood of any business; accurately interpreting that data can make the difference between yearly growth and unprecedented losses.
With an AI-powered ERP, you can get real-time reporting of your data, along with predictive analytics. With less time spent crunching the numbers, and predictions about customer behaviors, you can make well-informed decisions about your next moves.
With an MRP, your data largely reflects information about your production capacity and efficiency, inventory levels, and order processing.
When it comes to the needs of your business, it’s also important to know that if you feel you would benefit from an ERP and an MRP, as long as the MRP solution is API-enabled and your ERP solution is headless, you can leverage the power of both solutions at the same time.
In the debate of ERP versus MRP, the answer comes down to the needs of your business. Integrating one when you need the other could end up being a huge source of strain for your company. After discussing the difference between both solutions, the ways they can benefit your business, and how to transition from an MRP to an ERP — along with digging into the impact a headless, customizable ERP can have — it should be much clearer which solution is right for your business.
Unless your business specializes in the selling or production of raw goods and materials — or the manufacturing of electronics, automobiles, or healthcare devices — a headless ERP solution will likely meet your needs. And even if your business is specialized in materials or manufacturing, an ERP with an MRP module would be a net benefit to your business.
Still unsure about which solution is right for you?
Schedule a demo with Tailor and we’ll dive into your operations to help determine what kind of solution makes sense for your business.
