Get Up to Speed on ERP Software

As a company or company representative reviews manufacturing software options, the choices are ERP software or MRP software. In the term ERP means Enterprise Resource Planning, Enterprise refers to the entire organization. ERP systems are built around ERP software, which is modular in nature. This modularity can be both strength, and a weakness. Some businesses instead may opt for MRP.

MRP software on the other hand, refers to Material Resource Planning and does not focus on the support systems of a business. While an ERP system is built around a central core, which contains data, which is central to the periphery processes, and is shared with those processes, an MRP system is stand alone with interaction with other processes limited to processes required to manage material.

Around the central core of ERP are modules for various enterprise wide processes. These include accounting, customer management, quality, human resources, payroll and others. ERP systems are flexible in that the central core can be integrated with third party modules. In MRP on the other hand, these peripheral processes are either stand-alone software or just managed by the business. We refer to these as peripheral not because
they are lesser importance to the business, but are not central to MRP activities.

The peripheral business processes are important to review since MRP implementation often goes with, or should go with Enterprise restructuring. This is compounded by the dynamics of the MRP software vendor approach to selling the system.

Often, the prospective client will go to a demonstration of the MRP software by a vendor, often concurrently with other prospective clients. These demos may be daylong or even multiple days in order to properly showcase each available feature. They may also be vending other manufacturing software such as human resource packages, accounting
packages and the like. This is where the prospective client needs to pay close attention.

MRP systems can be sold a complete package or bundled with other manufacturing software. The end purchase decision may be based upon the budgetary constraints, reorganization timing or both.

For budgetary constraints, the buyer will often buy the best MRP system with a current budget with hopes of upgrading as future funds become available, while not having the support system software to match the restructuring. This is a dangerous gambit for two reasons. First it requires the Enterprise to go without software in a function or area that it needs to have some type of system, preferable software. This can be phased in at a later date, however it runs the risk of the future funds never materializing. This leaves the restructured enterprise with a hybrid system, which ultimately means the original goal of the enterprise failed, leaving a weakness in the missing software. The attending lower
performance may then in fact make it harder to get the future funding, and the enterprise will just live with the result. Worse yet, the Enterprise may be planning modification or elimination of the function that is now left high and dry without the relevant manufacturing software.

This strategy of stepped purchase/implementation should only be employed if the Enterprise makes a structured financial commitment, and never as an undisclosed attempt to build the manufacturing system.