Enterprise resource planning (ERP) systems has helped organizations to consolidate all its functional units into an integrated computerized system. An ERP system creates a convergence of departments, people and mechanisms to provide a cost effective production system that ensures a company meets its customers’ needs and realizes profits. This kind of resource planning stemmed from the manufacturing resource planning which provides materials, labor and other resources to realize an optimum production capacity. Material requirements planning (MRP) which a software module of manufacturing resource planning manages an organization’s inventories and schedules order entries in a manufacturing process. In a manufacturing process MRP and ERP are not the only processes used to plan for an organization’s production resources.
Capacity requirements planning (CRP) which is another dimension of MRP II gives an illustration of all the demands on each work center in order to effectively manage production or problems arising. Another process such as the supply chain management is also vital in the manufacturing process as it tracks and coordinates movement of resources from suppliers to the final consumer (Wagner & Monk, 2009).
Enterprise resource planning is not limited to manufacturing processes only but can also be applied to service industries as well. Though ERP evolved from manufacturing resource planning which ensures that a manufacturing resource is available when needed, it is now used by most companies to converge departments and resources such as employee records, financial records, production data as well as customer and supplier details. However, material requirements planning (MRP) is designed to be used in a manufacturing organization. By having an integrated database, MRP handles scheduling of orders for raw materials and other dependent-demand components and also manages the flow of the production process by determining what necessary components of production are required in order to have a finished product at a certain time (Enarsson, 2006).
Enarsson, L. (2006). Future logistics challenges. Copenhagen: Copenhagen Business School Press DK.
Wagner, B. J., & Monk, E. F. ( 2009). Concepts in Enterprise Resource Planning. Cambridge: Course Technology.