Manufacturing Resource Planning (MRP) Software

Manufacturing resource planning software, sometimes called material requirements planning or also known as MRP II software, is the core technology that sets manufacturing software apart from other types of business software. This added functionality also adds complexity, both in implementation and in operation. We wrote this buyer’s guide to help buyers navigate the maze of top MRP solutions.

Here’s what we’ll cover:

What is MRP Software?
What Type of Buyer Are You?
The Vendor Landscape

Market Trends You Should Understand
Benefits & Potential Issues

What is MRP Software?

“If you fail to plan, then plan to fail” is equally true in sports and manufacturing. MRP was the first attempt to bring software tools, such as a materials forecast, to formal manufacturing techniques. Software answers the four basic questions: What do I make? What do I buy? When do I buy? When do I make? 

MRP is a subset of enterprise resource planning (ERP). It covers the period of time from when a product is conceived, the raw materials are identified and procured, resources are identified, to when production steps are planned. At that point, manufacturing executions systems (MES) take over. ERP combines the tools of an MRP system and an MES system, and extends both. MRP and MES focuses on planning for individual jobs, ERP is concerned with a manufacturer's entire chain from buying raw materials to delivery of finished goods to the customer, over the course of time. In other words, MRP focuses on increasing efficiencies for the course of a job and ERP takes a wider and longer view, over all jobs from end to end.

Basic functions include inventory control and procurement, production forecasting, job costing, procurement scheduling, and process scheduling applications. Job costing is usually the core function. It determines what is made versus what is bought. Job costing works with the inventory system to check quantities on hand and lead times for parts that must be ordered as well as production logs to determine lead times for any sub-assemblies that must be fabricated. 

Manufacturing resource planning systems are adaptable to many different philosophies but favor the lean manufacturing and just-in-time (JIT) system. It can support all modes including discrete, process, make to stock (MTS), assemble to stock (ATS), assemble to order (ATO), make to order (MTO), and engineer to order (ETO). However, MRP’s planning and inventory control is generally more important to the “to order” modes due to the time constraints that these modes impose.

MRP ERP systems are generally run on premises. Small shops may have only a single-user system or a small network, while larger organizations may have networks with workstations throughout the facility. Manufacturers have been slower to adopt cloud-based programs.

What Type of Buyer Are You?

The first step in evaluating software, is determining what type of buyer you are. Over 90% of buyers fall into one of these three groups:

  • Full-suite buyer. These buyers value the seamless integration of data and processes that comes from having one system for all functions. For example, they would prefer a full-suite system for estimating, work-in-progress management, and accounting that can automatically turn an estimate into a budget for project management, and then match invoices to project status and allocate job costs. These buyers favor complete suites like Oracle, SAP, Sage ERP or Microsoft Dynamics.
  • Departmental buyer. Specialists in one function, such as job costing, may value the feature depth of best-of-breed solutions designed for their function. These buyers may need specific functionality, like the ability to interface with a specific departmental procurement system.
  • Small manufacturer. Small and organizations often have limited budgets and fewer IT resources to dedicate to software. In many cases, they may be deciding between a new system and a new piece of equipment. These businesses need cost-effective solutions that are easy to implement and use. Some will prefer full-suite systems, while others may just want one application, such as resource planning or production inventory control.  

The Vendor Landscape

The scale of solutions varies greatly; different buyer types need to “right size” and compare MRP software vendors.

This type of buyer... Should evaluate these systems
Enterprise resource planning suite buyer Microsoft Dynamics, Oracle, SAP, Sage
Departmental buyer Microsoft Dynamics, Epicor, SYSPRO, Casco
Small manufacturer E-Z-MRP, ECi, Exact, Fishbowl

Market Trends You Should Understand

While you evaluate software, make sure you consider these market trends:

  • Advanced planning techniques. As the cost of computing power and storage decreases, more powerful planning models are available which yield better results.
  • Harmonization. For many years, the goal for MRP and ERP was a single corporate-wide data store. However, that thinking is now evolving to strategically selected systems for specific purposes, sharing information as required.
  • Use of mobile devices. Until recently, most system designers assumed that the users would be working from a fixed location. Any information had to be entered, remembered, or written down and brought to the computer. The new trend is have to mobile systems in the warehouse or shop floor. Operators enter pertinent information directly into mobile systems without having to go to a permanent workstation.
  • Vendor consolidation. Large vendors like Oracle and Microsoft are buying niche vendors to round out manufacturing software solution libraries. With so many vendors and products available, this trend will continue for the foreseeable future.
  • Intelligent inventory tagging. The use of one-dimensional bar coding for equipment and inventory tagging is well established in systems for manufacturers. Recent systems use radio frequency identification (RFID), which can be read remotely to check inventory levels and to confirm equipment availability. Other systems use two dimensional bar codes which contain descriptive information in addition to an identifier like a part number.
  • Functional integration with ERP. While there are still numerous stand-alone systems, generally the functions are part of a larger ERP system that is broader in scope than just a facility.

Benefits & Potential Issues

MRP systems, whether stand-alone or incorporated in an ERP system, offer distinct benefits over less formal production planning systems. These include:

  • Better planning and resource allocation. One of the greatest strengths of software for manufacturers is better data and greater insight into the actual costs of inventory, people, and equipment, and the actual time costs for each step of the planning and production process. 
  • Greener operations. Better planning and tracking leads to operations that generate less waste and less scrap, reducing environmental impact for those firms. Additionally, as more documentation is kept electronically, it reduces waste paper and cuts paper costs.
  • Integration with accounting systems. The basic purpose of an MRP ERP system is to decide what to buy and when. Integration with the general inventory makes it easier to track the inventory costs as well as determining lead times. The the accounts receivables system handles ordering and payment.

MRP as a discipline, and MRP software in general, does have some limitations which can cause problems if not addressed. MRP planning is based on what should be possible; it ignores current limitations. The inventory and resource planning are based on the assumption that everything is idle. Care must be taken not to over-allocate resources.

Inventory levels are another area of concern. Inventory items tend to two extremes. Either too much is carried in inventory, tying up valuable capital and credit, or too little is carried in inventory, requiring stock to be acquired and delaying production. MRP is supposed to solve this particular problem, but if the model does not adapt to changes in the inventory supply chain, inventory levels on key items will tend to one of the two extremes.

There are also problems that develop over time. The bills of materials, work orders, and schedules are based on the assumptions made when the MRP is first installed. If assumptions are not updated to reflect changes over time as costs fluctuate and and productivity changes, the estimates from the MRP will increasingly diverge from the actual costs.

There is also a scope issue. MRP planning is based around particular jobs. While it can increase the efficiency for those jobs, it is possible that over the course of many jobs, the costs will add up. For example, if three jobs are costed that each use four pounds of salt, the system will miss the discount available if 12 pounds of salt are purchased all at once. Among other things, ERP systems expand the scope to solve this issue in MRP.

Have an opinion on this guide? Email the authors. We appreciate the feedback.

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Manufacturing Software Feature Checklist

Use this detailed side-by-side comparison matrix to evaluate manufacturing ERP systems across 80 of the top features and functions.

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Top 10 Most Recommended Systems

ECi M1

The ECi M1 is an on-premise system that is geared toward the small to medium discrete manufacturing shop. The MRP application is offered as a best-of-breed and includes features for finite capacity planning.

ShopVue

Since 1984, Casco has developed MRP and shop floor control software for mid-sized to large discrete manufacturers. ShopVue is suitable for repetitive, make to order, and engineer to order companies in most industries.

Henning Visual EstiTrack ERP

The MRP application of Visual EstiTrack ERP is part of an integrated suite that includes human resources, asset management, business intelligences and more. The system supports both finite and infinite capacity planning.

Exact JobBOSS

Exact JobBOSS is a popular system for manufacturers that need an MRP package at an affordable price. The software comes with shop floor control, supplier management and can integrate with Quickbooks accounting.

E2 Shop System

Shoptech has been in the manufacturing software industry for roughly two decades. The E2 Shop System comes with an MRP application that includes finite capacity planning features and is part of an integrated suite.

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Epicor Manufacturing Express Edition

Epicor Manufacturing Express Edition is a full-featured cloud ERP manufacturing system. In addition to MRP functionality, the software includes applications for MES, supply chain management, human resources and asset management.

Epicor Manufacturing

Epicor’s material requirements planning (MRP) application is offered in an integrated suite. In addition to MRP, the suite includes MES, product lifecycle management, human resources and asset management.

Sage ERP

Sage is one of the largest software providers in the world with a strong base among small to medium-sized enterprises. Their system that includes MRP is integrated with human resources, supply chain management and accounting.

Fishbowl Inventory

Fishbowl Inventory is an on-premise solution deigned for small to medium manufacturing firms. The MRP application is part of a suite with supply chain management while MES and others are offered as best-of-breed applications.

ERP123

The MRP application in ERP123 has functionality for inventory control, process scheduling and procurement scheduling. MRP is integrated into a suite of applications that includes human resources, asset management and more.

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Free Download:
Manufacturing Software Feature Checklist

Use this detailed side-by-side comparison matrix to evaluate manufacturing ERP systems across 80 of the top features and functions.

Free Download:
Ten Steps to Selecting the Right Manufacturing Software

This concise, step-by-step guide will help you organize your software selection process from initial research to contract negotiation.

Call us for a free
FastStart Consultation

(888) 918-2748

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Interactive Timeline

Manufacturing and MRP Software History


PRESENT
1950
1960
1970
1980
1990
2000
2010

Future
Late 1950's
Electronic Inventory Management and BOM is Born
Maytag develops a system for storing a limited assembly model schedule on a 650 tape-drum. With this system, Maytag is able to project their time-series several months in advance. However, the bill of materials (BOM) has to be maintained and inventoried on tape as well. These are the first steps toward maintaining electronic copies of inventory and bill of materials.
1957
APICS is Founded
Recognizing the need for an educational and professional society, IBM finances the creation of the American Production and Inventory Control Society (APICS). The society is run as a non-profit and helps promote the coming wave of software. In future years, APICS becomes recognized as an authority in operations management and provides certification for software professionals.
Early 1960's
The Groundwork for Manufacturing Requirements Planning is Laid
In 1960, Joseph Orlicky implements the first manufacturing requirements planning (MRP) system at JI Case in Racine, Wisconsin. The following year, Gene Thomas invents the Bill of Materials Processor (BOMP) at IBM. With this invention, manufacturers break down a bill of materials on a computer for the first time. BOMP would become the foundation for packaged MRP software offerings.
1965
The Birth of MRP
Joseph Orlicky and Gene Thomas build upon BOMP to include a production schedule and purchasing plan. Although MRP is a major breakthrough in the planning of materials, programmers are limited to only 8K of memory. Developers recognize the need for capacity planning but the computing power just isn't there yet.
1970's
APICS Crusades for MRP
APICS begins a national program of MRP software education and publicity. From 1971 to 1975, the number of manufacturing companies running MRP software increases from 150 companies to over 700. During that time, MRP adds sales and operations planning, master production scheduling, and capacity planning to become "closed loop" MRP.
1975
MRP Goes Commercial
Materials Management Systems (later Software International) launches the first commercial net change MRP software in 1975. In the same year, Joseph Orlicky publishes Materials Production Planning outlining what an MRP system contains and how it should work. This is the prelude to MRP software coming to the masses. Suggested by: Christopher Gray
1978
MRP Moves to the Minicomputer
Minicomputers arrive and offer manufacturers cheaper computing options with more processing power. IBM comes out with MAPICS for their System/34 and System/38 minicomputer lines. Around the same time, software developer ASK comes out with Manman for Hewlett-Packard's minicomputers. Manman is a massive success and ASK quickly comes to dominate the manufacturing systems market.
1980
Manufacturing Resource Planning Emerges
While MRP proved valuable, manufacturers found that frequent changes in sales forecasts were skewing their ability to plan efficiently. Production often failed to align with demand. A new class of manufacturing software, Manufacturing Resource Planning (MRP II) emerged to incorporate more sophisticated capacity constraints by consolidating materials planning with capacity information related to finance, plant, and people.
1984
"The Goal" Introduces Continuous Improvement
Eliyahu Goldratt publishes "The Goal," a fictional tale of a plant manufacturer that is ordered to turn around an unreliable and unprofitable plant. Goldratt turns the plant around by identifying and removing bottlenecks in production to ensure a continuous flow in the manufacturing process. The Goal is thought of as a seminal work introducing the theory of constraints and continuous improvement to the US. The book questions whether the computing power of MRP is enough to run operations.
1986
SAP Enters the American Market
Long a presence in the European software market, SAP enters the North American market. SAP becomes a force with their R/2 mainframe MRP offering in a time when mainframe software sales are stalling and the game is changing toward PCs and client/server technology. SAP reports strong sales of R/2 and quickly gains a leadership position.
1990
ERP Swallows MRP
Research firm Gartner coins the term enterprise resource planning (ERP), which envelops MRP and MRP II, as well as a range of other applications, including: product lifecycle management, supply chain management, logistics, customer management, order processing, financials, and human resources. Today, the ERP remains the broadest descriptor of enterprise software applications.
1992
SAP Moves to Client/Server
Despite strong sales of their mainframe R/2 software, SAP decides to go the way of client/server technology as they release R/3. SAP's R/3 release is a fundamental change in the way software is written and handled. Most software companies follow suit and develop their software for the client/server platform.
1994
Advanced Planning and Scheduling Emerges
i2 technologies introduces the first advanced planning and scheduling (APS) software to improve upon the forecasting capabilities of MRP software. Manugistics hits the market with their own offering soon after. With APS, manufacturers are now able to simulate the impacts of supply chain contraints to better adjust production. APS includes demand planning, production planning, production scheduling, distribution planning, and transportation planning.
Lates 1990's
MRP Meets Lean
Realizing that number crunching and demand forecasting can only take you so far, lean manufacturing software starts to gain in popularity. Factory Logic (founded 1998) and JCIT Demand Flow technology start to gain wider acceptance. The intense focus on building to demand forecasts begins to give way to building just in time (JIT).
2000
Web Architecture Emerges
The introduction of the web browser and the dramatic growth of the Internet led to "web-based computing." In this model, both the data and the manufacturing software code are hosted in a data center, while end users access applications through their web browsers. The dramatic improvement in accessibility, cost of ownership, and ease-of-use forced manufacturing software vendors to rethink, and often redevelop, their products, much like they had to when client/server replaced mainframes as the computing model of choice.
2001
ERP Market Declines
With year 2000 spending coming to an end and the global economy receding, the ERP market suffers. All major ERP vendors report a decline in sales and share prices decline precipitously. While a large market remains, it is clear that the glory days of ERP have past and the market must begin to consolidate.
2001
Plex Systems Delivers Manufacturing Software-as-a-Service
Michigan-based manufacturing software vendor Plex Systems quickly makes use of the new web architecture and is the first vendor to offer manufacturing software as a service. The company starts with point solutions and works its way up to a full suite ERP. Many doubted whether this model could work for manufacturing software. Plex has proven it is possible.
2000's
Infor Goes on a Consolidation Binge
From 2002 to 2010, Infor goes on a massive acquisition binge - rolling up an astounding 30 different software companies. Notable purchases include MAPICS (2005) and SSA Global Technologies (2006), a similar "roll-up" consolidator. The acquisition streak consolidates much of the manufacturing software market outside of SAP and Oracle.
2010
Manufacturing Software Moves to the Cloud
More manufacturing software vendors follow Plex's lead and moved their manufacturing software to the cloud. Four notable vendors added a cloud option to their portfolio: SAP Business ByDesign, Epicor Express, NetSuite Manufacturing Edition, and Infor SyteLine. As the cloud gains in adoption, more are likely to follow suit.
Future
Looking Forward: Trends to Watch in MRP
Where will MRP software head next? Since the 1960's, MRP has been about trying to predict demand more accurately. Refinements in the software's capabilities focused primarily on calculating constraints more accurately. The future of MRP will be about developing more responsiveness to demand rather than simply trying to predict it. The software will evolve to meet need of manufacturers to plan their materials requirements in a dynamic way. Suggested by: Chad Smith and Carol Ptak