ERP vs MRP: Key Differences, How They Work Together, and When to Use Each

ERP and MRP are closely related systems, but they serve different scopes of business and manufacturing operations. MRP focuses on material planning and production scheduling within manufacturing, while ERP integrates those manufacturing needs with finance, HR, sales, and operations across the entire organisation. Together, they form the planning backbone that connects production decisions with broader business operations.

Most manufacturers start with MRP and adopt ERP as business complexity and scale increase. In Australia, ERP adoption continues to grow as businesses modernise operations, with the ERP software market generating approximately USD 1,796 million in revenue in 2024 and projected to exceed USD 3,880 million by 2030 (Grand View Research).

This article examines the distinctions between ERP and MRP, their integration, and helps businesses determine whether they require one or both systems.

What Is ERP (Enterprise Resource Planning)?

ERP is an enterprise-wide business system that integrates core organisational functions into a single, shared platform. It brings together finance, procurement, HR, inventory, sales, and operations, acting as the organisation’s central planning and coordination layer rather than a collection of standalone tools.

Most organisations deploy ERP as a modular system. Common ERP platforms, such as Odoo, Microsoft Dynamics 365, SAP, or Oracle NetSuite, allow businesses to standardise processes while scaling functionality as needs evolve, particularly in complex or multi-site environments.

ERP platforms typically support the following core functions:

• Finance and Accounting
• Human Resources and Payroll
• CRM and Sales
• Procurement and Suppliers Control
• Inventory and Warehouse Management
• Production and Operations

For manufacturing businesses, ERP connects production and planning activity with financial control and customer demand, with the core goal of maintaining a single source of truth across departments. While ERP provides enterprise-wide coordination, manufacturing operations rely on a more focused planning approach. This is where Material Requirements Planning (MRP) comes in.

What Is MRP (Material Requirements Planning)?

MRP is a manufacturing-focused planning system that determines what materials are required, in what quantities, and when they are needed to support production. Its primary goal is to ensure materials are available for production, products are ready for delivery, and inventory levels are optimised. Unlike ERP, which spans enterprise-wide functions, MRP concentrates exclusively on manufacturing planning, scheduling, and material availability.

MRP systems can be standalone software, such as Katana, Fishbowl, MRPeasy, or Epicor, or modules within ERP platforms, allowing material planning to scale with production complexity while staying focused on manufacturing execution.

MRP supports production planning through a set of tightly defined functions, including:

• Bill of Materials (BOM) management
• Master production schedules
• Inventory level calculations
• Production scheduling & planning
• Purchase and replenishment planning
• Cost control

Together, these functions align material availability with production timelines, help manufacturers reduce stockouts, avoid excess inventory, and improve shop-floor efficiency.

While both ERP and MRP support planning, they operate at different scopes of business and manufacturing operations. The following section compares ERP and MRP directly, highlighting their key differences in purpose, functionality, and role within an organisation.

Difference Between ERP and MRP (Key Differences at a Glance)

ERP and MRP differ in scope & roles, functionality, key features & data, and users within a manufacturing organisation. The comparison below outlines how each system contributes to planning and coordination, and why they are often used together rather than as alternatives.

Scope and Roles (Enterprise vs Manufacturing)

ERP and MRP operate at distinct levels of organisational planning. ERP manages processes across the entire enterprise, supporting coordination between finance, sales, supply chain, and operations. MRP operates within manufacturing boundaries, focusing exclusively on planning materials and production requirements needed to execute manufacturing schedules.

Core Functionality

The core functionality of ERP and MRP reflects their different responsibilities. ERP integrates planning, execution, and reporting across departments, while MRP performs detailed calculations to determine material needs and production timing.

Key Features

ERP systems include a broad range of features designed to manage enterprise operations, whereas MRP features are tightly focused on manufacturing planning.

Users (Multi-Department vs Production Teams)

ERP is a system used across various departments, supporting both operational and strategic decision-making. In contrast, MRP is primarily focused on and utilised by production teams.

Data Coverage (Company-Wide vs Production-Specific)

ERP manages company-wide operational and financial data, creating a shared, consistent view of the business across departments. MRP works with production-specific data, including bills of materials, inventory levels, lead times, and work orders.

ERP vs MRP Comparison Table

These differences reflect more than functional boundaries; they illustrate how modern business systems evolved. To understand why ERP includes MRP capabilities and how manufacturing planning became part of enterprise-wide systems, it helps to look at the historical progression from MRP to MRP II and, ultimately, ERP.

How MRP Evolved into ERP (MRP → MRP II → ERP)

The evolution from MRP to ERP reflects how business planning expanded from managing materials and production efficiency to coordinating activities across the entire enterprise, incorporating real-time data, AI, and cloud technologies.

• MRP (1960s): Developed in the 1960s as a manufacturing-focused system to calculate material needs, quantities, and timing to meet production schedules. MRP’s main purpose was to align material availability with production demand while minimising inventory.
• MRP II (1980s): As manufacturing operations became more complex, MRP evolved into Manufacturing Resource Planning (MRP II) in the 1980s. MRP II extended material planning to include capacity, labour, equipment, and production rates. It also introduced links to budgeting, reporting, and basic financial planning, shifting the focus from planning materials alone to planning manufacturing resources as an integrated system.
• ERP (1990s onward): As organisations required cross-departmental integration, ERP emerged to extend MRP II principles to finance, HR, procurement, sales, and supply chain management. ERP created a single, enterprise-wide system supporting decision-making and shared data, while incorporating MRP functionalities for production planning.

Today’s ERP platforms embed MRP functionality while extending planning across the entire enterprise. Modern ERP is cloud-native, AI-enabled, and fully integrated with shop-floor systems, enabling real-time visibility into production, inventory, procurement, and supply chain. This lets manufacturers respond dynamically to demand, optimise resources, and coordinate operations across multiple sites.

Understanding this evolution clarifies why ERP and MRP are often used together today. The next step is determining which approach — MRP, ERP, or a combination of both — best fits a business’s size, complexity, and operational needs.

When Should You Use MRP, ERP, or Both?

The right choice depends on whether your primary challenge is production planning, enterprise coordination, or the need to connect both. The scenarios below outline when MRP alone is sufficient, when ERP becomes necessary, and when using both together delivers the most value.

When MRP Software Is Sufficient

MRP systems are most suitable when manufacturing planning is the central concern and broader business integration is not yet required. It fits organisations that need tighter control over materials, inventory, and production schedules without managing enterprise-wide processes.

Typical signals include:

• A small or focused manufacturer with a limited product range
• Production planning issues, such as material shortages or scheduling conflicts
• Minimal need for cross-department integration, with finance and sales handled separately

In these cases, MRP provides the planning precision needed to stabilise production without introducing unnecessary system complexity.

When ERP Solution Becomes Necessary

ERP software becomes necessary when coordination across departments is critical to business performance. It supports organisations that need shared data, aligned planning, and consistent processes across finance, sales, procurement, and operations.

Common goals include:

• Multiple departments requiring access to the same data
• The need to align finance, sales, procurement, and production
• Growth and scalability, where manual handovers and disconnected systems become constraints

Here, ERP acts as the system of record that enables organisation-wide visibility and coordinated decision-making. For a deeper dive, read our blog post: Top 5 ERP Solutions in Manufacturing: How They Work In Action.

Signals and Use Cases for Using ERP and MRP Together

Using ERP and MRP together is most effective when manufacturing planning must be tightly connected to business operations. This approach is common as organisations scale and complexity increases.

Clear scenarios include:

• Business growth, where production decisions directly impact cash flow and customer commitments
• Multi-warehouse or multi-site operations, requiring coordinated inventory and planning
• Complex bills of materials (BOMs) that demand precise material planning
• The need for financial visibility tied to production, such as cost tracking and profitability analysis

In these situations, MRP handles detailed production planning while ERP ensures that manufacturing activity is fully integrated with the rest of the business.

When ERP and MRP are used together, their value depends on how effectively planning information flows between systems. The next section explains how ERP and MRP integration works in practice and how this connection supports coordinated decision-making across the business.

How ERP and MRP Integration Work Together

ERP and MRP work together by connecting detailed production planning with enterprise-wide data, so manufacturing decisions are aligned with financial, operational, and commercial outcomes. Integration ensures that what is planned on the factory floor is reflected across finance, procurement, inventory, and sales in real time.

What Data Flows Between ERP and MRP?

ERP–MRP integration is built on a two-way data exchange between systems. ERP typically provides demand signals and master data, such as sales orders, forecasts, item records, suppliers, and cost structures. 

In return, MRP feeds ERP with execution-ready planning outputs, including planned work orders, purchase requirements, inventory consumption, and production timelines. This shared data flow keeps finance, procurement, and operations aligned with manufacturing plans.

ERP ↔ MRP Data Flow Overview

Benefits of Integration

Integrating ERP and MRP reduces disconnects between planning and execution. Production plans are created using accurate demand and cost data, while enterprise teams gain visibility into how production affects inventory, cash flow, and customer commitments.

Key benefits include:

• Aligned planning and execution, reducing surprises and rework
• Improved inventory control, with material plans reflected in enterprise stock levels
• Better financial visibility, as production activity ties directly to costs and margins
• Faster decision-making, supported by shared, up-to-date data

Best-Fit Scenarios for Integration

ERP and MRP integration is most effective in environments where manufacturing complexity and business coordination increase together.

Common scenarios include:

• Growing manufacturers transitioning from isolated planning tools
• Multi-warehouse or multi-site operations requiring coordinated inventory
• Complex BOMs with tight material dependencies
• Organisations needing production-driven financial insight, such as cost tracking and profitability analysis

In these cases, integration allows MRP to focus on planning accuracy while ERP ensures enterprise-wide coordination.

In many cases, this integration is delivered within a single platform rather than through separate systems. The next section looks at common ERP systems that include MRP as a native module and how manufacturers typically use them in practice.

Top ERP System Examples That Include MRP Module

Many modern ERP platforms include MRP as part of their manufacturing modules, allowing material and production planning to operate within a broader enterprise system. Below are common ERP platforms and how MRP typically functions within each.

Odoo

Odoo provides MRP as part of its manufacturing suite, designed to integrate material planning directly with inventory, procurement, and accounting in a single system. MRP planning outputs flow naturally into purchasing and stock movements.

Typical MRP capabilities within Odoo ERP:

• Bill of Materials (BOM) and multi-level BOM management
• Demand-driven material requirement calculations
• Production order and work order planning
• Automatic replenishment and purchase triggers
• Inventory availability and lead-time consideration

SAP

SAP embeds MRP deeply within its manufacturing and supply chain architecture, supporting complex planning scenarios across large and multi-site organisations. MRP planning is closely tied to enterprise master data and logistics processes.

Typical MRP capabilities within SAP ERP:

• Multi-level BOM and routing-based planning
• Material requirements and capacity-aligned scheduling
• Planned orders and purchase requisitions
• Integration with inventory, procurement, and logistics
• Time-phased planning across plants and locations

Microsoft Dynamics 365

Microsoft Dynamics 365 includes MRP within its supply chain and manufacturing modules, focusing on connecting material planning with sales demand, inventory control, and financial processes.

Typical MRP capabilities within Dynamics 365 ERP:

• Net requirements calculation based on demand and stock
• BOM and formula-based planning
• Production and purchase order planning
• Lead-time and safety stock management
• Integration with sales forecasts and inventory data

Oracle NetSuite

Oracle NetSuite offers MRP functionality as part of its cloud ERP platform, supporting material and production planning while maintaining real-time visibility across finance and operations.

Typical MRP capabilities within NetSuite ERP:

• Demand-driven material planning
• BOM management and revision control
• Work order and purchase order planning
• Inventory level and availability tracking
• Financial visibility linked to production plans

Across these platforms, the structure remains consistent. MRP performs detailed material and production planning, while ERP provides the enterprise context that connects those plans to finance, inventory, procurement, and broader business operations.

While the platforms differ in depth and complexity, the underlying principles remain the same. The final section addresses common questions businesses ask when comparing ERP and MRP and deciding how to adopt them.

ERP vs MRP: Common Questions Answered

Is MRP Included in ERP?

Yes. In most modern ERP systems, MRP is included as a core manufacturing module rather than a separate tool. While standalone MRP systems still exist, ERP platforms typically embed MRP functionality so material and production plans are directly connected to finance, inventory, procurement, and sales data.

Do Small or Medium Manufacturers Need ERP?

Not always. Smaller or focused manufacturers may succeed with only MRP if production planning is the main challenge and cross-department integration is minimal. ERP is needed as organisations grow, add complexity, or require tighter alignment across finance, sales, procurement, and production. See the top 5 ERP software for small businesses in our article.

ERP vs MRP vs PLM: What’s the difference?

ERP, MRP, and PLM serve different stages of the product and business lifecycle. PLM manages product design and engineering data, defining what the product is; MRP plans manufacturing, calculating required materials, quantities, and timing to produce it; and ERP integrates production with finance, sales, procurement, HR, and supply chain, coordinating how the business operates around the product. Learn about the distinctions, integration, and overall value of ERP vs PLM for Australian manufacturers.

ERP vs MRP vs MES: What’s the difference?

ERP, MRP, and MES operate at different operational layers. MRP plans materials and production schedules, ERP aligns those plans with enterprise functions such as finance, inventory, and sales, and MES manages real-time shop-floor execution, controlling machines, operators, quality checks, and production events as they occur. For further information, explore our article: ERP vs MES: Key Differences, How They Work Together, and When You Need Both.

MRP and ERP solve different problems of business and manufacturing planning. MRP plans materials and production, while ERP extends that planning across the entire business, integrating finance, sales, procurement, and operations. In Australia, 65 % of organisations already use ERP as part of their core business technology, highlighting its critical role in managing complex operations and supporting growth (CPA Australia, 2025).

For many manufacturers, combining ERP and MRP is a natural progression rather than a requirement, often driven by growth, operational complexity, and the need to connect production decisions with financial and commercial outcomes.

For guidance on your next steps and to plan the right solution for your manufacturing requirements, the Havi Technology team can help assess your current systems and define a practical next step.