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Enterprise Resource Planning (ERP): What It Is, and How It Differs from MES
Enterprise resource planning, or ERP, is the software that runs a company’s core business: orders, purchasing, inventory, finance and planning, in one connected system. It grew out of MRP, which just planned materials. ERP plans the whole business; an MES executes the part of it that happens on the shop floor.
Why is ERP important ?
ERP matters because it puts a company’s core functions, orders, purchasing, inventory, finance, and planning, on one connected system instead of separate spreadsheets that never quite agree. Shared data lets every department work from the same numbers, so planning is faster and mistakes from re-keying disappear. For manufacturers, enterprise resource planning is the backbone that turns demand into purchasing and production plans.
What does ERP manage ?
ERP connects the business functions that used to run in separate systems:
- Orders and sales, from quote to delivery.
- Purchasing and inventory, including what the BOM requires.
- Finance and accounting, tied to the actual transactions.
- Planning: demand, capacity and materials.
- HR and other back-office functions, in the fuller suites.
How does ERP differ from MES and MRP ?
Scope and layer. MRP was the ancestor: it planned materials from a bill of materials and demand. ERP wraps that into the whole business. An MES sits below ERP and executes production on the floor. ERP decides what to make and when; the MES makes sure it happens and reports back. ERP is the plan; MES is the doing.
ERP vs MES vs MRP at a glance
Three systems, three scopes.
| Aspect | ERP | MES | MRP |
|---|---|---|---|
| Scope | The whole business | The shop floor | Material planning |
| Job | Plan and run the business | Execute production | Plan materials |
| Time | Days to months | Real time | Planning horizon |
| Relationship | Above the MES | Below ERP | ERP's ancestor |
Related Terms
- Production Order – ERP issues it, MES runs it.
- Manufacturing Operations Management (MOM) – the operations layer between them.
Further Reading
- MOM-Software – plan & control production
