Material Requirements Planning (MRP)

Best MRP Software for Small Business in 2023

By Team TranZact | Published on Jan 12, 2023

An MRP software for small business helps to integrate procurement processes with production planning, and reduce operating costs. By automating their Material Requirements Planning (MRP) system, SME manufacturing businesses can also access reliable data and significantly improve supply chain performance and product quality. MRP is also known as Material Resource Planning in some scenarios; both these terms have similar meanings.

To help you select the right MRP software for small business, we have outlined recommendations of the best MRP software, along with their features, pros, and cons in this blog. Read further to know more.

TranZact - Best Inventory Management Software

Best MRP Software for Small Business

The best MRP software for a small business assists in requirements planning, forecasting and execution activities. A free MRP software for small business helps in determining the ideal quantity of human and material resources needed for everyday production processes.

Here’s a list of the top five MRP software for your SME business:

TranZact

TranZact is an expert MRP software for small business that provides a cloud-based MRP engine. It helps businesses to mitigate losses due to unoptimized inventory levels and improper purchase planning, using focused solutions across sales, purchase, inventory and production.

It digitally transforms small and medium-scale manufacturing businesses by automating their entire business process, from inquiry to dispatch. With a single click, TranZact provides you with a complete view of the required materials as per current stock and already purchased raw materials.

Features:

  1. Automated MRP module with distinct planning structures based on orders, product category and production process.
  2. Production planning and scheduling.
  3. Inventory management with Barcode Scanning.
  4. Quotation management.
  5. Smart reporting and analytics with a business intelligence dashboard.
  6. Integration with other business tools, such as Tally, BusyERP and Excel.
  7. AfterShip integration for order shipping convenience.
  8. Quick overview of details such as item ID, required quantity, blocked quantity, total ordered quantity, total inward goods pending to be quality tested, quantity of goods received but not approved in inventory and total price.

Pros:

  1. Offers real-time inventory insights
  2. GST compliant documentation
  3. Reordering alerts with live notifications
  4. Lifetime free customer support & zero upfront cost
  5. Flexible & easy to use

NetSuite

NetSuite MRP is a software solution that specializes in artificial intelligence and machine learning capabilities for businesses. It offers procurement, inventory, project management, risk management solutions, along with real-time demand planning features, allowing small businesses to easily manage their inventories and delivery.

Features:

  1. Inventory management
  2. Order management
  3. Supply chain management
  4. Document management
  5. Production scheduling

Pros:

  1. Cloud-based software
  2. Low maintenance cost

Cons

  1. Complicated to use and may not fit budgets for small businesses
  2. Not flexible

Katana MRP

Katana MRP allows SMEs to manage their production and material requirements with features such as automated resource allocation, multichannel sales management and contract manufacturing. It helps to improve raw materials visibility, order waiting times and simplifies customer experience.

Features

  1. Production scheduling
  2. Order management & tracking
  3. Inventory & resource management
  4. Quality management
  5. Shop Floor Control (SFC)
  6. Barcode scanning

Pros:

  1. End-to-end traceability
  2. Offers Bill of Material software
  3. Automatic calculation of manufacturing cost

Cons:

  1. Comparatively more expensive
  2. Complicated manufacturing order process

Focus MRP

Developed by Focus Softnet, Focus MRP is designed for production units, plants, and supply-chain establishments. Features such as delivery date estimation, finite and infinite capacity planning help to determine bottlenecks and provide increased control over business operations.

Features:

  1. GST-compliant MRP system
  2. Supply chain management
  3. Reporting
  4. Quotation management
  5. Equipment servicing
  6. Warehouse management

Pros:

  1. User-friendly
  2. Dedicated quality control solutions

Cons:

  1. Complicated quoting process
  2. Lacks the option to view multi-level assemblies

ERPAG

ERPAG is a cloud-based MRP software to manage and track inventory. It enables users to manage business operations such as selling, ordering, and delivering. Payroll, service administration, shipping management, user-access management, and barcode scanning are some of its unique features.

Features:

  1. Inventory tracking
  2. Multilevel BOM
  3. Integrated invoicing & purchasing module
  4. Sales & CRM solution
  5. Shop Floor Control

Pros:

  1. Real-time order entry & reporting
  2. Offers automatic reordering functionality

Cons:

  1. Does not offer detailed production functionalities
  2. Not specifically designed for Indian SMEs

What Is an MRP system?

An MRP system is an automated tool to determine the materials, components, and subassemblies required to manufacture a certain product. It supports manufacturing businesses to deliver the right product on time and at the best price.

It interlinks with production planning, scheduling, and inventory management systems to aid businesses in understanding their inventory needs while balancing supply and demand. It also minimizes inventory while scheduling production in accordance with the bill of material.

Features of MRP system

The following are the key features of MRP that are essential for manufacturers:

1. Accurate MRP reporting: An MRP system offers real-time reporting functionalities by sourcing data as per sales orders, planned production orders, and/or based on specific finished goods. This helps to assess optimal levels of raw material, ensuring your business never falls short of critical raw materials.

2. Production scheduling: This stage entails looking at production timelines, the required resources, and the labor you need to fulfill your manufacturing orders. To make sure that you can order your supplies and receive them in time for production, it is essential to use production scheduling software that can create a defined timetable.

3. Purchase planning: One of primary capabilities of an MRP system is providing the purchasing department with a clear insight of what materials are required to finish a work order, whether it has been ordered or is only forecasted currently. Therefore, manufacturers should look for an MRP software with this feature.

4. Inventory management: To avoid potential inventory problems like manufacturing too many or too few items in the allotted time, accurate demand forecasting and inventory management are essential. By doing this, you'll be able to reduce the expense of keeping goods idle, and promptly complete orders.

How Does MRP Work?

A small business manufacturing software supports businesses in controlling inventory levels, schedule production activities effortlessly, manage labor and machine capacity, in order to meet estimated demand. It accomplishes this by addressing 3 important questions:

  1. What is needed to fulfill the order?
  2. What is the quantity required?
  3. By when is it needed?

MRP systems answer these questions by breaking down the final finished product into individual subcomponents, and identifying the quantities required to meet demand. It then interconnects with the order management and purchase modules to schedule the production or purchase of these components, taking into account lead times, inventory levels, and other constraints.

Importance of MRP

MRP helps your company improve stock levels and production schedules by providing visibility into inventory requirements. Not having this information can result in the following:

  1. Ordering excessive inventory, which subsequently increases carrying costs.
  2. Shortage of raw materials resulting in unfulfilled demand, canceled contracts, and unhappy customers.
  3. Discontinued production cycles raising production costs and output.

Furthermore, an advanced MRP system precisely helps to calculate the materials needed for each product and process. It improves purchase planning by assisting the business in obtaining goods as needed and prevents unnecessary accumulation. In addition, it helps to prevent production delays and notifies all the internal teams when the customer's order is due.

MRP Processes and Steps

The key steps of MRP are as following:

Estimating demand

The MRP process begins by determining consumer demand and estimation of the materials required to meet the same. Then, using the bill of materials needed for production, MRP breaks down demand into individual parts while taking into account any necessary sub-assemblies.

Evaluating inventory and allocating resources

You can monitor your inventory by using MRP to compare demand with inventory levels and allocate resources accordingly. This is crucial if you have inventory spread out over various locations.

Furthermore, you can view the status of items, providing visibility into items that have been ordered but have not yet arrived at the warehouse, aligned with items that have been allocated to a different project. The MRP system then directs stock to the right locations and generates recommendations for reorders.

Production Planning and Scheduling

Next, a master production schedule is created to determine the time and labor required for production. The necessary work orders, purchase orders, and transfer orders are prepared based on the production schedule, which also specifies what equipment is required for each phase. The system also accounts for the time taken by each subassembly and schedules them accordingly.

Monitoring the process and identifying gaps

Finally, you must keep an eye on the production procedure to make sure it adheres to your strategy. Since MRP integrates work orders, customer orders, and raw materials, your MRP system should notify you of any delays if they occur and, in some situations, offer a backup plan to get your manufacturing schedule back on track.

MRP Inputs

An automated MRP system's ability to work effectively depends on accurate and real-time inputs, which include the following:

Bill of Material (BOM):

For accurate planning and forecasting, it is important to have details of each item required for manufacturing. Therefore, the BOM, also referred to as the product structure record, has details of each item including its part number, description, quantity per assembly, next higher assembly, lead times, and quantity per end product.

Master Production Schedule (MPS):

MPS is a production schedule that a business estimates on the basis of customer orders and demand projections.

Inventory Status Records:

All inventory items, including on-hand stock and scheduled receipts, are listed in the inventory status records. These stock reports determine whether or not the inventory present in the warehouse is adequate for the specific order demand.

To maintain data accuracy, these records should be kept updated and each receipt, payment, and withdrawal must be recorded.

MRP Outputs

MRP determines which materials are required, the quantity required to finish the production, and when they are required based on the inputs given.

After this information is analyzed, businesses can implement a standard production schedule in accordance with material availability. Since inventory is not kept in the warehouse for upcoming production but rather is delivered as needed, carrying costs are reduced. Simply put, MRP generates distinguished reports based on the inputs. These include:

Primary reports:

  1. Planned orders releases, including purchase orders as well as work orders
  2. Order release notices
  3. Changes in the original schedule
  4. Rescheduling notices
  5. Cancellation notices
  6. Inventory status report
  7. Performance report
  8. Inventory forecasts

Secondary reports:

  1. Planned order report
  2. Order release report
  3. Order changes report

Benefits of MRP

Manufacturing resource planning is beneficial to SME businesses in the following ways:

Timely delivery at an optimal cost

MRP inputs support business to identify accurate amounts of input materials and other resources to plan purchases better. Thereby, businesses can efficiently organize reordering processes and deliver orders on time.

Error-free production:

MRP systems enable businesses to adequately plan and schedule production, preventing any delays and errors in order fulfillment. As a result, customer satisfaction increases and profitability is maximized.

Enhanced forecasting:

MRP systems use information from a master production schedule and sales forecasts to evaluate the necessary quantities of materials and components, helping companies make more accurate predictions about future demand.

Challenges in MRP

May turn out to be expensive

If the right MRP system is not chosen, the costs of implementing and maintaining an MRP system can be costly and exceed budgets, especially for SME businesses.

Data integrity requirements

The accuracy of primary inputs, particularly demand, inventory, and production, is crucial for MRP. Errors may surface if even one or two inputs are incorrect. Therefore, maintaining data integrity and data validation are crucial for using MRP systems effectively.

Moreover, due to lack of real-time data inputs, the MRP system may predict shortages faster, which can result in overestimating turnaround time and inventory quantities, particularly in the early stages of implementation.

Lack of flexibility

Since the MRP system does not take capacity changes into account, it lacks flexibility. Additionally, manual data processing in traditional MRP may be time-consuming because of the huge amount of data involved. The way that a manual MRP system considers lead times or other elements that have an impact on the master production schedule is also relatively rigid.

MRP vs ERP

By regulating inventory and purchase processes, MRP systems are primarily focused on planning and managing end-to-end requirements and resources for production purposes.

On the other hand, Enterprise Resource Planning (ERP) systems came into existence when businesses discovered the need for a broader system to monitor all business functions like payroll, finances, and supplier management, which led to the development of ERP as an extension to MRP systems. An ERP system oversees functions such as finance, procurement, warehousing, customer relationship, production, inventory and order management.

Streamline Materials Planning With an Automated MRP Software

Before deciding to deploy a new MRP software, businesses must carefully assess all its benefits and drawbacks. TranZact is a cloud-based business digitization software that supports businesses in automating all key operations from start to finish.

Not only does it provide an automated MRP tool but also offers exceptional transactions, production and inventory management solutions for SME manufacturing businesses. Leave behind outdated MRP processes and switch to digitized materials planning with TranZact!

FAQs on MRP Software for Small Business

1. How much does MRP cost?

Costing for subscription-based MRP software can start from ₹ 4,000 per month. You must consider the number of customers, the quality of assistance provided, and any additional features offered as part of your base package when using a subscription model.

The best MRP software bases its prices on a variety of factors, such as the number of orders, the size of the company and more. However, TranZact offers all the features of an efficient material requirements planning system at a lesser cost. You may also sign up for free, explore all features with the free trial, and pay only when you're ready.

2. What is the best software for small manufacturing businesses?

TranZact is the best MRP software for manufacturing businesses and Indian SMEs. Its MRP module aids small businesses in streamlining their purchasing, and production planning processes. With a single click, you get a complete view of the required materials as per the current stock and the already purchased raw materials on a centralized platform.


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TranZact

TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.