CRM vs ERP vs MRP: what each one does and which you need

A CRM manages customers and sales up to the point of an order. An ERP runs the business after that: orders, invoices, stock, purchasing, finance and staff. An MRP system plans manufacturing: which materials to buy or make, how many, and by when. Most small service businesses need a CRM and the core of an ERP. Only manufacturers need MRP.

The three acronyms sound like competing products. They mostly answer different questions, which is why the useful question is which of them your business has a problem with.

What is the difference between CRM, ERP and MRP?

The difference is the question each one answers, and so who opens it every morning.

What does a CRM do?

A CRM keeps every lead and customer in one place, along with what was said and what happens next. When someone fills in your enquiry form, the CRM records them, shows who owns the follow-up, and tracks the deal through stages until it's won or lost.

Its value is memory. A salesperson going on holiday shouldn't take the state of ten conversations with them. A CRM usually stops at the sale. It knows a deal worth €8,000 was won, and traditionally it doesn't know whether the invoice was paid or whether you have the stock to deliver.

What does an ERP do?

An ERP keeps the operational and financial records of the business in one shared system. The order that sales enters is the same record the warehouse picks from and accounts invoices from, so nobody retypes it and the departments can't disagree about the numbers.

A full ERP usually covers sales orders, invoicing, purchasing, stock, expenses, the general ledger and HR. That breadth is why the big suites take months to set up. Below them sits a growing group of lighter business apps that cover the same daily jobs for smaller teams without the implementation project.

What does an MRP system do?

An MRP system works out what materials a factory needs and when to order them. It takes three inputs (the production schedule, the bill of materials and the current stock, with supplier lead times) and produces a list of what to buy or make and by which date.

Here's an invented example. A furniture workshop must deliver 100 tables in week 10, and each table takes one top, four legs and 16 screws.

That's arithmetic you could do on paper for one product. MRP earns its cost when you have hundreds of products sharing parts, sub-assemblies inside assemblies, and a schedule that changes weekly. A spreadsheet stops coping at about that point.

The names also share a history. MRP came first, in the 1960s and 70s. MRP II (manufacturing resource planning) later added capacity and shop-floor planning. The term ERP appeared around 1990 for systems that had grown beyond the factory into finance and the rest of the business. So when a vendor says "MRP" today, check whether they mean materials planning alone or a whole production system.

How do CRM, ERP and MRP work together?

CRM, ERP and MRP work as a relay, each handing a record to the next. For a manufacturer, one order runs like this:

1. CRM: a lead comes in, gets a quote and accepts it.
2. ERP: the accepted quote becomes a sales order. Here's how a quote becomes an invoice without retyping.
3. MRP: the order adds to demand, and the plan says what to buy and make.
4. ERP: purchases arrive, finished goods go into stock, and the order ships.
5. ERP: the invoice goes out and the payment is recorded.
6. CRM: the account manager sees the customer's history and starts the next conversation.

Without production, step 3 disappears, and that's the whole picture for an agency, a salon or a consultancy. The handovers are where separate systems cost money, because each one is a re-entry, an integration to maintain or a spreadsheet someone exports every Friday.

Which one does your business need?

Your business needs the system that fixes its most expensive gap today, and that follows mostly from what you sell.

A few signs point to a specific gap:

• You need a CRM if enquiries go unanswered, if follow-ups live in someone's head, or if you can't say what's in the pipeline.
• You need the ERP core if the same details get typed into quotes, invoices and spreadsheets, or if nobody can say today what's owed to you.
• You need MRP if you run out of one part while over-buying another, or if a schedule change means an afternoon rebuilding a planning spreadsheet.

Do you need three separate systems?

Usually you don't. Most small businesses are better served by one application covering CRM and the core ERP jobs, because the customer on the invoice is then the same record as the customer in the pipeline. Separate best-in-class tools make sense when one function is large enough to justify its own specialist system and someone to look after the integrations.

The trade-off is depth. An all-in-one app won't match a dedicated CRM's sales automation or a manufacturing suite's planning engine. So check that it does the jobs you do daily, and be honest about which advanced features you would actually use.

Where ERPFlow fits

ERPFlow covers CRM and the core ERP jobs for small businesses, on one set of records. Leads and customers cover the CRM side. Quotes, orders, invoicing, products and stock, expenses and staff cover the operational side, and to invoice a client you work from the same customer record the lead became.

MRP is coming soon. Today ERPFlow has no bills of materials, production orders, routings or materials planning. A small manufacturer can keep materials and finished goods as separate products and record the stock movement between them, but a business planning multi-level production today needs a system that already has MRP.

It also isn't a full accounting ledger. ERPFlow has no double-entry bookkeeping, so your accountant keeps the books from what you export.