MRP Software: A Practical Guide for Small Manufacturers

Egor Domnin · 2026-02-21 · Industry Guides

What MRP software does, when you need it, and how to choose a system that fits small manufacturer scale without enterprise complexity.

MRP Software: A Practical Guide for Small Manufacturers

MRP software sounds complicated. The full name — Material Requirements Planning — suggests complex calculations and enterprise-level operations.

But the core idea is simple: figure out what materials you need to make the products you're planning to produce. If you're making 100 units of face cream next week and each unit requires 20g of shea butter, you need 2kg of shea butter. Multiply that logic across all your products and materials, account for what you already have in stock, and you've got material requirements planning.

This guide explains what MRP software actually does, when small manufacturers need it, and how to choose a system that fits your scale without enterprise complexity.

What Is MRP Software?

MRP software calculates the materials needed to meet production demand. It takes your recipes (bills of materials), your production schedule, and your current inventory, then figures out what you need to buy or make.

The basic calculation:

What you need to produce × Materials per unit − What you have = What to acquire

That's it. The complexity comes from doing this calculation across many products, many materials, and changing schedules — exactly the kind of repetitive math that computers handle well and humans find tedious and error-prone.

Modern MRP software typically extends beyond pure material calculation to include:

• Inventory management — Track materials and finished goods
• Production orders — Plan and track manufacturing batches
• Purchase management — Create orders for needed materials
• Work order tracking — Monitor production progress
• Cost calculation — Understand actual production costs

Some systems add scheduling, quality control, shop floor tracking, and other capabilities. The line between MRP and more comprehensive manufacturing systems (sometimes called MRP II or manufacturing ERP) blurs in practice.

What MRP Software Actually Does

Calculates Material Requirements

The core function: take your BOMs, multiply by planned production, subtract inventory, and identify what's needed. If you're making 500 units of Product A and 300 units of Product B next month, the system calculates total requirements for every material across both products.

This replaces manual spreadsheet calculations that become unmanageable as product lines grow. Change a recipe or adjust production quantities, and requirements recalculate automatically.

Manages Bills of Materials

BOMs define what goes into each product — ingredients, quantities, units of measure. MRP software stores these recipes centrally, uses them for calculations, and keeps them consistent across the organization.

Multi-level BOMs handle products made from sub-assemblies or intermediate products. Your face cream might use a pre-made fragrance blend, which has its own BOM. The system calculates requirements through the full hierarchy.

Tracks Inventory

Know what materials and products you have, where they're located, and how quantities change over time. MRP systems connect inventory to production — when you complete a batch, materials are consumed and finished goods are added automatically.

Generates Purchase Recommendations

Based on requirements calculations and current stock, the system suggests what to order and when. Factor in supplier lead times to ensure materials arrive before production needs them.

Creates and Tracks Production Orders

Plan production batches, assign materials, track progress, and record completion. Production orders connect the planning side (what you intend to make) with the execution side (what actually happened).

Reports on Production Performance

Understand actual material usage, production costs, output quantities, and variances from plans. Data for improving processes and making better decisions.

Signs You Need MRP Software

How do you know when spreadsheets aren't enough? Common indicators:

Material shortages interrupt production. You start batches only to discover you're missing ingredients. Production stops while someone rushes to find or order materials.

You can't answer "can we fulfill this order?" A customer asks for 500 units next week. You need to check multiple spreadsheets, do calculations, and still aren't certain whether you have or can get the materials.

Manual calculations consume hours. Someone spends significant time each week figuring out what to order, manually updating inventory counts, or calculating production plans.

Purchasing is reactive. You order materials when you notice you're low, not when you anticipate future needs. Rush orders and expedited shipping eat into margins.

Cost tracking is guesswork. You know your prices but not your actual costs. Material usage, waste, and production efficiency are mysteries.

Errors multiply. Spreadsheets have wrong formulas, outdated recipes, or conflicting versions. Different people maintain different files. Trust in the data erodes.

You've outgrown simple tracking. Basic inventory apps track quantities but can't connect materials to production. You need something that understands manufacturing, not just storage.

If several of these sound familiar, MRP software likely offers meaningful improvement over current methods.

MRP Software vs ERP: Understanding the Difference

These terms overlap and confuse. Here's the practical distinction:

MRP (Material Requirements Planning) focuses on production: materials, BOMs, manufacturing orders, inventory directly related to making products. The scope is the production floor and closely connected functions like purchasing.

ERP (Enterprise Resource Planning) encompasses the entire business: production plus sales, accounting, HR, CRM, and other functions. ERP systems are comprehensive platforms where manufacturing is one module among many.

MRP II (Manufacturing Resource Planning) extends MRP to include capacity planning, scheduling, and financial integration. It's broader than basic MRP but narrower than full ERP.

In practice, many "MRP software" products include functions beyond pure material planning. And many small manufacturers don't need full ERP — the accounting, HR, and CRM modules add complexity without proportional value for smaller operations.

For small manufacturers, the sweet spot is often MRP with selected extensions — robust production planning without comprehensive enterprise overhead.

Key Features for Small Manufacturers

What capabilities actually matter for small batch producers?

Must-Have Features

BOM Management. Create, edit, and organize recipes. Handle different units of measure. Support reasonable complexity without requiring engineering degrees to set up.

Inventory Tracking. Real-time visibility into materials and finished goods. Automatic updates when production consumes materials or adds products.

Production Orders. Create batches, assign to production schedule, track progress, record completion. Connect planning to execution.

Material Requirements Calculation. The core MRP function: analyze orders and plans to determine what materials you need.

Purchase Management. Track what's on order from suppliers, create purchase orders, receive materials into inventory.

Basic Reporting. Stock levels, production history, material usage, costs. Export data when needed.

Important but Not Critical

Lot Traceability. Track which material batches went into which products. Essential for food, cosmetics, and regulated industries. May be optional for others.

Expiration Management. Track shelf life, get alerts before materials expire. Critical for perishables, less important for stable materials.

Multiple Locations. Manage inventory across warehouses or production areas. Needed if you physically separate storage from production.

User Roles. Control who can view, edit, or delete data. More important as team size grows.

Integrations. Connect with accounting software, ecommerce platforms, or other systems. Depends on your existing tech stack.

Nice to Have (But Don't Overpay)

Advanced Scheduling. Detailed production scheduling with capacity constraints. Helpful for complex operations, overkill for simple ones.

Shop Floor Terminals. Dedicated interfaces for production workers to log time, record quantities, track progress. Adds cost and complexity.

Sophisticated Forecasting. AI-powered demand prediction, statistical analysis. Most small manufacturers have enough customer insight to plan without algorithms.

Multi-Plant Coordination. Manage production across facilities. Only relevant if you have multiple production sites.

Features you don't need add cost, complexity, and implementation time. Start with essentials; add capabilities as genuine needs emerge.

What You Don't Need (Yet)

Enterprise MRP systems include capabilities that small manufacturers should avoid initially:

Complex Capacity Planning. Detailed machine-hour scheduling, constraint-based optimization, and resource leveling. If you know your equipment can handle your volume, simple scheduling works fine.

Advanced Manufacturing Execution (MES). Real-time shop floor monitoring, IoT integration, automated data collection from machines. Valuable for high-volume production, excessive for small batch operations.

Multi-Currency, Multi-Language, Multi-Subsidiary. Global enterprise features that complicate systems for single-location operations.

Extensive Workflow Automation. Elaborate approval processes, multi-step routing, complex business rules. Adds setup time without proportional benefit at small scale.

Heavy Customization. The ability to modify every field, screen, and process sounds flexible but creates implementation projects measured in months rather than days.

You can always upgrade to more sophisticated systems later. Starting with enterprise complexity guarantees painful implementation and features you won't use.

Choosing MRP Software: A Practical Checklist

When evaluating options, consider:

Deployment Model

Cloud-based systems offer anywhere access, automatic updates, and lower upfront cost. Best for most small manufacturers.

On-premise software provides more control but requires IT infrastructure and maintenance. Rarely necessary for small operations.

Implementation Timeline

Enterprise systems often require months of setup, configuration, and training. Look for solutions where basic functionality works within days to weeks. Extended implementation delays value realization and increases project risk.

Pricing Structure

Understand total costs: monthly subscription, per-user fees, implementation charges, training costs, add-on modules. Affordable monthly rates sometimes hide expensive onboarding or limited user counts.

Typical small manufacturer pricing: - Budget options: $30-75/month - Mid-range: $75-200/month
- Full-featured: $200-500/month - Enterprise: $500+/month

Scalability

The system should grow with your business without requiring complete replacement. Adding users, products, or locations should be straightforward, not a migration project.

Support Quality

Who helps when something goes wrong? Some vendors offer responsive support; others rely on documentation and community forums. For critical business systems, accessible human support matters.

Industry Fit

General MRP works for many manufacturers, but some industries have specific needs. Food producers need lot traceability. Cosmetics need batch documentation. Verify the system handles requirements specific to your industry.

Common Implementation Mistakes

Avoid these pitfalls when adopting MRP software:

Overcomplicating Initial Setup. Start with core products and materials. Add complexity gradually rather than trying to model everything before going live.

Neglecting Data Quality. MRP calculations are only as good as input data. Accurate BOMs, correct inventory counts, and realistic lead times matter more than sophisticated features.

Skipping User Training. Software that people don't understand or trust gets abandoned. Invest time in helping everyone understand why the system matters and how to use it.

Customizing Too Early. Resist modifying workflows before understanding how the standard system operates. Often what seems like a customization need is actually unfamiliarity.

Ignoring Integration Needs. If you need MRP connected to accounting software, verify integration works before committing. Disconnected systems require manual data entry that defeats efficiency gains.

Choosing Based on Features Alone. The longest feature list doesn't indicate the best fit. Evaluate ease of use, support quality, and actual relevance to your operations.

How Krafte Approaches MRP

Krafte provides MRP functionality designed for small batch manufacturers — the material planning capabilities you need without enterprise overhead.

Core MRP logic. Define BOMs, create production orders, and see material requirements calculated automatically. Know what you need to buy based on what you're planning to make.

Integrated inventory. Materials, work-in-progress, and finished goods tracked together. Production orders consume materials and add products automatically.

Batch and lot tracking. Record which supplier lots went into which production batches. Full traceability for quality control and compliance.

Purchase management. Track supplier orders, receive materials, connect purchasing to production needs.

Accessible pricing. Monthly subscription starting at €7. No enterprise sales process or six-figure implementation.

Quick implementation. Import existing data, define key recipes, and start using the system within days. Training measured in hours, not weeks.

Cloud-based access. Work from anywhere — production floor, office, or home. Real-time data for everyone who needs it.

The goal is practical MRP for small manufacturers: powerful enough to replace spreadsheets, simple enough to actually use.

Frequently Asked Questions

What does MRP software do?

MRP software calculates the materials needed to meet production demand. It uses your bills of materials (recipes), planned production, and current inventory to determine what materials you need to acquire. Modern MRP software typically also includes inventory management, production order tracking, and purchasing features.

What's the difference between MRP and ERP?

MRP focuses on production: materials, manufacturing, and closely related functions like purchasing. ERP encompasses the entire business: production plus sales, accounting, HR, CRM, and more. MRP is one functional area; ERP is a comprehensive platform. Small manufacturers often need MRP but not full ERP.

How much does MRP software cost?

Pricing ranges widely: $30-75/month for budget options, $75-200/month for mid-range systems, $200-500/month for full-featured platforms. Enterprise systems can cost thousands monthly plus substantial implementation fees. For small manufacturers, capable systems exist in the $50-200/month range.

Is MRP software hard to implement?

Complexity varies enormously. Enterprise systems often require months of setup and configuration. Purpose-built solutions for small manufacturers can be operational within days to weeks. Key factors include data quality (accurate BOMs and inventory counts), system complexity, and available support.

Do I need MRP software or is Excel enough?

Spreadsheets work initially but become problematic as you grow. Signs you've outgrown Excel: material shortages disrupting production, hours spent on manual calculations, errors from formula mistakes or outdated data, inability to quickly answer "can we make this?" MRP software automates what spreadsheets make tedious.

What features are most important in MRP software?

For small manufacturers: BOM management, inventory tracking, production orders, material requirements calculation, and purchase management. Lot traceability, expiration tracking, and integrations are important depending on your industry. Avoid paying for advanced scheduling, shop floor systems, or multi-plant features you won't use.

Tags: Manufacturing, MRP, Production Planning, Small Business