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The Limitations of MRP and ERP Systems

Tamara Wilhite is a technical writer, industrial engineer, mother of two, and published sci-fi and horror author.

If your inventory consists of a few simple products, MRP software is unnecessary.

If your inventory consists of a few simple products, MRP software is unnecessary.

About MRP Systems

Many people extol the benefits of MRP systems. Manufacturing requirements planning systems provide centralized inventory management and tie purchasing and inventory management with the production planning systems. However, we’re going to explore the limitations of MRP and ERP systems.

The Drawbacks of MRP and ERP Systems

You will either get reports out of the box that do what you want, hire the software vendor to create a custom solution, pay third-party vendors to create something, or you'll become very good at manipulating the data outputs you receive. This is a factor behind the rise of data repositories and data analysts who combine all of the data coming from various systems to present the combination of information management needs to make correct decisions as quickly as possible.

Given how few full-scale MRP and ERP solution providers there are, you have little choice as to who you will use. This is especially true if you’re looking for MRP or ERP systems that are already compatible with your payroll or Human Resources tools.

There is a good chance you’ll have to tailor your manufacturing processes to fit the ERP software instead of tailoring the software to fit your processes. SAP’s manufacturing modules, for example, are complex and hard to use for shop floor data management.

If you want to gain insight into your supply chain both upstream and downstream, you’re pretty much stuck with the MRP or ERP software they use, regardless of the performance of the software in other areas. If your organization wants that level of visibility up and down the supply chain, you either have to pressure vendors to adopt the software you have or consider the lack of it a strike against them regardless of their overall quality.

Not every MRP system can track pre-built kits and partially built assemblies. Tracking these partially built assemblies and assembled kits as another part number adds to the workload of the manufacturing planner.

Few ERP systems can perform product verification of as-built assemblies against as-designed assemblies.

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When you rely on a single mission-critical ERP system, a software glitch or system outage cripples the entire organization.

User account maintenance with the ERP system becomes critical to onboarding and daily work. If someone is locked out on purpose or by accident, they can’t do their jobs.

ERP forces businesses into a one-size-fits-all approach. The complexity of the system makes buying off-the-shelf components for a quick fix or makeshift solutions to solve a problem very difficult to track, much less implement on a wide scale. MRP and ERP systems have a significant upfront cost that puts the best tools out of reach of small businesses.

MRP and ERP are most helpful when you have a complex bill of material with many levels. Conversely, if you have a small selection of parts and low inventories, it isn’t worth it to get MRP software. You might be able to track inventory in your financial software and run basic reports to determine when you need to order more if a low inventory alert isn’t sufficient notice. Or you could implement a Kanban system to handle the day-to-day inventory management system and order what you need when you switch to the second bin.

MRP and ERP rely on accurate data. If your stock figures are wrong, if prices are constantly fluctuating, ERP and MRP systems will give you inaccurate information.

Once you implement MRP, the data about parts coming in and those going out must be "clean" or precise. You can’t afford to run out of a key part because someone typed 15 instead of 5. Furthermore, as lead times change, the data on which your ERP system relies must be kept up to date.

Every MRP System Has Its Limits

While ERP and ERP tools can help businesses save money on inventory and product management costs when they’re managing a large array of parts or complex products, there are organizations that don’t need enterprise requirements planning or MRP software. And every MRP system has its limits, regardless of which vendor you choose.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 Tamara Wilhite

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