ERP, MRP, and WMS: Companies map failures but don't identify their causes

By Guilherme Felippe, consultant at Massimo Consulting.

When a retailer manages to expand its operation, it can end up facing losses due to unexpected problems, such as an exponential increase in delivery logistics errors and failures, and increasingly longer delays in restocking or order dispatch, for example. In some cases, companies identify possible failures in one of their corporate systems, such as the ERP, MRP, or WMS. But they are not always able to trace the specific causes of each type of problem.

In one of Massimo Consulting's clients, for example, it was identified that the systems and operational processes had been designed ten years earlier, sized to handle the volume at that time. A small delay in stock replenishment used to be easily managed by the team with quick fixes. But today, with a larger-scale operation, not only has the delay started to generate losses, but other failures have also emerged. The project began with mapping the gaps in the MRP, the production management system, but some failures were identified that extended into the WMS, responsible for logistics and warehouse control, and into the ERP, which connects to other areas of the company, such as purchasing, tax, finance, and even delivery and customer feedback.

To fix these problems, it is necessary to select the solutions on the market that are best suited to the type of operation, process, and desired service level. This requires a complete understanding of the operation, since, depending on what is planned to be supported, some points need to be given more or less emphasis. More than advanced technology, it is essential to assess whether the system meets the particularities of a given operation. One example is operations involving pharmaceuticals or cosmetics, which require a WMS capable of tracking batches, managing recalls, offering product tracking, and providing raw material licenses and certifications, among other features, since these are sector requirements.

Two companies of the same size can have very different system needs: a pharmaceutical company, for example, will need an MRP that allows it to specify how long chemical substance mixtures remain in the catalyst. A home appliance manufacturer, on the other hand, requires an MRP that controls mechanical processes, such as component assembly. Correctly selecting and configuring the system according to sector-specific requirements generates several benefits, such as: real-time inventory visibility; richer and more reliable information; fewer discrepancies, errors, and losses; and better operational visibility. The latter becomes faster and more accurate because the system itself continuously recalibrates inventory as it receives orders, instead of waiting for manual review, which is done by the team at scheduled times.

These results are a consequence of automating certain activities, such as coordinating the physical flow of materials and products within the distribution center and between different warehouses. When done manually by the team through notes on paper and spreadsheets, it takes longer and carries a higher chance of errors than when handled automatically by the system. Certain errors can lead to product losses or even entire batches expiring, for example.

Through its extensive expertise in the consumer goods sector, Massimo Consulting has deep knowledge of end-to-end operational processes and is therefore able to help clients strategically select the best vendors, taking into account the essential functionalities for each segment.