ERP Integration, System Implementation, and Performance Metrics
MRP inside the ERP
Closed-loop MRP adds capacity feedback plus the shop-floor and purchasing execution loops. MRP II extends it into finance - costing, budgeting, simulation. ERP integrates sales, procurement, production, inventory, and accounting over one data set. The integration is the point: one item master, one BOM, one set of lead times, so a sales order, a purchase order, and a journal entry describe the same reality.
Implementation realities
Software does not fix process. Before go-live an organisation needs process design, data cleansing, and education; inventory record accuracy around 95% or better and BOM accuracy around 98% are the usual thresholds below which MRP output is noise. A conference-room or pilot run, a cutover plan, and clear ownership of item master data make or break the project. Critical success factors are executive sponsorship, a disciplined operating environment, and trained users - not module count. ERP turns the go-live into the start of data discipline, not the finish line.
Metrics that matter
Inventory turns = annual cost of goods sold ÷ average inventory value; days of supply = 365 ÷ turns. Delivery performance, fill rate, or on-time-in-full measures customer service. MPS adherence and schedule attainment measure plan execution. Forecast accuracy via MAD or MAPE, with bias tracked separately because MAPE conceals it, measures demand management. Capacity utilisation measures the constraint; cycle-count accuracy measures the foundation.
Worked example
COGS 12,000,000; average inventory value 2,000,000. Turns = 12,000,000 ÷ 2,000,000 = 6, so days of supply = 365 ÷ 6 ≈ 61 days. Doubling turns to 12 cuts days of supply to about 30 - but only if the gain comes from better netting and lot sizing rather than starving service, so check fill rate alongside.
Traps
Confusing inventory turns with days of supply. Quoting forecast accuracy without bias. Claiming Class A performance without audited data accuracy. Assuming that installing ERP modules delivers planning discipline on its own.