MRP Mistakes That Cost Millions: What CFOs and COOs Need to Know

Key Takeaways:

• MRP failures often stem from misaligned logic, poor data governance, and outdated business rules—not from software limitations.

• Many organizations treat MRP as plug-and-play, leading to excess inventory, missed shipments, and manual workarounds.

• CFOs and COOs must pressure-test MRP logic before go-live, define operational KPIs, and ensure frontline adoption.

• Executive oversight is critical to preventing MRP cost overruns and aligning planning systems with enterprise strategy.

Executives rarely notice their material requirements planning (MRP) system when it works as intended. Production flows, inventory levels feel predictable, and procurement decisions align with actual demand. But when it fails, the financial consequences are immediate, and the root causes are hard to untangle.

Too often, MRP is treated as a technical sub-feature of ERP, handed off to planners and plant managers without full executive oversight. The assumption is that once configured, it will quietly optimize inventory and production behind the scenes.

That assumption is costing companies millions.

For CFOs and COOs, MRP mistakes are no longer a localized operational issue. They are a strategic risk with implications for working capital, cash flow, customer retention, and regulatory exposure. Today, we’ll discuss the cost of MRP implementation failure and what steps to take to prevent it.

Why MRP Still Matters in 2025

Despite advancements of AI in ERP, advanced analytics, and supply chain digitization, MRP remains the backbone of manufacturing execution. Whether embedded within a modern ERP or operating as a standalone planning engine, MRP translates forecasts, BOMs (bills of materials), and inventory positions into actionable production schedules.

For process manufacturers, discrete product lines, and even multi-site distribution environments, MRP governs decisions that directly impact cost of goods sold, delivery performance, and throughput.

The problem? Most MRP systems operate on outdated assumptions, misaligned data, or poor configuration logic. This is where experienced ERP advisors provide an edge. Organizations that engage an independent ERP advisory partner can identify blind spots early, assess MRP configuration risks, and ensure alignment between system design and business strategy.

For example, one of the largest lean beef suppliers in the country recognized that its 20-year-old ERP system was holding back growth. Each of its plants relied on spreadsheets and workarounds for planning, creating inefficiencies and data silos.

By working with Panorama to evaluate vendors and select a modern ERP, the company gained real-time visibility, reduced manual forecasting, and improved its ability to align production planning with demand.

Three Common MRP Mistakes That Create Cost Overruns

1. Treating MRP as Plug-and-Play

The first MRP mistake many organizations make is assuming the system will work out-of-the-box. While most ERP systems include standard MRP modules, these templates reflect generic industry models, not the complexity of your specific production environment.

Manufacturers with variable lead times, frequent engineering changes, or mixed-mode operations (batch and discrete) often require deep configuration to align MRP with reality. Without that, planners either override the system or rely on tribal knowledge, both of which undermine long-term scalability.

The result is predictable: MRP cost overruns caused by excess inventory, missed shipments, and unnecessary expediting. In our ERP project recovery work, this scenario is a frequent red flag, signaling that planning logic was never fully reconciled with business constraints.

2. Ignoring Data Governance

MRP depends on the accuracy of your item masters, supplier lead times, production routing, and sales forecasts. If these inputs are stale, conflicting, or undefined, MRP will generate flawed plans.

This issue is especially prevalent in companies that have grown through acquisition. Each plant or region might have its own data structures and planning assumptions. Without harmonization, the MRP engine can only simulate a fragmented supply chain.

An ERP failure at this stage often surfaces post-go-live, when inventory builds up in some facilities while others grind to a halt. What appears to be a system issue is often a governance one.

3. Overlooking the Business Model Shift

MRP logic needs to evolve with your business.

A company that moves from make-to-stock to make-to-order must reconfigure planning horizons, safety stock logic, and capacity constraints. Yet many organizations keep old rules running under new strategies, resulting in planning blind spots.

This mistake is not always visible from the top. Finance teams may notice unusual inventory turns or gross margin compression, but the linkage back to MRP configuration is often missed until external auditors raise red flags.

Warning Signs of MRP Implementation Failure

• Planners work around the system: When Excel becomes the real planning tool, your MRP investment is no longer delivering value.

• Inventory metrics diverge from financial expectations: If on-hand stock appears healthy but working capital ratios are out of alignment, the planning assumptions may be flawed.

• Production schedules shift constantly: Chronic rescheduling is a sign that MRP logic is mismatched with actual constraints or demand variability.

• Supply chain teams are in firefighting mode: Repeated expediting, last-minute orders, and customer complaints often trace back to MRP issues.

These signs often lead to MRP cost overruns that cascade across departments. The operations team absorbs the logistics hit, finance bears the capital costs, and sales risks losing key accounts.

Strategic Moves That CFOs and COOs Should Lead

1. Pressure-Test the MRP Logic Before Go-Live

MRP testing should go beyond clean data scenarios. Organizations should simulate actual disruptions, variable lead times, and changing order volumes.

As we often advise during ERP selection and implementation readiness assessments, exaggerating operational complexity is the best way to surface misalignment before cost overruns begin.

2. Set Operational KPIs for MRP Performance

Traditional IT metrics (like system uptime or ticket resolution time) do little to measure MRP success. Instead, CFOs and COOs should align vendor accountability to business-level outcomes—such as inventory turns, schedule adherence, or planned vs. actual capacity utilization.

These KPIs should be included in post-go-live vendor reviews, ensuring that MRP remains a living system, not a static configuration.

3. Build Change Leadership Capacity on the Floor

As we often observe, MRP mistakes multiply when user behaviors default back to old processes.

MRP success depends on adoption. This means investing in frontline training, involving schedulers and planners in testing, and identifying super users who can coach others.

Executive sponsorship here should go beyond messaging. It should include budget for training, alignment on planning roles, and time for users to adapt before go-live.

Learn More About Costly MRP Mistakes

MRP is the invisible thread that connects procurement, production, finance, and customer fulfillment. When it works, it creates flow and confidence. When it fails, it exposes the cracks in your operating model

At Panorama, our independent ERP advisors group works with organizations to prevent MRP mistakes before they materialize.

If your organization is navigating MRP implementation failure, or evaluating your options from a long list of ERP systems, our ERP implementation consultants are ready to support you. Contact us today to learn more.