Supply chains are the lifeblood of all businesses, especially for producers and manufacturers. Recent events; from global health crises, political and military conflicts, and a jammed Suez Canal, all show how difficult and sensitive to change they can be.
Even local supply chains need flexibility as prices fluctuate and transport links struggle to evolve. Keeping the supply of raw materials, parts and finished products flowing.
Whatever your business size, to maximise supply chain efficiencies, management seeks digital cloud solutions to take over legacy applications, spreadsheets, and paperwork. With some two-thirds of businesses still using a spreadsheet, Enterprise Resource Planning (ERP) tools provide whole-business support for supply chain managers, offering:
- Turning delayed and lagging information reports into real-time insights
- Using automation to speed up supply chain analysis and changes
- Increasing supply chain visibility by breaking down departmental silos
- Driving business growth with cutting-edge supply chain integration
ERPs can improve all five stages of the supply chain, driving better business efficiency and management of assets to improve the resiliency of an organisation as it grows or meets changing market conditions.
And for larger organisations, some vendors are stepping into the 4PL role, ahead of third-party logistics, taking over much of your supply chain. A new example is Supply Chain by Amazon recently launched using Amazon’s logistics and fulfillment services to move your materials and products, with auto-replenishment and other benefits.
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What is an ERP’s Role in Supply Chain Management?
ERP software gives manufacturers and producers the tools to track raw materials, parts and stock inventory through a detailed and integrated system. With live and accurate views, managers can better control and manage their stock and the production and distribution processes based on them.
This means manufacturers can organise and categorise their inventory, better manage purchasing through detailed warehouse data, and record product movements and quality more accurately, enabling improvements for:
Supply chain leaders who can deliver demand and planning scenarios based on ingredients, materials, labour costs and other factors. Supply chain management (SCM) features in your ERP automate forecasting and enable faster response to changing market conditions.
Along the supply chain, material requirement planning supports a unified system to manage the procurement of materials, choice of suppliers, logistics and the use of flexible distribution channels.
Supporting production efficiency and process improvement planning through live schedules, traceable performance monitoring and paperwork including the Bill of Materials (BoM) from supply purchase orders to sales and returns.
Finally, finance and management gain more granular oversight of costs, can control them better and promote efficiencies across the supply chain.
The Benefits of Using ERP in Supply Chain Management
Supply chain management scales in importance as those chains grow in complexity and volume. Using Electronic Data Interchange (EDI) can boost the performance of warehouse management, while greater visibility into SKUs helps firms communicate with their customers, partners, wholesalers and retailers.
At the other end of the supply chain, SCM delivers benefits for quality control, checking failures and quality issues, supporting aftermarket care, and customer service and retention, and support with product returns.
Growing company use of SCM creates supply chain and production flexibility to deliver multiple levels of value, including:
- On-time and live data enables streamlined and cost-efficient buying
- Optimisation of inventory and stock levels through improved forecast models
- Automation of manual order processing and stock tasks
- Design and deliver custom products that add premium value to sales, be it a unique colour combination or finishing process
- Integration of quality control, customer service/returns/upselling and communications through the ERP
How an ERP Improves the 5 Stages of Supply Chain Management
Supply chains are typically well-established within business, and workers and managers are resilient to change. An ERP with SCM features enables a change for the better, delivering benefits across the five stages of supply chain management:
- For planning, an ERP and SCM deliver a cross-organisational view helping growing companies streamline operations.
- With a unified view of data in the supply chain operations, sourcing becomes more flexible and manageable.
- Benefits for production include the ERP’s power to automate repetitive administration and factory/assembly line tasks, delivering efficiencies that scale with business growth.
- Tracking large volumes of parts or stock, distribution is made easier with an ERP through reduced stock in the warehouse and a better view of the flow of goods.
- Finally, returns are easier to manage, to gain insights into production or quality problems, with the ERP linking to customer service to resolve problems faster and keep customers happier.
Across the supply chain, operators and managers can identify delays (and potential problems down the line) along with production bottlenecks faster. They can use the supply chain features of the ERP to balance supply needs with spikes or falls in demand.
Purpose-built supply chain management functionality in leading ERPs also streamlines everything from purchasing to warehouse operations to order delivery. As ERPs add more features, they integrate the likes of warehouse management systems (WMS) and yard management systems (YMS) to improve logistics and performance.
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How Leaders Benefit from SCM and ERP
At the higher levels of a business, ERPs help improve leadership decision-making through greater data analytics. Modern ERPs deliver more timely live reports and are equipped with AI advisory services to provide process and supply insights that can lead to better decision-making.
Through real-time data and analytics, information can flow faster up and down the lines of command. Leadership gains a better perspective of processes and performance and can develop strategies and decision-making systems to align departments, processes and supply chains better.
By implementing an ERP all the activities can be coordinated and executed ensuring higher levels of on-time delivery across the chain. and distributors. With live insights and constant price monitoring, ERP bridges the gap between supply chain partners.
By reducing costs across business through process and supply simplification, and investing in business flexibility increases, ERP and SCM enable change to happen faster.
Increase the flexibility of the business through integrated ERP and SCM systems, leaders can adapt as requirements change, markets evolve and staff gain experience and training using new applications, adopt citizen developer tools and use AI to query databases.
Issues To Consider When Selecting an ERP/SCM System
Primarily the ERP’s features need to suit your business, so a solid understanding of your company’s needs and growth plans is essential.
While cost is always an issue, cloud ERPs reduce the up-front burden and subscriptions can be managed, with most new features added at no extra cost.
The ERP requires data compatibility with your current IT systems, or has integration features to absorb information from current and future services, creating a common data model for a single view of true supply and business performance.
It should also be easy to use across every level of the business, so end-users feel comfortable adopting and experimenting with new features. The key goals you need to meet with an ERP/SCM are:
- Improved Productivity: Delivering process efficiency within the business and across partners
- Cost Efficiency: Identify the best partners and prices across the supply chain
- Expert Insights: Gaining a total understanding of the supply chain in real-time
- Technology and Innovation: Gaining new tools to deliver better results and finer-tuned insights
A new ERP with SCM is a major investment for any business, bringing some degree of change and upheaval. However, the rewards and results are proven in many cases and are an essential investment for future competitiveness.
FAQs
How Does ERP Support Supply Chain Management?
Enterprise resource planning is software to link, streamline, and automate your data and operational processes. SCM within an ERP makes those supply operations simpler and improves the quality of data insights. This helps save money, reduce delays and improves process speed, delivering business benefits and helping it adapt to change in market conditions and deliver a strategy for future growth