Enterprise resource management software, or ERP, is essential for larger and medium-sized organizations with complex structures or detailed supply chains. Today's supply chain managers require real-time data, accurate information, and the resources to help plan, execute and monitor activities. RP can make a considerable difference to an organization’s overall efficiencies.
There are countless examples of companies that use ERP systems that showcase how the platform helps improve spending, budgetary oversight, and stock fulfillment, as well as the adoption of lean inventory management processes to drive performance.
Adopting ERP in a Supply Chain Process
Each of the functional modules within ERP support different business roles, but easy integration is undoubtedly the most valuable system feature for supply chains. An ERP solution can include multiple modules, collating detailed information across departments. Whether your business utilizes ERP for finance and other back-end tasks or as a separate project management tool, the insights gained through ERP offer a clear competitive advantage.
ERP Applications in a Supply Chain System
ERP fulfills core requirements in managing procurement workflows from automating inventory replenishment to creating real-time production records. These include:
- Planning for demand: ERP simplifies the supply chain by scheduling jobs in the most efficient manner, identifying resources used to forecast optimal replenishment dates, and allocating available inventory.
- Effective procurement: Manual purchasing tasks, such as tracking vendor communications and product purchasing, can be automated.
- Production monitoring: ERP traces material resources and labor hours throughout each task, creating shipping documents and eliminating the potential for manual error.
- Logistics automation: When an order is fulfilled, the ERP solution can produce invoicing documents, dispatch them to the client, and maintain a central log of all shipping and delivery dates to ensure on-time fulfillment.
For manufacturing firms with complex catalogs, ERP system functionalities provide a range of additional benefits, such as selecting the most efficient packing method and delivery options to meet customer requirements.
The Advantages of ERP Systems in Supply Chain Management
Real-time supply chain management removes many risks associated with forecasting demand or predicting project delivery times. Perhaps the biggest benefit is the ability to accurately assess data, predict stock and component requirements more precisely, and reduce inventory costs, particularly in larger batch manufacturing processes.
A leaner inventory is vital for just-in-time production and enables managers to reduce costs while maintaining an agile supply chain. Other reasons to consider a supply chain ERP solution include:
- Intelligent decision making: An ERP system delivers fast, reliable data to assess sales figures, make informed choices about product discontinuations or launches, and avoid investment in less profitable business projects.
- Reduced business risk exposure: Instantaneous data is crucial. It helps identify where a primary vendor cannot meet demand and automates procurement through alternative sources to reduce the risk of nondelivery and missed deadlines.
- Organization-wide automation: Each module within an ERP is linked, automating processes, reducing human error, and allowing department and company managers to access information on-demand from any element of the business.
An ERP aims to give decision makers enhanced control over operations. However, unlike conventional software, it is not limited to ring-fenced aspects of the supply chain, such as inventory or financials. A fully integrated ERP framework provides oversight of the bigger picture to support faster and more efficient management functions.