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The Importance of ERP in Supply Chain Management

Anyone who runs a business knows how important supply chain management is. Ensuring the smooth flow of the resources you need to keep your business running is crucial, especially in a modern world where buying patterns, changing technology, and global events can affect the price and availability of those resources in unexpected ways.

In fact, supply chain management is so important that business owners and their employees tend to spend an inordinate amount of time on it. This tiresome and time-consuming process is by no means efficient use of your efforts; surely you’d prefer to focus on growing your business rather than preventing disaster.

The days when a simple spreadsheet can manage a business’s entire supply chain are long gone. Market changes occur much more quickly in the modern era, making it nearly impossible to forecast supply and demand through historic data alone. And trying to keep up with the dizzying pace of the market can lead to low-quality batches of products—which can damage a company’s once-sterling reputation.

This is where enterprise resource planning (ERP) software comes in. ERP is a wide-ranging software solution that integrates and automates every aspect of business, and that includes supply chain management. It has proven to be an essential tool for ensuring that a business gets the right product to the right place at the right time, and it can keep the supply chain running smoothly as well as help a business expand and grow to greater success.

How ERP Can Improve Your Supply Chain Management

There are many varied ways in which ERP can help you when applied to your supply chain management strategy.

1. Making demand management and procurement more efficient. As soon as an order is received, scheduling is automatically implemented. Real-time information about resource use in production is made available to all team members, who can then better plan production jobs and product delivery. Other tasks, such as materials transportation and warehouse resource management, can be automated and optimized too.

2. Making documentation and processing more reliable. Once products are shipped, ERP can instantly create and send invoices to customers. For cross-border shipments, all required import and export documentation can also be created and sent out automatically. Also, all shipment and delivery data is archived, which improves customer service and helps ensure on-time delivery while cutting down on errors.

3. Strengthening collaboration between your business and vendors. Connecting your suppliers to your ERP system allows you to collaboratively tackle problems faster, such as when certain inventories are low. This helps you to ensure that resources are available and avoid bottlenecks, and lets you and your suppliers work together more efficiently.

4. Increasing visibility of your overall supply chain structure. With its ability to give you a detailed, real-time, and transparent view of your operations, ERP software allows you to spot what’s working well and what isn’t. You can troubleshoot problem areas and plan your resource strategy much more intelligently.

5. Taking full advantage of the cloud. ERP software used to be on-premise only, but cloud computing has made it available for small-to-medium businesses and even enhanced its capabilities. The mobility and accessibility of cloud-hosted ERP allow team members to log in at any time and from anywhere. Given how fast-moving supply chain operations can be, the advantages of this are obvious.

6. Insulating you from unexpected business disruptions. By far the biggest recent disruptor to almost every business on the planet was the COVID-19 pandemic. Many businesses that went under in the last two years could’ve been saved by a more adaptable supply chain, better risk management, more flexible sourcing, and more connected networks. ERP provides all of this with the greater visibility and smarter decision-making that comes with it.

Is ERP Just WMS?

At first glance, warehouse management solutions (WMS) may seem capable of doing anything ERP can do when it comes to supply chain management. However, there are a number of key differences. WMS is predominantly for warehouse management, whereas ERP is a total solution that integrates with other functions such as manufacturing, accounting, customer service, project management, and order processing.

This means that WMS solutions often work in tandem with ERP, but they rarely are a complete solution. Instead of connecting all the external variables that affect supply and demand, WMS can only manage inventory in-house. It can’t automate key functions or link supplier systems like ERP can, and it doesn’t help you forecast demand, optimize procurement, or discover opportunities for innovative products or reduce costs in the same way.

The stronger supply chain responsiveness and efficiency that ERP delivers allows you to plan ahead more effectively and anticipate fluctuations and potential shortfalls, ultimately helping you make better decisions. It can even improve customer service by providing better shipment predictions as well as shortening production and delivery times.

All these advantages are what ERP can give your business when applied to your supply chain management system. Find out more from Navigator about how ERP can help your business.

Have questions about ERP and/or SCM? Contact us, call (801) 642-0123, or email info@nbs-us.com

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