What is ERP in Supply Chain Management?
What is ERP in Supply Chain Management?
ERP in Supply Chain Management is a unified solution that provides a comprehensive suite of integrated tools to streamline the complex chain of activities in the supply chain process and plan, execute, control, and monitor various other processes.
ERP software helps manufacturing and distribution businesses achieve higher visibility into business operations and increase efficiency & profitability. The primary use of such a tool is to reduce bottlenecks, minimize overhead and operational costs, improve efficiency, and benefit from workflow automation.
The Role of ERP in Supply Chain Management
An efficient supply chain is essential for any business to grow and succeed in today’s highly dynamic business landscape. Enterprise Resource Planning is an all-comprehensive software that supports and transforms various business activities, including supply chain management. It consolidates all the supply chain operations under one roof in a single dashboard and provides comprehensive charts, and reports to understand areas of improvement and take measures to become more productive, efficient, and agile. It enables automation, collaboration, and coordination to meet ever-changing market demands and minimize supply chain costs.
Key Takeaways
ERP improves the supply chain efficiency while reducing overhead and operational costs
Incorporating the ERP into the supply chain can benefit businesses in various ways such as reduced costs, enhanced efficiency, higher Return On Investment (ROI), and exponential growth
As a business grows and expands its operations, the role of ERP in supply chain management becomes even more crucial.
Benefits of Using ERP in Supply Chain Management
ERP automates various activities in the supply chain and benefits all stages of the supply chain process.
360° Supply Chain Visibility
Tracking & bmonitoring the movement of goods, and materials across the supply chain becomes easier with the ERP. Businesses benefit from increased visibility in different aspects of the supply chain to better position themselves in a highly dynamic business environment.
Supply Chain Resilience
Supply chain resilience is the ability of a business to withstand disruptions, and address various operational disruptions on a timely & ongoing basis. ERP helps companies to swiftly respond to unexpected market changes and grab new opportunities in times of crisis.
Vendor Performance Tracking
ERP builds a database consisting of a complete history of vendors and their performance. This helps companies evaluate the performance of each vendor, acquire only quality material, negotiate for better prices, and make informed decisions.
Supply Chain Planning
Supply Chain Planning includes various activities such as choosing different market channels, checking stock quantities, building promotional schemes, and much more. An ERP lets you easily adopt more flexible methods of customizing the parameters within the supply chain process.
Prevent Disruptive Stockouts
A Stockout is a situation in which the company is unable to fulfill the customer orders because the product is exhausted in the inventory. The Inventory Management System helps businesses reduce the instances of stockouts during peak demand and uncertainty.
Enhanced Customer Service
The Supply Chain Management module in ERP offers one more advantage. It reduces the errors in the packaging and delivery of products and minimizes logistical problems to retain existing customers and improve brand reputation.
10 Ways ERP Can Improve Supply Chain Management
▸ Plan Inventory & Production Requirements
Supply Chain Management Tools provide business-critical tools that enable solid inventory planning and forecasting using current market demands, seasonal sales, and historical data. It plays a crucial role in optimizing production schedules to meet market demands and reduce instances of stock-outs and excessive stocks.
▸ Streamlined Procurement of Raw Materials
The Procurement Management System replaces the traditional paper-based process of raw material procurement with an out-of-the-box solution. It completely automates the process of placing raw material procurement orders every time the stock level reaches a certain threshold. Moreover, it manages vendor efficiency and provides real-time information about vendor performance.
▸ Become Agile & Take Advantage of Unpredictable Opportunities
ERP eliminates the complex activity of pulling data from different departments and consolidating it in one place. As a result, businesses gain access to up-to-the-minute and accurate information which helps them become agile to both internal and external changes, gain competitive advantage, and take advantage of unpredictable opportunities.
▸ Track Equipment Downtime
Tracking equipment downtime can be a challenging task in the absence of an ERP. It enables companies to keep production running and monitor assets’ performance. Not only does it reduce the instances of downtime, but also ensures assets run smoothly at optimum performance.
▸ Real-time Collaboration
ERP builds a centralized database that contains organization-wide information from different departments which enables real-time collaboration among employees. The real-time collaboration tools facilitate better results in today’s fast-paced world and provide decision-makers an up-to-the-minute 360-degree overview of business operations and financial position.
▸ Optimize Warehouse Costs
The Warehouse Management System reduces warehouse costs, automates various processes, saves storage, brings efficiency to the order fulfillment process, and enhances customer satisfaction. Companies can benefit from improved reporting accuracy and comprehensive visibility throughout the warehouse management processes.
▸ Material Requirements Planning (MRP)
The MRP feature in both Cloud ERP and On-premise ERP facilitates planning, forecasting, and scheduling raw materials and compares multiple potential scenarios to optimize lead generation, minimize production delays, and build efficient materials planning strategies.
▸ Reduced Transportation Costs
ERP encompasses extensive capabilities to optimize shipping routes and schedules and monitor engine performance and driver performance. It also assists businesses with costing, freight billing, and management of transportation expenses. As a result, the company benefits from lower transportation costs and reduced time.
▸ Brings Transparency
ERP modules store all organization-wide data in a central database. It provides detailed insights into different types of records — sales, customer data, and financial records. These records are easily available for auditing and reporting. Moreover, ERP eliminates human errors and discrepancies in the data, thus enabling businesses to overcome regulatory and compliance challenges.
▸ Improved Decision Making
Indian ERP Software unifies data across the organization and presents it in a modern data architecture with detailed analytics, reports, and relevant insights that help the company build data-driven strategies, and make timely & informed decisions. Thanks to BI tools, ERP uplifts sales performance, provides a better understanding of consumer expectations and market trends, and helps better understand emerging opportunities and challenges.
Improve Supply Chain Management with Sage X3
Sage X3 is an extensive solution that optimizes the key aspects of the supply chain management process and helps businesses become super-efficient. It comes with industry-leading modules that cater to different industry requirements and provides much-needed flexibility, scalability, and customizability. With a single source of truth, your company can benefit from better demand forecasting, cost-effective transportation planning, and better inventory management.
FAQs
What Features Should I Look for in an ERP for Supply Chain Operations?
In order for your business to experience exponential growth and benefit from reduced costs, it is important to select a top-notch ERP that encompasses various features such as automation, real-time KPI analysis, powerful forecasting & reporting tools, customization abilities, and scalability, among others.
How Does ERP Reduce Supply Chain Costs?
ERP drastically reduces supply chain costs in various ways. For example, it streamlines various supply chain processes, optimize routes to bring down logistics cost, minimize customer lead time, plan inventories, and proactively address gaps in the supply chain operations.
How Long Does the Implementation of ERP for the Supply Chain Take?
The ERP implementation can take time depending on the size of your company, the complexity of the business operations, and the volume of data. Typically, the process takes about a few months to years, depending on different factors.
How Can I Overcome the Implementation Challenges?
Implementation of the ERP is a long-term and complex process that requires setting up a Project Team with proficiency in the ERP implementation. ERP Vendors also provide professional support and assistance to help with the implementation process and mitigate any challenges. Your company can also hire a third-party consultancy for additional specialized assistance.
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