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erp in supply chain

Business-boosting Benefits of ERP in Supply Chain Management

In today’s global economy, supply chain management (SCM) has become absolutely crucial to ensuring the uninterrupted flow of goods between vendors, businesses and consumers—particularly where logistics and manufacturing are concerned.

In manufacturing terms, the involvement of numerous third-party suppliers, each responsible for providing goods on time and in the right quantities, means accurate and efficient SCM processes are essential. With increased scale and the expectation of super-rapid deliveries, manufacturing warehouse operations have become vastly more complex and so have supply chains; comprising manufacturers themselves, suppliers, logistics partners and retailers. And so, the role of ERP consulting and implementation in supply chain management has become ever more important.

of respondents feel SCM is a massive burden on their time.
State of Manufacturing Report
$101 billion
expected value of global ERP software market by 2026.

Today's businesses often partner with logistics software development vendors to build and implement custom ERP (Enterprise Resource Planning) solutions. With ERP software, enterprises can gain a real-time view of their business processes from a single easy-to-use dashboard, while automating many supply chain management steps to optimise their operational efficiency.

The role of ERP in supply chain management

The supply chains comprise a multifaceted, interdependent set of operations involving demand analysis, purchasing materials, manufacturing and selling the product to clients. Such intricate structure makes it complicated for the companies to manage SCM effectively. ERP in supply management is used to address various aspects across the finance, logistics, sales, manufacturing, and distribution sectors.

The essential uses of ERP to improve supply chain management for businesses:
  • Planning – by leveraging real-time data on inventory levels, managing inventory processes, and strategically planning work schedules for product delivery, ERP enables organisations to plan and adapt to the dynamic shifts in global supply chains' dynamics.
  • Procurement – the ERP system streamlines procurement and delivery by automating supplier selection, purchase order creation and invoice processing.
  • Inventory management – ERP systems can assist companies in optimising inventory levels by notifying them when a product needs to be purchased and help to avoid overstocking or stockouts.
  • Monitoring and maintenance – ERP provides a centralised source where companies can track the movement of goods, monitor production processes and equipment utilisation, and identify potential bottlenecks.
  • Measurement – by gathering data from internal and external sources, ERP solutions can introduce advanced measurement and reporting capabilities, enabling businesses to assess KPIs and supply chain metrics.
  • Global visibility – ERP provides centralised visibility into the entire supply chain within and outside the company.

There are a plethora of use cases for ERP in supply chain management, but we’ve given a breakdown of a few of the benefits, plus what to look for when considering other supply chain management ERP solutions, below.

4 key benefits of ERP in supply chain management

1. Streamlining demand planning and procurement

ERP system gives businesses a single view of their operations and can automate a chunk of their day-to-day processes, including demand planning. In doing so, demand can be created upon the receipt of orders, which not only ensures the leanest and most efficient use of raw materials and resources at any given time, but it also allows for more accurate job and delivery planning based on real-time data analysis. ERP is especially beneficial for procurement in custom manufacturing scenarios, where there isn’t a consistent supply of materials needed for the production process and ordering can be more complicated—often with longer lead times. With ERP for supply chain management in place, other key tasks like transportation of raw materials can be automated for improved efficiency.

2. Automating document processing

Keeping paperwork up to date and accurate can be a laborious and time-consuming task, but it’s nevertheless an essential part of business operations. ERP software solutions for business can automate things like invoicing, so that invoice documents can be automatically sent out to customers with no manual intervention required. ERP systems can also handle import and export documents to facilitate international shipments, archiving data while mitigating human error and providing a better all-round service to customers.

3. Smoothing third-party collaboration

Since a supply chain is made of multiple links, optimising the interaction between them can vastly improve the whole chain and ensure smooth deliveries and happy end customers. Integrating ERP software with supply chain management helps streamline communication between various vendors in the chain by connecting them through one centralised ERP system. This optimises efficiency by reducing bottlenecks in workflow and automating inventories so that materials are always in stock. ERPs also allow businesses to gain an overview of vendor performance, and to compare prospective vendors so that they know they’re making competitive decisions.

4. Boosting customer satisfaction

ERP solutions help supply chains maintain a consistent flow of goods and meet their expected service levels, which benefits the end customer and builds consumer satisfaction. ERP software gives businesses a comprehensive real-time overview of end-to-end supply chain operations, which allows them to spot potential pain points and make the necessary adjustments to improve services. This improved level of operational visibility also means that companies can make and keep service promises based on facts, rather than pre-defined best-practice SLAs.

erp in supply chain management

How to choose the right ERP supply chain management solution

Selecting the right ERP system for your supply chain is critical to success. Firstly, organisations must assess their specific business requirements and ensure the ERP system aligns with their goals. It is crucial to evaluate scalability, flexibility, and customisation options to accommodate future growth and the changing needs of an agile supply chain.

However, just as enterprises come in different shapes and sizes, there’s no one-size-fits-all ERP solution. To get the most from integrating ERP systems within supply chain management, you should choose custom ERP modules and solutions tailored specifically to your business's needs.

A custom logistics software development partner will work with you to analyse your requirements, get invested in your vision, and find the best-fit custom ERP solution for your business needs, which may occasionally mean challenging your original ideas.

A good ERP software development company will be able to work flexibly with you, depending on your specific requirements, either offering end-to-end solution development or bringing onboard a smart development team to augment your existing in-house resources with enhanced skills.

When selecting an ERP software development partner, it pays to check the vendor’s credentials, see how many similar projects they’ve completed and spend some time vetting their domain and technology expertise.

Implementing ERP in your supply chain: steps and strategies

Successful ERP implementation starts with thorough preparation. Engage key stakeholders, define project objectives, and establish a dedicated implementation team. Conduct a comprehensive analysis of existing processes and data to identify potential gaps and customisation needs.

Key steps in the ERP implementation process

The ERP implementation process typically involves system design, data migration, configuration, testing, training, and system go-live stages. It is crucial to follow a structured approach, involve subject matter experts, and conduct thorough testing to ensure system stability and accuracy of data.

Strategies for successful ERP implementation

Successful ERP implementation requires a robust change management strategy. Ensure stakeholders understand the benefits of ERP and how it aligns with the organisation's goals. Provide adequate training and education to the employees using the ERP system. Define realistic timelines, manage expectations, and foster an environment of continuous improvement and knowledge sharing.

Engage key users throughout the implementation process to gather valuable feedback, identify areas for optimisation, and ensure smooth user adoption. Regularly monitor system performance, provide ongoing support, and offer training opportunities to maximise the benefits of the ERP system.

Key takeaways

As logistics and manufacturing operations become more complex, businesses are turning to ERP systems more often. ERP in supply chain management streamlines processes like demand planning, procurement, and inventory management, providing real-time insights through a single dashboard.

Key benefits ERP brings to the table include

  • optimised resource use,
  • automated document processing,
  • enhanced vendor collaboration,
  • improved customer satisfaction.

Successful ERP implementation involves thorough preparation, stakeholder engagement, clear project objectives, and ongoing support for maximum benefits. Choosing the right ERP system is vital. However, there is no perfect fit for each company, thus, the best option is to go for tailored ERP solutions.

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What is ERP in supply chain?

Enterprise resource planning (ERP) in the supply chain helps to streamline the supply chain management operations. With ERP, companies can consolidate all supply chain operations in a single dashboard, have better visibility into end-to-end operations, receive cross-platform reports, automate processes, and more.

What does ERP stand for in logistics?
What is CRM and ERP?
What is ERP management?
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