The Power of ERP in Managing Supply Chains

Today’s global supply chains are complicated, spanning multiple countries, facilities, and partners. Raw materials and components pass through many hands before final assembly and distribution to customers.

This intricacy makes supply chain visibility and efficient coordination essential yet challenging. Even minor disruptions can ripple into substantial delays, costs, and bottlenecks.

Enterprise resource planning (ERP) software has become a critical tool for manufacturers and distributors to gain control over their entire supply chain. ERP software provides comprehensive visibility by connecting data across the value chain into one system. It enables streamlined processes, informed decision-making, and proactive optimization.

With robust ERP capabilities purpose-built for supply chain management, companies can:

• Track materials, inventory, and orders in real-time
• Collaborate seamlessly with suppliers and logistics partners
• Balance supply with predicted demand
• Identify and resolve bottlenecks rapidly
• Adjust plans nimbly based on updates across the network

The result is agile, efficient, and resilient supply chain operations – delivering lower costs, faster cycle times, and high customer satisfaction.

At Top10ERP, we have helped many businesses choose an ERP solution that excels in efficient supply chain management and adapts to complex operations in various industries.

Realizing the Benefits of ERP in Supply Chain Management

Implementing a robust ERP system tailored to improve supply chain management provides tangible benefits across logistics operations.

Here are a few benefits that stand out:

Enhanced Visibility and Planning

ERP software centralizes supply chain data to provide real-time visibility into:

• Inventory levels and locations
• Order statuses and tracking
• Production schedules and material flows
• Shipping and delivery status

With an integrated view of activities, supply chain bottlenecks become apparent. Teams can optimize plans and inventory to balance supply and predicted demand.

Streamlined Processes

ERP software automates redundant manual processes like:

• Purchase order creation and supplier integration
• Production planning and scheduling
• Warehouse management and inventory control
• Order fulfillment and shipping
• Returns and reverse logistics

Workflows become more efficient with data flowing seamlessly between departments and partners.

Improved Forecasting

Advanced analytics in ERP leverage historical supply chain data to:

• Identify trends and patterns in customer demand
• Predict future demand more accurately
• Adjust inventory and production plans accordingly

This reduces excess inventory while minimizing stockouts.

Stronger Supplier Collaboration

ERP solutions enhance communication and coordination with suppliers on:

• Purchase orders and lead times
• Payment processing
• Inventory planning and replenishment
• Quality controls and compliance

This upstream alignment ensures adequate inputs and rapid issue resolution.

In the manufacturing industry, in particular, ERP systems provide indispensable visibility and coordination across their production supply chain. From sourcing raw materials to managing in-process inventory to final product distribution, ERP helps manufacturing businesses optimize their end-to-end operations.

7 Key Supply Chain Management ERP System Capabilities

While ERP systems can have a wide array of functions tailored to different industries, for supply chain-centric businesses, certain capabilities stand out.

Let’s look closer at the key ERP capabilities essential for effective supply chain operations.

1. Inventory Management

Effective inventory management is paramount for a smooth supply chain operation, and ERP systems excel in this, providing:

• Real-time visibility into stock levels.
• Predictive analytics to forecast demand.
• Tools to manage stock turnover and reduce carrying costs.

2. Warehouse Management

Warehousing is more than just storing products; it’s about optimizing space, managing stock, and ensuring quick and accurate fulfillment. ERP solutions can help by:

• Organizing and optimizing storage layouts.
• Streamlining picking, packing, and dispatch processes.
• Integrating with barcode scanning and IoT devices for accuracy and efficiency.

3. Transportation and Logistics Management

Getting products from A to B efficiently and cost-effectively is challenging and crucial. Transportation & Logistics ERP systems can:

• Plan optimal routes.
• Monitor transport in real-time.
• Manage cross-border documentation and compliance.
• Provide insights into transport costs and performance metrics.

4. Supplier and Vendor Management

A supply chain is only as strong as its weakest link, making robust supplier and vendor management essential. With ERP, businesses can:

• Maintain detailed supplier profiles.
• Automate ordering processes.
• Monitor supplier performance and adherence to contracts.
• Integrate communication tools for better collaboration.

5. Order Management and Fulfillment

Order management is the bridge between a company and its customers. ERP ensures that this bridge is strong by:

• Automating order-to-cash processes.
• Integrating with e‑commerce platforms.
• Providing real-time visibility into order status for customers.
• Managing backorders and partial shipments.

6. Production Planning and Scheduling

ERP systems provide robust capabilities to optimize production planning and scheduling for manufacturers. Key features include:

• Scheduling machines, labor, and resources efficiently
• Ensuring materials are available when needed on the shop floor
• Gaining real-time visibility into production status and bottlenecks
• Monitor work in progress and finished goods inventory

ERP Systems with Superior Supply Chain Management

Not all ERPs are created equal when managing intricate logistics operations. After evaluating the top ERP systems, these leading Enterprise Resource Planning solutions rise to the top for their sophisticated supply chain functionality. They provide the visibility, integration, optimization, and flexibility needed to maximize efficiency across the value chain.

Choosing the Right Supply Chain ERP Software

Selecting the ideal ERP system tailored for your supply chain requires a deep dive into several pivotal areas.

Supply Chain Requirements and Processes: Begin by mapping out your end-to-end supply chain workflows. This should involve identifying current bottlenecks and areas of friction. Equally important is recognizing key metrics you aim to improve, such as cycle times and overall system visibility. As you sketch this roadmap, don’t forget to assess the need for integration with other systems, like your Warehouse Management System (WMS) or Transportation Management System (TMS). Finally, cast an eye to the horizon: What future objectives, such as global expansion or omnichannel retailing, might be on your agenda?

Comparing Top ERP Systems for Supply Chain: With the above groundwork, it’s time to dive into the ERP landscape. Start by shortlisting ERP systems that are renowned for their supply chain capabilities. Examine their features, especially in areas crucial to your industry, like inventory management, warehousing, and logistics management. Supplier and order management functionalities should also be under your lens. Embedded analytics and business intelligence tools can offer invaluable insights, so ensure these are robust. And as a litmus test, peruse the industry reputation of your shortlisted systems — what are other businesses saying about them?

Cloud ERP vs. On-Premise ERP Deployment: The decision between cloud ERP and on-premise solutions is often influenced by a mix of infrastructure requirements, available IT resources, and cost considerations. On the one hand, cloud ERP solutions offer scalability and accessibility benefits; on the other, on-premise solutions might align better with your security preferences and regulatory factors. It’s essential to strike a balance: Compare the upfront hardware costs with the long-term expenditure of ongoing subscriptions.

Implementation Planning and Change Management: Transitioning to a new ERP system is rarely a plug-and-play affair. It’s a journey. You must start by mapping out how data will migrate from legacy systems to your new platform. As with any significant change, your team will be at the heart of this transition. Crafting comprehensive training modules and adoption strategies is paramount.

Moreover, consider the external dimension: How will your new ERP solution integrate with partner networks? And remember, expert consultants can be invaluable, especially if your deployment leans towards the complex side. As you navigate this journey, have a clear project management approach — oversee the rollout, monitor its stages, and measure its success.
 

Measuring ERP Impact on Supply Chain

Implementing an ERP system is a significant investment, not just in terms of finances but also in time, effort, and organizational adaptation. But how can we measure its actual impact on the supply chain? It’s crucial to establish tangible metrics and consistently monitor them to be sure you are getting the most out of your investment.

Key Performance Indicators (KPIs): An ERP system’s effectiveness in the supply chain realm can be primarily assessed through specific KPIs. Three leading indicators stand out:

• Reduced Costs: A streamlined supply chain should lead to noticeable cost reductions, be it in inventory holding, transportation, or procurement.
• Improved Cycle Times: A well-integrated ERP should optimize processes, reducing the time from procurement to production to delivery.
• Enhanced Visibility: One of the primary advantages of ERP systems is the clear, real-time insight they offer into the entire supply chain. This visibility aids in quicker decision-making and proactive problem-solving.

Tracking ROI Over Time: While initial improvements post-implementation are encouraging, the real test of an ERP system’s value is its sustained performance. Tracking ROI over an extended period is necessary to gauge the return on investment. This involves measuring tangible benefits like cost savings against the total cost of ownership of the ERP system. Moreover, intangible benefits, such as improved customer satisfaction or increased agility in adapting to market changes, also play into the overall ROI.

Ongoing Optimization and Improvement: Supply chain complexity is ever-evolving, and resting on initial ERP success can lead to stagnation. For businesses to stay competitive, the approach to ERP software should be iterative. Regular feedback loops, system updates, and training sessions are essential. Additionally, as businesses grow and their supply chains become more intricate, the ERP system must adapt and scale accordingly. Periodic reviews, benchmarking against industry best practices, and open communication channels between end-users and IT teams can ensure that the ERP system remains a robust tool for an agile supply chain.

The ripple effects of a well-chosen and effectively implemented ERP solution can significantly enhance supply chain planning. But, like any tool, a system’s actual value emerges only when it’s continually sharpened and adapted to the task at hand. Businesses can ensure that their ERP system provides powerful assets in their supply chain arsenal by measuring KPIs, tracking ROI, and committing to ongoing optimization.

Lessons from the COVID Supply Chain Disruption

The COVID-19 pandemic caused unprecedented disruptions to global supply chains. Shortages, delays, and rising costs rippled through industries worldwide.

For manufacturing businesses, this meant shortages in critical components, assembly line shutdowns, and an inability to meet customer demand — all underscoring the need for resilient supply chains.

While the pandemic was an extraordinary event, several key lessons emerged that can help companies better prepare for future disruptions:

Build In Supply Chain Visibility

Many companies struggled to pinpoint where and why shortages or delays occurred in their complex global networks. Greater supply chain transparency and real-time tracking of inventory and orders is essential. ERP software systems can provide the visibility needed.

Diversify Suppliers And Transportation

Relying too heavily on a small number of suppliers or shippers left many companies exposed when disruptions hit certain regions. Spreading out the supply chain geographically helps mitigate localized impacts.

Increase Supply Chain Agility

The ability to rapidly adapt to changes in supply and demand is crucial. ERP tools allow more nimble forecasting, inventory management, and production planning to align with shifting needs.

Strengthen Supplier Relationships

Communication and collaboration with strategic suppliers improve the chances of overcoming challenges together. ERP systems facilitate transparency and data sharing with supply chain partners.

Build In Slack And Flexibility

Many lean supply chains lacked buffers to absorb shocks. Carrying more safety stock or building redundant supplier options provides important breathing room when the unexpected happens.

While COVID-19 was an extreme example, supply chain disruptions are inevitable. Companies that learn from the pandemic and leverage ERP to create flexible, diverse, and data-driven supply chain networks will be better positioned to navigate the next crisis. Those who fail to adapt may not be so lucky next time.

Artificial Intelligence in Supply Chain Management

As supply chain management becomes more technologically advanced, integrating Artificial Intelligence (AI) and ERP systems creates a potent combination.

Large software companies are investing heavily in AI, and that investment is quickly trickling down to Enterprise Resource Planning systems and, soon, will become part of supply chain management.

This merger paves the way for operations anticipating future needs, providing intelligent data analysis, and making automated decisions.

Here are five key areas where we are seeing AI-enhanced features improve ERP in supply chain management.

1. Predictive Analytics for Demand Forecasting: Traditional supply chain strategies often rely on historical data to predict future demand. AI-enhanced ERP systems revolutionize this by analyzing vast amounts of historical data with real-time insights and external market trends. The result? Highly accurate forecasts help businesses anticipate demand surges or lulls, enabling them to optimize inventory levels and reduce holding costs.
2. Intelligent Procurement: ERP systems can evaluate real-time supplier performance metrics with AI-driven insights. This ensures timely stock replenishment, helps identify reliable suppliers, and even suggests alternatives based on cost, delivery time, and quality. Such capabilities provide a smoother, more resilient supply chain.
3. Automated Decision-making in Logistics: Transportation and route optimization can be significantly enhanced using AI. ERP systems can now analyze traffic conditions, weather predictions, and delivery urgencies to suggest the most efficient routes, reducing transit times and fuel costs.
4. Enhanced Customer Service with Predictive Insights: AI-driven ERP systems can anticipate issues in the supply chain that might impact delivery times. By predicting these potential delays, companies can proactively update customers or rearrange logistics to ensure timely delivery.
5. Smart Warehousing: Integrating AI into ERP systems can lead to intelligent warehousing solutions. This includes predictive maintenance of warehouse equipment, optimized storage solutions based on demand predictions, and even automated handling of goods using robots guided by the ERP’s real-time data.

Need Customized Guidance Selecting ERP Software?

While our ERP selection tool is designed to be helpful, some prefer more personalized assistance directly from an expert.

Let our advisors provide a proven shortlist of supply chain ERP systems tailored to your unique requirements. We analyze your needs, handpick the top options, and connect you with leading vendors for demos, pricing, and next steps.

If you’d rather get specialist guidance via email or phone, contact us at selectionhelp@​top10erp.​org or 805−475−7650 (M‑F PST). We’re happy to provide complimentary one-on-one support in finding your business’s ideal supply chain management solution.

Before implementing an ERP system, businesses need to understand common queries concerning the functions, implementation, and benefits of ERP systems in supply chain management. Answering these questions can aid in informed decision-making and facilitate smooth transitions.

Can ERP help manage global supply chain networks?

Yes, leading ERPs support different languages, currencies, and regulatory requirements across countries. This enables real-time visibility and coordinated decision-making across vast global networks.

What are the benefits of using ERP for supply chain management?

ERP systems provide visibility, automation, and integration across the supply chain. This improves planning, reduces costs, increases efficiencies, and enhances collaboration. Key benefits include better inventory management, more efficient procurement, improved order fulfillment, and tighter supply chain integration.

What are the key supply chain management ERP features?

Key features include demand planning, sales and operations planning, procurement, warehouse management, transportation management, product lifecycle management, supply chain analytics, and integration with suppliers, logistics providers, and other trading partners.

What are the different types of supply chain management ERP solutions available?

Broad ERP suites or specialized supply chain management software can handle supply chain management functions. Options include on-premise and cloud-based systems provided by ERP vendors such as SAP, Oracle, Infor, Microsoft, and more.

How much does supply ERP software with supply chain features cost?

ERP costs vary widely based on the solution, number of users, implementation services, customizations required, and ongoing support fees. Smaller cloud solutions may start under $100 per user per month, while large on-premise ERP deployments can cost millions.

How long does it take to implement ERP with supply chain management?

Typical implementation timeframes range from 3 – 12 months, depending on the solution’s scope and complexity. Phased rollouts can spread implementation over a more extended period.

How can I choose the best vendor for ERP with supply chain management features?

Key vendor evaluation criteria include industry expertise, functional capabilities, technology platform, implementation services, training and support, total cost of ownership, and company viability. Develop precise requirements and carefully assess vendors.