The Importance of Enterprise resource planning (ERP) to Supply Chain Management

Enterprise resource planning (ERP) solutions have turned out to be an integral part of supply chain management. Businesses need to interact with various partners and suppliers to gain access to resources and raw materials in a timely fashion and the right quantities to efficiently supply and distribute goods to the market (Pinkowski, 2017). The adoption of ERP Solutions comes out of the need to implement multiple supply chain strategies to cut down on costs of manufacturing, enhance product quality, boost plant productivity, and fulfill market demand efficiently. As operations become more globalized and extensive, SCM integration also becomes important (Manning, 2015). In this context, ERP Solutions provide multiple modal support such as multisite operational support, configure-to-order, engineer to order, as well as make to order in real-time (Baltzan, 2016). In SCM, ERP solutions streamline procurement, production, supply, and distribution pathways to avoid destruction right from the raw material acquisition to customer order fulfillment.

Business Intelligence

Integrated business intelligence helps businesses to easily manage its performance through use of updated analytics, performance indicators, alerts, and reports. With such an overview of an organization’s SCM elements at play in real-time, the business can make better decisions related to business intelligence (Pinkowski, 2017). A more common benefit in this regard is demand and planning. Real-time Analytics on reports such as customer orders enables businesses to streamline certain activities within the supply chain such as job scheduling, order management, and resource planning among others. In this context, ERP enables the business to better plan product delivery, inventory levels, and resource utilization to create a lean operation that responds to market conditions in real-time and automatically.

Integrated Customer Relationship Management

With integrated CRM, the business will have supply chain-related customer data readily available to relevant staff members. Thus, staff can instantly and accurately answer all questions concerning their customers (Baltzan, 2016). It also enables the business to attract new clients and retain existing customers, realize new revenue streams, and improves customer ties.  ERP system integrates all departments and functions throughout a business into a single IT system (Pinkowski, 2017). This system is ultimately effective in tasks regarding customer data regarding inventory, sales, orders, and service evaluation. At the same time, the system is associated with increased productivity, streamlined data flow, decreased operating costs, effective delivery of business insights, and improved decision-making related to customer needs management (Morris et al., 2010). The ERP system will also increase the profit to the business through saving time, managing employees’ behaviour and productivity, and maintaining customers’ relationships (Jenkins, 2015).

Mobility

The businesses’ mobile executives and employees expects to participate in organizations operations and therefore, they demand access to corporate systems from their smartphones and tablets. Modern ERP solutions enables the mobile executives and employees to remain in the know and thus, eliminate redundant data entry for coordination, enhance communication, and improve productivity. Modern ERP solutions connect all employees to one source of information thus, enhancing coordination throughout the company. Workers can comfortably share SCM related data, reports, and other important documents among themselves and also with customers. In this context, key decision-makers across the entire supply chain maintain real-time visibility on the performance of critical KPIs and are able to prompt key performance questions (KPQs) through the ERP system in real-time (Baltzan, 2016). Since the process is automated and hyper communicative, decisions translate into real work rapidly. Right from KPQs inputs to the creation of KPIs and finally, to production, business executives anywhere in the world can get an accurate picture of performance and productivity in several levels of granular data.

Support Global Operations

Today’s modern business supply chain operations are global and so are modern ERP solutions (Pinkowski, 2017). With integrated ERP, companies do not need localized solutions for each nation since they can easily report across locations and borders by using a single system. Central management of supply chain processes such as logistics and transport provides effective and efficient coordination of activities. Transport costs are one of the highest negatively impacting the gross profit of a business (Baltzan, 2016). Uncoordinated distribution is the main challenge particularly for small businesses that cannot afford to outsource to specialists’ logistics firms. ERP systems can map out delivery points and automatically provide data related to minimal costs of distribution. Granularized data will feature multiple elements and levels such as time, manpower, wages, and costs among others related to the distribution and delivery of commodities to customers.

Compliance

The right ERP solution improves compliance management, lowers risk, and enhances governance throughout the supply chain system. It can enhance compliance reporting, financial management standards, and deliver improved audit trails. Compliance and compliance reporting are one of the most common areas of business finance that can run into millions of dollars. Rights from government authorities to business partners, small businesses are under pressure to comply with regulations and standards of supply. Small and even large businesses try as much as possible to limit labour costs thereby cutting human intervention in nonessential areas of core production (Pinkowski, 2017). Unfortunately, compliance is one area where businesses overlook and only address periodically as deadlines approach. However, increased tasks around these deadlines affect business productivity and the smooth operation of the supply chain system.

High ROIC and Low Total Cost of Ownership

Today’s modern ERP solutions attracts high ROI in SCM and relatively low total cost of ownership. Consequently, advanced architecture and web interfaces are of great importance since they do save both time and money through making ERP solutions relatively easy to install, integrate, implement, maintain, and upgrade across the entire SC channel. Further, updated and sophisticated ERP systems provide advanced features that make it easy for employees along the entire supply chain channel to interface with each other and with the system easily (Morris & Venkatesh, 2010). An organization do not need to consider factors such as flexibility. features or cost of installation when making decision to adopt an SCM system of management. ERP solutions for SCM are really simple, easy, and productive for end-users (Morris & Venkatesh, 2010).

Coordination and Collaboration

ERP tracks the inventory of raw materials or bought-goods for resale without showing any favouritism. While the acquisition of raw materials or foods is going on, executives through ERP can send out a sales team to find customers (Shanks et al., 2003). The job of the sales team is to get those orders. ERP will take care of those orders but can also keep track of the sales people’s territories and their Commission’s (Shanks et al., 2003). When the day arrives for customer order fulfillment, ERP prompts delivery teams to make logistical arrangements while at the same time collecting customer information such as contacts and addresses that are fed automatically into the CRM system (Manning, 2015). ERP provides the capacity to customize each order and delivery to the need and preferences of each customer.

When customers make payments, ERP solutions provide safeguards to the business to the extent of guaranteeing their credit for 30 days for amounts up to $200,000 and above depending on the service level agreements (SLA) (Baltzan, 2016). In the case of big and demanding customers, ERP uses something called EDI. Thus, an ERP will often include an electronic data interchange module as well. ERP will help the business to fulfill those orders if the organization is in the distribution business (Umble et al., 2003). The system will tell executives how much inventory the business has on-hand, where it is physically sitting, and give the organization’s packers instructions on what to pick and put into the containers for customers with large orders (Umble et al., 2003). Thus, the business can create a virtual pool of inventory to be pulled from multiple sites to fulfill big orders. ERP further helps employees to arrange the shipment to get the product to your customer while filling the paperwork for the business to get delivers across customs over national and international borders (Manning, 2015).

Conclusion

Organizations are adopting more advanced ways on how they can boost productivity, achieve better decisions, gain a competitive advantage in the market, reduce costs, and positively manage growth.  In this case, Modern ERP Solutions is the best option since it provides real-time visibility for decision making, improves business processes, and boosts managing performance. Organizations are widely adopting Modern ERP Solutions for ease and convenient management of their operations.

 

 

 

 

References

Baltzan, P. (2016).  Business-driven information systems.  McGraw-Hill Education.  New York, NY.

Manning, A. (2015). Databases for small business: Essentials of database management, data analysis, and staff training for entrepreneurs and professionals. New York, NY: APRESS, Springer Science Business Media.

Morris, M. G., & Venkatesh, V. (2010). Job characteristics and job satisfaction: understanding the role of enterprise resource planning system implementation. Mis Quarterly, 143-161.

Pinkowski, M. (2017). ERP 101 – What is Enterprise Resource Planning Software & How Can Small Businesses Benefit From It. https://www.youtube.com/watch?v=hKX7MnOljOc

Shanks, G., Seddon, P. B., & Willcocks, L. (2003). Second-wave enterprise resource planning systems: Implementing for effectiveness. Cambridge (U.K.: Cambridge University Press.

Umble, E. J., Haft, R. R., & Umble, M. M. (2003). Enterprise resource planning: Implementation procedures and critical success factors. European journal of operational research, 146(2), 241-257.

 

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