The Role of ERP in Supply Chain Management

The Role of ERP in Supply Chain Management

ERP systems streamline supply chain management by integrating various functions like planning, execution, monitoring, and measurement. What’s even more impressive? They enhance efficiency, visibility, and decision-making across inventory, logistics, and production processes.

42% of companies worldwide have already adopted ERP systems to support their supply chain operations. Cloud-based ERP solutions offer real-time insights, cost savings, and accessibility. For further insights into the role of ERP in supply chain management, we’ll cover:

  • What is ERP in Supply Chain Management?
  • Supply Chain Management Elements
  • Benefits of Using ERP in Supply Chain Management
  • Key Areas Where Supply Chain Processes Are Supported by ERP
  • How to Identify the Right ERP to Enhance Supply Chain Management
  • Enhancing Supply Chain Management Through Onboard’s ERP Training & Change Solutions
  • Common Questions About the Role of ERP in Supply Chain Management

Looking for Training Support with your ERP Project?

We’ve supported over 750 ERP projects across the globe.

What is ERP in Supply Chain Management?

Enterprise resource planning in supply chain management refers to software systems that organize and improve day-to-day activities such as production, logistics, and distribution of goods. The ultimate objective is to ensure resource availability, timely order fulfillment, cost reduction, and the optimal utilization of resources.

Supply Chain Management Elements

To effectively manage a supply chain, it is essential to understand and address its key elements:

a) Supply Chain Planning

Supply chain planning consists of designing policies and procedures that guide the operational practices of the various supply chain partners. In this stage, various activities are performed, including deciding marketing channels, devising promotional strategies, setting quantities and timing for production, regulating inventory at an optimum level, and developing replenishment policies. Fundamentally, supply chain planning establishes the boundaries within the supply chain, providing the basis for efficient execution.

b) Supply Chain Execution

The application of execution-oriented software apps enables the frictionless procurement of goods and services across the supply chain. This part includes applying systems for manufacturing, warehousing, and transportation execution and solutions that give visibility across the whole supply chain. Supply chain execution that works well enables the flow of products from suppliers to customers, eliminating disruptions and improving operations of the manufacturing industry as a whole.

c) Supply Chain Monitoring

Monitoring is the continuous process of rating all the activities in the supply chain as they happen in real time. It involves monitoring and evaluating the position and performance of particular activities against agreed metrics and objectives. Through the regular measurement of key performance indicators (KPIs) and the detection of deviations from the forecasted outcomes, organizations can react quickly and make improvements to the supply chain.

d) Supply Chain Measurement

Measurement involves evaluating the actual performance of supply chain activities against planned targets. This phase often utilizes scorecards or benchmarks to compare performance metrics and identify variances. By systematically measuring performance and analyzing deviations, organizations can gain insights into areas for improvement and take corrective actions to enhance overall and improve supply chain management and efficiency.

Benefits of Using ERP in Supply Chain Management

Managing diverse aspects simultaneously can be challenging without an ERP system integrated with SCM. The benefits of this integration are substantial:

360° Supply Chain Visibility:

ERP systems with a common data model offer advanced analytics shared throughout the entire supply chain, synchronizing supply and demand to meet customer delivery expectations predictably.

Optimized Inventory:

ERP systems with inventory management capabilities help maintain sufficient levels, avoiding stockouts during peak demand and reducing uncertainty that can lead to excess inventory.

Oversight Over Vendor Performance:

ERP systems present a complete record of suppliers, thus facilitating real-time collaboration and informed decision-making on supplier performance.

Data-Driven Decision-Making:

ERPs integrate data for actionable intelligence across the business, assuring decisions are data-driven, with BI at the forefront.

Greater Supply Chain Resilience:

Improved visibility and control provided by ERP allow proactive responses to supply chain disruptions, enhancing overall resilience.

Efficient Order Fulfillment:

ERP systems automate production scheduling and provide real-time status updates on the production process, which helps effectively allocate resources and deliver orders on time.

Real-Time Management with Cloud-Based Infrastructure:

Cloud-based ERP applications offer real-time access to global supply chains and chain management systems. This feature is not available with on-premises solutions. In addition, cloud-based ERP applications provide better security and mobility for data.

Improved Customer Satisfaction and Retention:

Efficient procedures and operations will allow a network of smooth supply chains for on-time order delivery and customer satisfaction with repeat orders, resulting in higher customer retention rates.

Automation to Minimize Human Errors:

ERP systems incorporate automation features that help eliminate human errors in typical supply chain tasks, improving the quality and efficiency of the supply chain functions.

Let’s understand with an example:

Every step in the supply chain depends on the preceding one. For instance, if there are delays in sorting and processing incoming shipments at distribution centers, it can lead to backlogs in inventory. This, in turn, will affect the availability of products for retailers and ultimately impact customer satisfaction. ERP systems play an important role in identifying potential bottlenecks, optimizing distribution center operations by providing real-time insights into inventory levels, informing the respective teams about the concerns and allocating reliable resources to carry out tasks. Thus, they ensure timely delivery of goods to retailers and customers alike.

7 Key Areas Where Supply Chain Processes Are Supported by ERP

The role of ERP in supply chain management extends to every stage, from planning and procurement to inventory management, manufacturing and delivery. Here are key areas where companies can use ERP in their improve supply chain management strategy:

#1. Supply chain planning: Efficient ERP systems contribute to supply chain planning by optimizing inventory levels, scheduling production, and determining product delivery dates.

#2. Inventory management: Integrated systems enable companies to get an exact view of inventory levels that assist them in maintaining optimal stock levels, and as a result, stockouts and overstocks are no more.

#3.Warehouse management: ERPs offer functionalities whereby inventory tracking, space optimization, and order fulfillment, among others, can be achieved, and therefore, efficient warehouse management can be done.

#4. Material management: Integrating systems deploying procurement and resource utilization with these systems and making the material management process simpler are the major goals.

#5. Purchasing and procurement: ERP systems will automate the purchases and procurement procedures; thus, they will ensure efficient communication with suppliers or reduce manual mistakes.

#6. Monitoring and maintenance: Integrated systems help businesses track the supply chain in real time, thus allowing them to identify and resolve issues instantly.

#7. Measurement and assessment: ERP systems gather comprehensive reports and analytics for the organization to measure the efficacy of its supply chain operations and procurement.

How to Identify the Right ERP to Enhance Supply Chain Management

Choosing the ideal Enterprise Resource Planning (ERP) system for your business ensures you have the right tools to optimize supply chain management processes. By keeping in mind many things, you may choose the right move. Here are key considerations to keep in mind:

User-Friendly Interface:

The platform you choose should be user-friendly and easy for all, from the shipping and receiving personnel to the production and accounting departments. Usability, which facilitates the transition and use of the system within or across your organization, is an important consideration for its successful adoption.

Cost Management:

Review the expenses involved in different ERP options while considering the bid-buy and ongoing maintenance expenses.

The subscription-based model of cloud-based ERP solutions covers all the setup and operating expenses, including updates and storage. Its predictability in expenditures, among other benefits, gives rise to quicker time-to-value.

Integrability with SCM:

Select an ERP software solution with the best inventory control features and automatically synchronize with SCM software.

The integrated SCM and ERP solutions are located on a single platform with the same data model, making data processing fast and easy. Minimize custom or manual integrations that are extensive and costly in the long run.

Common Data Model:

Opt for an ERP system with a unified data model that ensures data accuracy and consistency across SCM and ERP functions.

Deploying a suitable data model from the start saves time and effort in connecting and managing information within your organization.

Cloud-Based ERP Solutions:

Consider opting for a cloud-based ERP solution that offers cost savings, optimal visibility, and accessibility.

Cloud-based ERP systems connect every node in your supply chain to manufacturing business processes and data, providing flexibility and accessibility from anywhere on any device.

Enhancing Supply Chain Management Through Onboard’s ERP Training & Change Solutions

At Onboard, We are about putting people first & we believe that technology comes second. We know that only the revolution, not the system, produces the change among people. Our focus is on providing support for digital transformation, training, and change management during the implementation or upgrade process of several ERP systems, including Microsoft Dynamics 365, SAP S/4HANA, Oracle Cloud ERP, etc., to add value to our customers from the industry.

Our clients’ roster includes respected brands such as Dr. Martens, PANDORA, Santen, and KodakAlaris. The comprehensive list continues with other well-known brands. As pioneered experts in ERP training and change management, we provide customized courses that are detailed enough to better address each of our client’s needs. Whether expanding into a new ERP implementation or migrating your present system to a new version, we support you in every step you take.

Why Choose Onboard:

Flexibility: We know that each organization we work with is unique. Therefore, we can offer individual and customized solutions. That’s why our training can be adapted to suit your needs and change management programs can also be customized according to your needs. Whether you seek holistic assistance or targeted resources, our services will be customized to meet your individual requirements.

Proven Expertise: With an estimation of over 20 years and more than 750 projects undertaken already, we have the experience and the aptitude to take you through your ERP journey. Our in-house staff of full-time advisors is well-equipped with practical knowledge and niche market expertise that every endeavor deserves.

Comprehensive Solutions: From preparation phase planning to teaching phase delivery and from the development of training materials to training of project teams, we provide a complete range of services required to ensure success in the ERP implementation or upgrade process.

Tailored Approach: Together with our clients, we design tailor-made ERP modules and training for end users that are easy to understand. We aim to allow your team to use the ERP system to its fullest by working with them to learn and acquire the knowledge they need.

Client Satisfaction: We take pride in our track record of client satisfaction. Over the years, we’ve supported hundreds of private and public sector organizations across North America, with customer relationship management helping them achieve their ERP goals.

Whether you’re just starting your ERP journey or looking to enhance your existing system, are here to help. Contact us today to learn more about how we can support your ERP training and change management needs.

Common Questions About the Role of ERP in Supply Chain Management

Q1: How does ERP contribute to efficient order fulfillment in the supply chain?

ERP automates order scheduling, providing real-time information on production status. This helps allocate resources effectively and streamline the delivery process, preventing bottlenecks.

Q2: What role does ERP play in improving coordination between businesses and vendors in the supply chain?

ERP in logistics and supply chain management ensures real-time connectivity between businesses and vendors. When an order is received, the supplier is promptly notified, allowing them to meet logistics requirements on time and avoid shortages of raw materials.

Q3: How does ERP enhance transparency and visibility in supply chain operations?

ERP systems provide clear, detailed, and real-time data for business operations. This transparency aids managers in identifying issues, making informed decisions, and taking appropriate actions to avoid larger problems in the future.

Q4: What are the benefits of using cloud-based infrastructure in ERP for real-time supply chain management?

Cloud-based ERP systems offer accessibility from anywhere, anytime. They provide better data security and mobility than on-premises solutions, enabling real-time supply chain management.

Q5: How does ERP contribute to customer satisfaction and retention in the supply chain?

ERP for supply chain streamlines processes, ensuring a smooth supply chain management SCM, network, and timely order delivery. This builds customer trust, leading to repeat orders and increased customer retention.

Q6: In what ways does ERP minimize human errors in supply chain processes?

Automation in ERP for supply chain management reduces human intervention in routine tasks. For example, it automatically requests restocking when inventory is low, eliminating the chance of manual errors in raising restocking requests.

Q7: How can manufacturers use ERP forecasting and analytics features for data-driven supply chain decision-making?

ERP systems provide business intelligence features like real-time reports and data analysis. Manufacturers can use these insights to identify trends, understand process strengths and weaknesses, and make data-driven decisions to overcome challenges.

Q8: What role does ERP play in risk management within the supply chain?

ERP systems with reporting and forecasting features allow business leaders to access historical data. This helps in foreseeing potential challenges and being prepared. In situations beyond human control, such as a pandemic, ERP SCM facilitates better team communication and enables successful order delivery.

Q9: How to prepare your team for ERP implementation?

It involves integrating a new system into existing business operations, affecting various departments and processes. However, success largely depends on how well the team is prepared for this transformative journey.

Sources:

Nicky Cortes
Nicky Cortes
Director of Training and Development

As Director of Training and Development, Nicky's role encompasses Trainer Management and the development of Onboard's strategic training solutions. After 25+ years as a trainer she has a wealth of information at her fingertips. She scopes complex requirements and devises training plans to roll-out ERP end user training. Nicky is able to analyse large organisations and user groups, presenting the information back to clients in a comprehensive and clear manner.

Related Posts

Download FREE eBook Now

Your step by step guide to a successful ERP implementation, ensuring confident and competent users.

    Image link