Enterprise resource planning (ERP), the management of all the information and resources involved in a company’s operations by means of an integrated computer system. ‘ERP systems’ – Oxford Dictionary definition.
ERP software has become critical for the smooth functioning of businesses across each industry. The most crucial benefit of implementing an ERP system is automation that allows companies to perform operations at lightning speed, reduced cost, and without any human intervention. Another significant benefit of ERP software is that it destroys information silos. This feature allows different departments to share business-critical information without any hassle.
ERP software can be customised for a particular industry. But the benefits mentioned above apply to every industry. This article will focus primarily on supply chain businesses and why organisations operating in this space must implement ERP software.
ERP software integrates all functional departments.
Most businesses shut down because there is a lack of coordination between various departments. There exists no information channel through which business-critical data can be shared and accessed. Or the information exchange process is too slow that inhibits the business from growing to its maximum potential.
ERP software provides a swift exchange of information from one department to another, allowing them to work as a cohesive force.
For example, the support service team engages with customers regularly. Therefore, they have a first-hand experience of the customers’ challenges that the company must resolve at the earliest. And it will happen when these pain points are shared with other departments.
ERP software provides a centralised information platform where authorised stakeholders from each department can access critical data from anywhere and anytime.
Think of this scenario. You manufacture top load washing machines and become a market leader in this space. After a few years, there is a considerable reduction in sales. The support service team collects feedback from customers who have been using your top load washing machines for several years. And they find out that most of them have begun using front load washing machines. Immediately, a comprehensive report is prepared and shared with the product development team, which begins developing a stylish and affordable front load washing machine model.
Thus, sharing critical information increases coordination between departments, allowing speedy redressal of challenges and helps the company to boost its productivity.
ERP software significantly improves supply chain processes.
The supply chain is a complex term that includes various actors, such as the manufacturing company, vendors, suppliers, distributors, and end-users. Mismanagement or lack of coordination between these groups can fail the entire supply chain.
ERP software acts as a bridge between these departments by providing real-time information regarding activities and processes. For example:
- Inventory management: Get instant notification about the quantity of raw materials available in the inventory. Whenever the quantity goes below the set threshold, the company can immediately send purchase requests to the vendor.
- Real-time location of transport vehicles: Get extensive details about the real-time location of trucks and transport vehicles and correctly estimate the amount of time they will take to carry materials from source to destination.
- Warehouse management: Store finished products in an orderly fashion so that they are easier to locate while loading them on trucks.
- Shop floor management: Get real-time insights into how things are being managed on the ground. Identify late shipments, rush orders, employee mistakes, schedule activities, monitor deviation in standard procedures, and locate loopholes.
- Identify the best vendors: Automatically generate a list of the best supply chain vendors, suppliers, and distributors in your area based on pre-defined parameters.
- Spot discounts: Many vendors provide significant discounts for bulk purchases. ERP software allows companies to identify such vendors and purchase items at discounted prices.
ERP software provides business intelligence.
Business intelligence (BI) allows supply chain companies to manage supply chain planning, handle logistics solutions, and evaluate trade-offs based on real-time insights instead of historical data. Earlier, transferring inventory, arranging shipments, and releasing work orders was challenging. But with BI tools, this process has become smooth and convenient.
BI is revolutionising the supply chain industry by enabling them to leverage cost-effective solutions. However, remember that companies can lose considerable money through various loopholes, such as:
- Not having significant knowledge about customer profile — geography, demography, and psychography.
- Lack of understanding about customer behaviour — their needs, wants, desires, and ambitions.
- Less consideration on factors such as primary delivery channel, product mix, and degree of engagement.
- Not putting adequate efforts in critical fields like brand reputation, customer loyalty, and forecasting ability.
ERP software allows supply chain companies to gather vital information about their customers that helps brainstorm effective strategies. For example, if you can correctly estimate which products customers are more likely to purchase, you will significantly increase profits.
Applying data mining techniques to read between the lines.
Data mining techniques allow supply chain companies to understand the changing market conditions and customer preferences.Today, everyone has a social media account where they post product reviews and share their experiences. Companies must remember that people believe more in peer reviews than advertising campaigns. But it’s physically impossible to sift through millions of reviews that are uploaded each day. This is where big data techniques play a significant role.
Big data algorithms identify patterns and extract data from multiple sources, such as social media and billions of tiny IoT devices attached to each product today. This data allows companies to brainstorm what products have the highest selling potential and get a 360-degree understanding of their competitors.
Companies can integrate data from various sources and use the data mining power of ERP systems to gain end-to-end visibility that helps reduce costs, improve the service, and identify future risks.
Conclusion
The coronavirus pandemic disrupted industries worldwide in 2020 and has taken a toll on supply chain businesses. As a result, industries are reducing their dependence on manual systems and processes and are readily adopting digital tools and technologies.
ERP software is the bedrock of this digital transformation process. It will allow supply chain companies to understand the pulse of the customer, the present market conditions and keep an eye on the changes in government policies.
If you haven’t already deployed an ERP software or haven’t upgraded it to the latest version, then it’s high time.
Author:
Nishant Joshi likes to read and write on technologies that form the bedrock of modern-day and age like ERP, CRM, Web Apps, machine learning, data science, AI, and robotics. His expertise in content marketing has helped grow countless business opportunities. Nishant works for Sage Software Solutions Pvt. Ltd., a leading provider of ERP Software to small and mid-sized businesses.
You can learn more about him on Linkedin