Maximizing Performance: Role of ERP Software in Supply Chain Management

Supply chain management (SCM) is a key growth driver for businesses in today’s highly connected global economy. From turning raw materials and components into final products and getting them to the ultimate customer, SCM does this and more. To streamline ERP supply chain management is not only labor intensive, and time consuming but also costly. Moreover, ineffective management can limit productivity, cause delays, affect quality, and result in unnecessary expenses and loss. That’s where ERP software can greatly help businesses for smoother and more profitable outcomes.

Enterprise resource planning (ERP) is a software system that helps businesses run their entire operations, from supporting automation and processes in finance, human resources, manufacturing, supply chain, and services, to procurement, and more. It helps businesses eliminate waste, maximize customer value, and gain a competitive advantage in the marketplace by simplifying and optimizing their ERP supply chain management processes. But how does it happen? What’s the role of ERP supply chain management? What are the benefits of using an ERP supply chain? This blog will help you find answers to these questions and in addition, it’ll also explore the best ways businesses can implement ERP in their SCM operations.

7 Ways to Use ERP Software to Enhance Supply Chain Management

Here is an overview of how ERP supply chain management software plays an instrumental role in an effective supply chain ecosystem consisting of manufacturers, suppliers, distributors, retailers, and consumers. The software benefits enterprises in many ways, helping them manage physical aspects, such as storage and transportation, and the market aspect of catering to demand and supply to meet consumer expectations.

1. Demand and Planning

ERP creates an effective job scheduling providing real-time insights to supervisors about what resources are consumed and those which are used. As a result, the supervisors can plan and schedule delivery dates. Also, the software facilitates automatic supply and demand predictions based on historical and real-time data. This, in turn, helps enterprises to understand and respond to constantly evolving supply chains.

2. Procurement And Production

It allows procurement in custom manufacturing scenarios, in which there is no requirement for a constant supply of materials for production, and ordering is complicated due to longer load times. Companies using ERP software supply chain management software can cost-effectively manage the procurement and supply of goods, services, and other resources across the ERP supply chain. It involves taking care of manufacturing and warehouse resources to handle transportation and execution processes.

Moreover, the software takes care of manual tasks, including communication with vendors and suppliers, and automated tracking of communications. ERP can store all production data, including purchase orders, requisitions, and material replenishment, to help businesses execute a production schedule effectively.

3. Sourcing Materials And Delivery

Using ERP software with Material Requirements Planning (MRP) capabilities in SCM means you can synchronize demand with the materials needed to produce and store all vendor data in one system accessible easily. Additionally, supply chain management software security ensures that sensitive vendor and shipping information remains protected from unauthorized access. Moreover, an ERP system with Distribution Requirements Planning (DRP) capabilities helps businesses track shipments, display the number of items shipped, and link support and shipping to quickly schedule delivery timelines.

It could also help SCM maintain secure relationships with shipping carriers who provide estimated delivery timelines, ensuring compliance with security protocols while meeting delivery schedules.

4. Better Customer Service and Data Security

ERP systems come equipped with capabilities that allow users to maintain a consistent flow of goods and expected service levels. This results in serving the end customers better and building customer satisfaction. With a holistic real-time overview of end-to-end operations, the software allows enterprises to detect potential areas for problems and make adjustments accordingly to improve the quality standard of services, and operational visibility for businesses to maintain delivery schedules based on data.

Implementing ERP supply chain management in supply chain operations could mean building a broad customer base and strong relationships by solving the issues of customers and service partners. Also, the ERP application features robust data security that enterprises can use to maintain unbreachable security of sensitive and confidential data by implementing various security protocols, including limiting access to the management data to authorized users only.

5. Shipment And Finance

An ERP application maintains a central repository of customer shipments and delivery information to help companies maintain on-time delivery of inventory as scheduled, forming a key part of a smart supply chain. Besides, the software’s functionalities also enable businesses to ideate about packaging methods and set criteria to check the quality of both internal and external packages.

In addition, ERP software helps smart supply chain management with financial management by managing real-time credit limits and timelines for all customers. Based on ERP-generated data, companies can identify harmful debits or frauds, enhancing overall supply chain efficiency and security.

6. Inventory Management

Having an effective inventory management system helps you ensure that there’s a balance between materials in inventory to feed production processes and fulfill customer orders. You would need regular updates and notifications regarding the said information and this is where an ERP system pitches in. Additionally, having AI in inventory management not only automates the entire process but also simplifies it.

For instance, an ERP application can alert purchasing groups when it’s time to reorder items and predict customer demand and supplier lead times, in addition to current inventory levels. Therefore, ensuring that the right products are in the right place at the right time while keeping costs in check.

7. Monitoring & Maintenance

The traditional requirement of manually pulling and consolidating data from many different systems was not only a complex and time-consuming process but was also prone to error. and made it almost impossible to get up-to-date information. With ERP software and systems integrated into the supply chain, businesses can get real-time dashboards to monitor performance across their entire supply chain. This helps them quickly adjust to problems, such as delays in delivery times or manufacturing equipment breakdowns.

It also makes it easier for businesses to maintain asset management by tracking equipment utilization, schedule maintenance to keep production running smoothly and monitor asset costs.

Top 5 Benefits of ERP Software in Supply Chain Management

Having efficient ERP software in your supply chains is a game changer. It brings a lot of advantages to your organization other than streamlining your supply chain. So, let’s discuss them here:

1. Efficient Demand Prediction: An ERP in SCM brings about improved accuracy of demand predictions, ensuring a reduction in the cost of inventory in case of the large-batch production process.
2. Improved Reductions in Production Bottlenecks: An ERP designed for SCM helps companies reduce bottlenecks between internal processes and external suppliers. The cutting-edge solution ensures adequate procurement and supply of the goods, services, and other resources required across the supply chain.
3. Enables Informed Decision Making: Real-time consolidated data of the supply chain facilitated by an ERP helps business executives make more informed decisions to ensure improved customer satisfaction and profitable business growth.
4. Enables Inventory Optimization: An ERP system featuring inventory management capabilities can help companies maintain adequate inventory levels and rule out the possibility of stockouts when the inventory demands soar higher during peak hours. The software also comes in handy to reduce the chance of encountering uncertainty leading to costly excess inventory.
5. Conforming to Business Needs: An organization can rely on ERP applications to meet its business needs by utilizing software customization, like a host of applications that can be used and implemented as and when needed. It could help companies solve their operational problems and make effective decisions.

Best Practices for Optimizing Supply Chain Management with ERP

To maximize the benefits of ERP in supply chain management, businesses should follow these best practices:

• Define clear goals and objectives: Establish the desired goals and expected objectives before you integrate an ERP system in supply chain management. Doing so helps you stay on track whether it’s budget or business goals.
• Ensure data accuracy and integrity: Running of your entire supply chain smoothly and seamlessly will depend on what kind of data you’re feeding your ERP application. So, research, and invest time and resources in data cleansing and migration. This ensures accurate and reliable data is in the ERP system.
• Continuously monitor and improve: It’s one of the main tasks in implementing ERP software in supply chains- to assess and evaluate its performance. This will help you in developing key performance indicators and metrics to identify areas for improvement and optimize supply chain processes.
• Select the right ERP software: The decision should be based on the core requirements of your business, so, going for custom software solutions could be substantially helpful. However, remember factors like an ERP system that can be trusted with your changing and evolving business needs, seamless integration with all the applications in your organization, with the cost of choosing, customizing, and implementing an ERP system in your SCM.

Know the Difference: ERP Vs CRM

Final Words

The role and benefits of ERP supply chain management software are tremendous, helping enterprises to maintain entire supply chain lifecycles effectively. Real-time data provided by the software helps companies with improved insights into understanding every aspect of their supply chain, from procurement, production, and scheduled delivery to improved customer satisfaction.

However, to manage your supply chain effectively, you also need supply chain risk management software that can anticipate and mitigate potential risks, alongside an intuitively designed ERP that serves your business needs. Whether it’s automating the delivery of the final product to the consumer or handling the continuous flow of goods between vendors and consumers, these solutions are essential. Therefore, we advise you to hire a trusted custom software development company specializing in developing robust and intelligent ERP software solutions to help you make improved decisions in business and grow significantly in your niche.

Author

Abhinay Kansal

AVP - Technology