What is the role of ERP in Supply Chain Management?

What is the role of ERP in Supply Chain Management?

What do Sheng Shiong and Netflix have in common? They both have a strong and robust supply chain system.

Sheng Shiong is a local supermarket chain well loved by Singaporeans. They have a strong and sophisticated supply chain system that is supported by their integrated retail distribution IT system (Enterprise SG 2015).  

The same goes for Netflix. Netflix focuses on the digital supply chain, expanding into content creation and distribution at the center of the supply chain. Netflix also gathers data it collects from its users to understand patterns. Then, using machine learning algorithms, it predicts what shows and movies people will want to watch next and recommends accordingly (Netflix Technology Blog, 2017b).

Put simply, supply chain is about delivering the product to the right place, at the right time, at the right quantity to the right consumer.

Having a robust supply chain system in place keeps companies competitive and without it, there could be potential waste of resources, time and overall lack of strategy.

Here’s the secret: Add the genius of ERP software into your supply chain management sauce.

In this article, you’ll learn more about how ERP helps support your supply chain processes in order to achieve increased profit from our Supply Chain resident expert in Aristou- Ang KL. This blog post is part 1 of our 3-part series on Supply Chain, so make sure you check back in so you don’t miss out!

What is Supply Chain Management and why is it important?

A supply chain system consists of organizations, processes, information and resources to send a product to either a manufacturing plant or a customer at the right time, to the right place at the right quantity. Examples of organizations range from: order processing function, warehouse function, production function, procurement function, transportation function, planning function.

With good supply chain management in place, operations can take place at a minimum cost, and working capital required for inventory is efficiently utilized. This means inventory turns are as high as possible, and obsolete inventory as low as possible.

Ultimately, the important goal is to deliver the right product at the right time to the right place.

3 ways your supply chain management can benefit from ERP software

So how does ERP fit into supply chain management?

  • Businesses with multiple locations can utilize cloud computing to reduce the coordination gaps in distance, time and enable ease of collaboration. The data can be kept in a single location or if regulators require a local storage.

  • ERP reduces the need to unnecessarily duplicate storage in multiple places and reduces the risk of misplaced data. This saves time and maintains the standardized approach in all locations. 

  • Cloud computing allows immediate data access on the go with multiple devices. This enables flexibility in its usage 24/7, providing the sufficient resources they need wherever they are.

What role does ERP play in logistics?

ERP is a management system and it’s objective is to integrate all the different processes to deliver its products efficiently for revenue generation. In today’s competitive business environment, speed in execution is needed to acquire leads and close deals.

In a nutshell, ERP supports supply chain management by providing tools for each function to deliver products to the right place at the right time with the right quantity in the most cost efficient manner.

Functions refer to finance, production, sales, procurement, planning, warehousing, transportation, inventory, etc. 

Let’s look at a simple example together below:

Tom’s company specializes in selling furniture. His manufacturing team needs to work with different suppliers and partners to obtain the raw materials and resources to bring their finished products to market.

His team actively focuses on several supply chain strategies to boost plant productivity, enhance product quality, and cut down on manufacturing costs. As their operations become more extensive and globalized, they face the challenge of multiple bottlenecks and need a resolution to reduce production bottlenecks. 

Tom and his team turn to integrating ERP solutions as part of their supply chain.

He learns that ERP solutions enable them to streamline the path their products go through from supplier to warehouse and finally to store for customers. It can also support multiple modes; such as make-to-order, custom-build and provide operation support across stores in real time.

As a result, Tom business is able to avoid supply chain disruption. Tom’s business continues to grow exponentially with the help of ERP, and he is pleased with how ERP has significantly helped the efficiency and productivity of his furniture business.

Things to note about using ERP in Supply Chain

Not all ERP software is built in the same manner or provides the same service for your supply chain. There are more complex ERP softwares in the market that require time to master, while others are more simplified for quick going live implementation.

The same advantage applies to logistics as it is one of the functions in the supply chain. You’ll be able to customize and be selective with which process works best for your supply chain.

As your business expands, you will need to decide which systems work best for the growth of your business.

To learn more about what to avoid when achieving supply chain management excellence for your business, stay tuned for our next post in this series!

As with the likes of Sheng Shiong and Netflix, your business can benefit from a robust and well strategized supply chain process with the help of ERP. Stay tuned for part 2 of this series as we dive deeper into the one mistake why your supply chain isn’t working for you, and the solution to solve it.

Click here to read our other 3 part blog series on Power BI, or contact one of our friendly consultants today to find out more!

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