The importance of supply chains
The supply chain is the journey that raw materials, components, and other goods take before they go into production or assembly, and then sold to customers. Many supply chains span across continents and are becoming increasingly complex. A resilient and trusted supply chain is now seen as critical and manufacturers need visibility over it to address any supply chain disruptions.
There have been some disruptions to supply chains that many businesses never even envisaged, for example, the Ever Given blocking the Suez Canal in March 2021. However, manufacturers should plan for certain eventualities, such as:
- congestion and bottlenecks disrupting the flow of goods;
- material shortage or scarcity;
- supplier problems and delays;
Supply chains and ERP
Companies need to take proactive steps to mitigate the impacts of supply chain disruptions. Trying to achieve this with legacy systems and manual processes is impossible. For a functioning supply chain, an ERP system is needed to consolidate and integrate processes across the business and provide the tools to achieve an optimized supply chain. A modern ERP system can help cut costs, improve operational efficiency, and enable real-time visibility enabling better informed decision-making.
Real-time visibility and data-driven decision-making
Supply chain management involves the continuous planning and orchestration of goods to meet customer demands. An ERP is a highly effective tool for consolidating and analyzing data pertaining to the movement of goods, from their origin to the point of demand.
One of the key benefits of an ERP in counteracting supply chain disruptions is the real-time visibility it can offer across the supply chain. It allows manufacturers to understand how goods are flowing to the shop floor and identify bottlenecks quickly. This information can help plan the arrival of goods so that production is scheduled. In turn, this can be used to provide customers with a more accurate timeline for delivery. When manufacturers use business intelligence capabilities in an ERP with real-time data and reporting capabilities, they can track and improve supply chain performance.
Greater supply chain visibility
An ERP enables manufacturers to see the location of inventory throughout the supply chain so they can respond quickly to supply chain disruptions. It allows them to make more informed business decisions, and have insight into every part of the supply chain to identify problems and address them speedily. An ERP system can assist in:
- managing the complex operations of a supply chain;
- notifying the manufacturer when problems occur;
- streamlining processes and eliminating inefficiencies.
Within supply chain management, the management of dispersed warehouses, especially across multiple locations, presents substantial challenges. These challenges can quickly escalate without proper tools and strategies. Warehouse management is key in supply chain operations, and an ERP system allows it to be optimized. Through ERP systems, organizations can achieve heightened inventory visibility of stock in every location, effectively mitigating the risks associated with stock-outs and overstocking.
Using inventory management to minimize disruptions
Deploying an ERP system as part of a supply chain management strategy also enhances information about stock data to improve stock levels and turnover. Manufacturers can accurately track shipments, inventory levels and demand to assist decision-making about inventory. This is particularly valuable where inventory surplus carries a high cost or stock-outs want to be avoided.
Organizations often struggle to access real-time updates on logistics and inventory, leading to decision delays. ERP integration alleviates this challenge, empowering businesses to connect with local and external activities, and gain timely cross-channel inventory visibility. This transformative step enhances overall supply chain management and operational efficiency.
How collaboration can mitigate supply chain disruptions
A well-functioning supply chain relies on the collaboration between internal departments and external partners to minimize supply chain disruptions. Trying to manage the information using emails or spreadsheets is error-prone and cannot scale as supply chains grow and get more complex. An ERP helps by:
- unifying information in a shared data model so that all stakeholders have access to the same real-time data, creating transparency and eliminating information silos;
- enabling communication with suppliers which creates better coordination and ensures disruptions are identified quickly and addressed accordingly;
- speeding up access to information means faster decision-making and quicker response to unforeseen circumstances.
With effective communication across supply chain partners, manufacturers can also identify if alternative sourcing options are available.
Better forecasting of supply needs
Effective demand forecasting is an essential aspect of supply chain planning. However, it can be a daunting task, given the numerous variables that are subject to constant change.
Manual processes are not conducive to forecasting supplies, but a manufacturing ERP can use sophisticated algorithms to analyze sales data, customer behaviour and market trends to forecast demand. It allows manufacturers to anticipate changes in demand and ensures they have the right resources at the right time. This leads to improved inventory planning and optimized stock levels, helping manufacturers to tackle supply chain disruptions.
An ERP can improve supply chain management
Using an ERP system to support a company’s supply chain can streamline and automate business processes and reduce manual errors and costs. It increases supply chain transparency and helps manufacturers tackle delivery challenges. By providing a unified data model, both internal staff and external partners can be kept up-to-date on activities throughout the supply chain. The real-time data that the ERP system can present creates better visibility and allows quicker decision-making when supply chain disruptions occur, so appropriate actions can be taken before the situation becomes too serious.
