How ERP Can Help Manufacturers and Distributors Manage Their Supply Chains
As part of Solutions Review’s Contributed Content Series—a collection of articles written by industry thought leaders in maturing software categories—Paulo de Matos, the Chief Product Officer at SYSPRO, details how ERP solutions can help manufacturers and distributors resolve problems across their supply chains.
Disruptions across the supply chain are inescapable, but in the past few years, they’ve certainly escalated in severity and frequency due to trade wars, natural disasters, major supply failure, the pandemic, and most recently, the Russian-Ukrainian war. For instance, power shortages in China that affected large-scale production, Brexit in the U.K., U.S trade embargoes on China, the Suez Canal obstruction, and the Russian invasion of Ukraine have all caused delays and bottlenecks across the globe.
In a recent Gartner survey, 76 percent of supply chain executives indicated that their company faces more frequent disruptions than it was several years ago. The increasing complexity and length of international supply chains mean manufacturers and distributors must look at a combination of tools and approaches to be more agile in meeting everyday and long-term challenges.
With more reliable data from solutions like Enterprise Resource Planning (ERP) systems, industries can use data analytics to foresee disruption, comprehend its magnitude and impact on the supply chain, and formulate a response to mitigate the effects before they arrive. Here are some key supply chain challenges and how ERP supports businesses to gain the control they need in their operations while increasing efficiency and overall customer satisfaction.
Challenge 1: Linear Supply Chain Models
Many manufacturers and distributors have a linear supply chain model. This means when one factor in the supply chain breaks, a snowball effect cascades through the entire process. Streamlined approaches can cut down on costs and increase efficiency during business-as-usual but are unable to deal with supply and demand shocks. When global supply chains are disrupted, a stripped-out supply chain can leave factories unable to meet demand and exacerbate an economic downturn.
Solution: Adopting Supply and Demand Plans Driven by Real-Time Insights
Forecasting and managing supply and demand is critical for today’s global supply chains. An ERP solution integrated across the various functions of the business can enable manufacturers and distributors to build their procurement requirements based on the forecasted demand in the system. With the help of the right planning tools and predictive analytics, a business can ensure that they have the complete picture and effective responses to the risks.
Tools built into an ERP system like performance and risk indicators often improve decision-making. For example, companies can quickly respond to supply chain issues by adjusting the prices per the demand while moving different products to drive revenue growth or expanding the margins for a high-demand product with a limited supply.
Challenge 2: End-to-End Supply Chain Visibility and Transparency
Faced with global operations, market expansions, and stricter regulations, enterprises are overwhelmed by the massive amount of information from the different suppliers and customers. Businesses often contain internal silos, such as supply chain and procurement, and external silos between companies and their supply networks.
Manufacturers and distributors often struggle with the visibility of raw materials in production, meaning they cannot manage resources efficiently and streamline production processes. Consequently, each moving part of the supply chain must be thoroughly assessed and painstakingly monitored to ensure that the product is brought to market quickly and effectively. This is the manufacturing challenge, but having insights across the supply chain can help improve the business process.
The Solution: Collaboration Through a Supply Chain Portal
Improving supply chain performance requires a single view connected to the relevant systems and accurate, up-to-date data. This should also be accessible to all stakeholders. Data management and integration through a portal or portal dashboard give the organization much-needed visibility and control over all their supply chain processes, such as procurement, manufacturing, storage, and logistics. A supply chain portal also provides the ability to engage, communicate and connect with colleagues, suppliers, and customers while giving manufacturers the control and agility they need to deliver on changing needs and demands, ensuring shelves are stocked and ready to serve the market.
Building a digitalization strategy requires support from top management to ensure collaboration and success in transformation initiatives. A recent survey reveals that 51 percent of manufacturing CFOs plan to invest in machinery, robotics, and technology automation, and 61 percent believe that predictive models supported by meaningful measurement and reporting are needed to ensure the business remains competitive.
However, factory leadership needs to set clearly defined strategies, goals, and key performance indicators that address business-specific pain points to ensure the necessary return on investment is achieved. Without collaboration, alignment, and effective change management, digitization efforts will not produce the desired outcomes.
The Solution: A Digital Roadmap
Achieving a more resilient, agile, and predictable supply chain requires a connected supply chain. Information in a digital format is the lifeblood of a connected supply chain, which is driven by a variety of smart technologies, including automated warehousing, cargo tracking, and remote fleet management. While ERP is key to the digital transformation journey, organizations need a robust business strategy that underpins their supply chain strategy. Change management also plays a crucial part in engaging the staff and ensuring that the digital transformation efforts deliver the required results.
Organizations need access to accurate, real-time, and actionable data to drive customer satisfaction and business success. Manufacturers and distributors require a fully integrated ERP solution with embedded analytics to tackle their immense challenges by optimizing their business operations and satisfying customer demands while increasing factory output. Without it, companies may remain in reactive mode. However, it has a competitive advantage with more control over business operations.
The supply chain situation is difficult right now, and it doesn’t look like it will improve much in the near term. However, the intelligent application of a robust ERP platform can help companies mitigate current risk and lay the foundation for a better-performing supply chain once conditions return closer to normal, providing a significant competitive advantage.