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Understanding the Role of ERP in Supply Chain Management Services for Effective Optimization
#DrivingExpertLedTransformation
Neha Bhagat
Senior Director – Microsoft Dynamics (Practice Head)
February 26, 2021
Supply chain management is considered one of the complex yet vital components of a business. To promote growth, it is imperative to have robust ERP software that streamlines various processes, including demand, procurement, supply, inventory, transportation, and customer data. A key feature of modern ERP systems is the inclusion of supply chain management in ERP, which allows businesses to integrate and automate supply chain operations for better coordination and decision-making. According to a report from Finances Online, some of the most common KPIs used for supply chain monitoring include daily performance, cost reduction, production service rate, inventory turn, production time, lead time, return rate, and ROA. With the complexity of tasks and the need to analyze data from various sources, ERP for manufacturing software providers offer a well-integrated supply chain management module within their ERP offerings. Supply chain optimization services are a part of these ERP software solutions that help enhance business efficiency.
By using supply chain management services, you can enhance real-time decision-making and streamline operations across various departments. These services are essential for optimizing inventory, shortening lead times, and boosting overall supply chain productivity.
The Role of ERP in Supply Chain Management
Over the last few years, and especially during the COVID-19 situation, organizations worldwide have recognized the many benefits of ERP software in supply chain management (SCM). From improved customer service and workflow automation to cost reduction, ERP for retail has proven to deliver several advantages. One of the most notable developments is the increasing adoption of ERP in Supply Chain Management, which plays a crucial role in driving efficiency and resilience across operations. Key features underscore the role of ERP in Supply Chain Management, making a substantial impact on optimization. Some of them are:
- Cross-platform visibility resolves quality issues and improves time to market.
- Supply chain planning software helps stay ahead of customer demand through agile planning.
- Analytics help optimize logistics and inventory.
- Monitoring and maintenance reduce equipment downtime and OEE. (Overall Equipment Effectiveness)
- Faster recovery from break-in supply-chain after COVID-19 in terms of supply and demand.
Benefits of implementing ERP in Supply chain Management (SCM)
Reliable and direct inter-department communication with IoT
ERP is a business-wide software that helps connect a network of parties such as manufacturers, suppliers, distributors, retailers, and customers. An ERP system in supply chain management plays a pivotal role by facilitating transparent communication among departments, thus eliminating information silos. ERP software enables supply chain optimization by updating information in real-time with the help of IoT (Internet of Things), eliminating communication bottlenecks that can ultimately lead to confusion and delays. Manufacturers, suppliers, distributors, and retailers have access to a variety of data sources with the help of IoT sensors that regularly provide them with data on shipments, warehouse inventory levels, customer-owned assets, and more.
Integrating supply chain management services within an ERP system in supply chain management enables businesses to streamline information flow across the entire supply chain, improving coordination and minimizing delays. These services ensure real-time tracking, analysis, and sharing of data from multiple sources, empowering organizations to make timely and informed decisions.
As a holistic platform, ERP feeds the relevant data of the processes collected from different sources to the users. Multiple users within the supply chain benefit from this data as it helps streamline the completion of tasks, thus leading to an efficient product delivery timeline and improves tracking accuracy. The real-time data leverages predictive analytics to eliminate production slowdowns and enhance production efficiency across locations.
Improved end-to-end supply chain visibility and transparency
According to the GEODIS Supply Chain Worldwide Survey, 62% of organizations have limited supply chain visibility. A sound ERP software with Block Chain technology gives supply chain visibility to monitor customer demand, market trends, and inventory to maintain agility. This transparency allows businesses with better customer servicing and problem-solving capabilities. Management has better insight into the various parts of the supply chain, thus making more informed decisions by understanding the relevant data issues. Block Chain combined with IoT can help customers to track the status of their assets along the supply chain in a transparent and secure manner.
Efficient demand planning and monitoring
The very definition of supply chain optimization requires a strong understanding of demand planning and monitoring. Using an inventory management module augmented by Big Data and Analytics in the ERP, organizations can create strategies centered around increased control, better margin, and improved fulfillment agility, leading to an enhanced customer experience through shorter delivery time.
Better supplier-qualification process
A good ERP for manufacturing allows organizations to move from a reactive to a proactive state of performance. Rather than wait and react to the quality of the materials provided by the supplier, a good ERP allows organizations to be proactive and optimize the qualification process to ensure the organizations’ vendors meet the company’s standards, in terms of quality of materials supplied. By standardizing this process using ERP, companies can effectively evaluate current and potential vendors to improve sourcing and fulfillment strategies.
Now that we have seen what the various benefits of implementing an ERP are, the question remains which ERP to choose? Microsoft’s answer to this dilemma is Microsoft Dynamics 365 Supply Chain.
Microsoft Dynamics 365 Supply Chain
Microsoft Dynamics 365 Supply Chain makes operational innovation and technological modernization, the key pillars for a modern supply chain planning, possible. With comprehensive supply chain management services, businesses can seamlessly integrate advanced capabilities to enhance agility and responsiveness across their supply chain.
It enables operational innovation and technological modernization by enabling users to
Operational Innovation
- Optimize fulfillment by synchronizing information across logistics, sales, and purchase management.
- Streamline the procurement process and get deep visibility into product inventory.
- Accelerate product delivery with advanced transportation and warehouse management.
- Implement a unified and intelligent production lifecycle.
Technological Modernization
- Automate business processes across Dynamics 365 solutions to create a unified user experience.
- Build and deploy scalable web and mobile client apps.
- Move toward a modern approach by infusing IoT and mixed reality.
- Seamless integration capabilities with business ecosystems.
