How Enterprise Resource Planning Helps Reduce Supply Chain Disruptions

How ERP can reduce supply chain disruptions

Modern companies must integrate their supply chains with other business functions to improve their resilience to external disruptions. ERP solutions can facilitate this enterprise-level integration. For instance, with an in-built supply chain management (SCM) module, ERP systems can provide end-to-end visibility of how goods move across the entire operation.

With real-time supply chain data, ERP systems enable business leaders to make informed decisions on critical functions like procurement and inventory management. Further, ERP systems can automate supply chain operations, thus saving both valuable time and expenses.

Here are 7 benefits of enterprise resource planning in supply chain management:

1. Accurate demand planning and forecasting

With accurate demand planning and forecasting, companies can foresee any supply chain disruptions and move to mitigate them. By analyzing historical data and customer insights, ERP systems can forecast demand patterns and future requirements. This enables companies to optimize inventory levels and replenish goods to prevent stockouts or excess stocks.

2. Efficient warehouse management

With ERP systems, companies can also streamline their warehouse and logistics management. For instance, ERP can automate warehouse operations such as order fulfillment and shipping. With real-time data on inventory levels and order status, organizations can use ERP solutions to improve their logistics management and optimize the frequency of their material reorders.

3. On-time procurement

Supply chain management also involves efficient material procurement from the right supplier, distributor, or manufacturer. With its integrated material requirement planning (MRP) feature, ERP systems act as a single source of information for all vendors and suppliers. Additionally, MRP can automatically synchronize the demand for the materials required for any product or good.

4. Production planning

With ERP-enabled supply chain management, product manufacturers can optimize their production schedule and capacity. This can work across production lines. Additionally, production managers can choose to sub-contract (or outsource) a production line to third-party companies.

With ERP’s production capabilities, companies can execute their production schedule on time by accessing all production-related data, including purchase orders, material requisitions, and replenishments.

5. Risk management

ERP solutions are crucial in risk management and mitigation across global supply chains. With its real-time data analytics capabilities, ERP systems enable global enterprises to identify potential risks in the form of short product supplies, transportation problems, and escalations in production costs.

Thanks to its early notification, ERP systems provide ample time for enterprises to develop any contingency plan or diversify their supplier network. For any geographical disruption, companies can plan their supply chains to go through alternative routes.

6. Supplier relationship

With supplier relationship management, ERP systems provide a centralized database of all its approved suppliers and vendors. This makes it easier for companies to manage their supplier’s contract renewals and track their performance. With integrated supplier information, ERP systems help companies evaluate their suppliers’ reliability and address any challenges they may be facing.

With efficient supplier relationships, ERP systems can help build a resilient and reliable supply chain, thus minimizing disruptions.

7. Data-driven decisions

With ERP-enabled supply chain management, business leaders no longer rely on their “gut feeling” to make important business decisions. Along with real-time data analytics, ERP systems provide them with timely insights from supply chain data.

With this data-driven approach, organizations can now:

• Monitor and analyze key performance indicators (KPIs) in their supply chains.
• Identify and act upon any potential areas of improvement.
• Drive continuous improvements to improve their supply chain operations.

How SAP Business One can reduce supply chain disruptions

As an ERP solution for small enterprises, SAP Business One (or SAP B1) can help them build resilience in their supply chains. Among its capabilities, SAP B1 can automate repetitive tasks such as order processing and inventory control. This frees up human operators to focus on other strategic supply chain tasks.

Here are some examples of how companies can leverage SAP B1:

• Manufacturing companies can use SAP B1 to increase their supplier network and look for alternative sources of essential goods and materials.
• Distribution companies can use SAP B1 to monitor inventory levels and adapt to potential stockouts.

As a recognized SAP business partner, Praxis Info Solutions provides implementation and consultation services to global companies. If you are looking for a reliable ERP partner for your supply chain operations, contact us today.