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  July 3rd, 2023 | Written by

An ERP System can Help with Supply Chain Snafus

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The pandemic has ended. This does not suggest that the world has returned to a pre-pandemic state. In fact, many sectors of the economy are still struggling, while others are continuing to adopt new and innovative measures to ensure the next pandemic does not ravage us like Covid did for nearly three years.

One of those measures is the adoption of Enterprise Resource Planning (ERP) systems. ERP systems are a lot of things, but what they are at their core is the glue that binds a company’s distinct systems together under a unified umbrella. One of the areas that was most affected by the pandemic was supply chains. By nature, supply networks are subject to a host of interruptions. This includes but is not limited to geopolitical unrest, natural catastrophes, and of course, pandemics. As we witnessed firsthand, when supply chains falter in a globalized world the flow of goods is constrained leading to delays, higher prices, and dissolving consumer confidence.

ERP systems are smartly positioned to tackle three key supply chain issues: integration and visibility, demand forecasting and inventory management, and risk management and mitigation. Via a consolidated and integrated database ERP systems provide real-time data visibility and exchange. This allows for more agile collaboration across the company and enough time to quickly respond to disturbances. This was one of the central issues with supply chain failures during the pandemic.

Second, ERP systems provide businesses with the tools to estimate demand in real-time. Instead of relying only on historical data, demand estimates combine real-time, historical, market trends, and consumer behavior data. The integration of past, present, and future is a supply chain value-added. Lastly, ERP systems employ risk reduction techniques to identify and address vulnerabilities. Buffer stock building, alternate sourcing, and dual sourcing are some of the more widely employed.

While all of this sounds lovely, implementing an ERP system to address supply chain concerns does have its challenges. First, organizations must be aligned in how they will develop data governance frameworks. While it is common for different departments to use different systems, ERP systems function well when data integration solutions are in place beforehand, not post-ERP implementation. Second, like anything new, a cultural shift at the company is required. ERP systems equate to new workflows and this requires change management strategies, training programs, and employee engagement initiatives to be in place.

Lastly, not all ERP systems are alike. It is critical to take stock of the distinct areas and workflows in your firm and allow for customization options. To scale over time a good ERP system must be flexible and user-friendly. Supply chains are ever-changing and require an agile partner to complement them.