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The Role of ERP in Supply Chain Management

Businesses of all sizes and from varying industries have used enterprise resource planning (ERP) to conduct business for more than 60 years. ERPs began in the 1960s when a manufacturer of tractor and construction machinery worked with IBM to build what is believed to be the first material requirement (MRP) planning system. By 1990, MRPs had evolved as businesses realized they needed a unified database for information across their entire company.

Fast forward to today, and ERPs are a non-negotiable tool for businesses of all sizes and in varying industries. In fact, the ERP market is expected to exceed $49.5 billion by 2025, and in 2019, the ERP software market grew by 9%, representing a worldwide revenue of approximately $39 billion in total software revenue.

Although present in many types of businesses, ERPs are often tied with manufacturing and distribution and warehousing businesses, and with good reason: Fueled by data-driven market characteristics, ERPs are the perfect solution for a multifaceted supply chain business to organize and track all of its data in one place.

Successful supply chain management takes all tasks under the umbrella of inventory management and warehouse management and ensures they work seamlessly together to achieve operational efficiency. This article will dive into how ERP is vital for supply chain management, providing you with a guide to optimize inventory control and enhance customer service.

What Is Enterprise Resource Planning (ERP)?

An ERP system is the glue that holds a business together. Think of all of the various departments in a business. Each will have its own processes and systems. An ERP integrates those various systems in a way that keeps the entire organization functioning like a well-oiled machine.

An ERP can range from manual to sophisticated software. Many businesses today use digital ERP software to manage and integrate essential parts of business operations. ERP applications also help businesses remain more transparent by linking and sharing information between departments like human resources, finance, and distribution.

The five common components of ERP software are:

  • Finance
  • Human resources
  • Logistics
  • Manufacturing
  • Supply Chain

Advantages of ERP in Supply Chain Management

Technology as it relates to supply chain management is based on part and product visibility, location, and transaction accuracy. Many warehouses today still use manual tasks and data entry, like Excel, to track inventory information. With the fast-paced nature of business today, along with the severe disruption the global supply chain has endured over the past three years, more automated and accurate technology is needed. Enter EPR software: Seamlessly integrated ERPs are an essential part of supply chain management technology.

Streamline and Centralize Data Management

As mentioned above, ERPs are great for streamlining and centralizing processes. Utilizing a proper ERP will allow you to access all business operations, eliminate manual tasks, gather real-time information, and making overall better informed decisions.

Improve Inventory Control and Demand Planning

In 2023, maintaining a lean inventory that still meets customer needs can be a challenge. Worldwide inventory distortion – shrinkage, stockouts, and overstock – is an estimated $1.1 trillion. ERPs help eliminate excess inventory by providing accurate and real-time data about current inventory levels.

Enhance Order Fulfillment and Customer Service

ERP systems track products from the moment they enter your distribution center all the way through the picking and packaging processes. The constant, real-time visibility helps prevent errors, overstocks, and understocks, all of which in turn improve order fulfillment rates and customer satisfaction.

Another way ERPs aid in customer relationship management is by providing historical and real-time customer data. Many ERPs will track customer order history and total sales by customer, making it easy for businesses to prioritize high-yield customers. ERPs also often automate shipping and tracking notifications making it easy for your customer to stay informed throughout the entire order process.

Optimize Production and Manufacturing Processes

ERPs can be helpful throughout the entirety of the manufacturing process. From research and development to design to maintenance and quality assurance, ERPs help OEMs track progress, inventory, run reports, and schedule maintenance.

The best part? ERPs not only help conduct and track the manufacturing processes, they allow for these processes to be automated. The right ERP software will help with receiving, stocking, and pick/pack/ship processes. Having these processes automated throughout our warehouse saves time, money, and resources.

Enable Real-Time Decision Making

Business owners need to make decisions based on data, results, and forecasts. ERP software is the hub for all business intelligence; i.e. the information vital to making informed decisions. The fact that today’s ERPs track business operations in real time means decisions are made based on the most up-to-date information available.

Implement Sensor Solutions for Enhanced Supply Chain Management

The brain behind the real-time visibility that ERPs and warehouse management software (WMS) can provide your business today is sensor solutions. Sensors are used to collect data throughout your supply chain such as location of inventory and product availability, creating a complete map of your inventory.

There are several sensor-based solutions you can utilize for your business:

  • Handheld scanners and RFID devices
  • Portal readers
  • Mobile fork truck pallet readers
  • Ceiling readers
  • Robotic readers

Global brands like Honda, Toyota, Garmin, Mazda, and many more trust Surgere’s supply chain visibility software, localization solutions, and sensor technology to manage their supply chain to achieve operational excellence in today’s data-driven business landscape.

Surgere’s IoT sensor technology, Interius™, includes multiple forms of sensor technology including a catalog of certified RFID tags with 99.9% accuracy and fidelity. Knowing that no two warehouses are exactly the same, Surgere can create a custom solution catered to your specific warehouse needs. It is time to join the more than 50% of businesses that plan to acquire, upgrade, or update their ERP systems soon. Contact Surgere today to start your journey toward operational efficiency and effective supply chain management.

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