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Four Ways ERP Improves Supply Chain Management

News & Blog

Accepted wisdom tells us that successful supply chain management requires an integrated management system providing an enterprise-wide view of key activities. Supply Chain managers need the ability to monitor and direct every aspect of their business including Customer Relationships, Supplier Relationships, Sales and Order Fulfillment, and Operational Performance. A comprehensive ERP system delivers just that integration and visibility.

Customer Relationship Management

Customer Relationship Management starts with the initial contact and is often first tracked in a Contact Relationship Management (CRM) system or module. Basics such as name, address, telephone, and other contact information is recorded and tracked in anticipation of the initial sale. In my experience, Customer Relationship Management goes far beyond that initial contact. Once the initial contact is complete there may be payment terms, contracts, or other agreements to track. Favorite items, shipping preferences, or special instructions may also be vital to the relationship. An effective ERP system accommodates all of this information and pulls it together in a centralized fashion along with purchasing patterns, customer service information, information on returns and credit history.

Supplier Relationship Management

Managing the supplier relationship is larger than it seems at first glance. As anyone who has ever done it will tell you, purchasing is far more complex than simply placing an order and receiving goods. In today’s economy businesses like yours need to take advantage of the best pricing, delivery, and incentives available from various vendors. Additionally, lead times, quality control and payment terms such as EDI must be considered. Vendor performance and accuracy ratings are critical to the overall success of your business. An ERP system integrated across purchasing, receiving, quality monitoring, and disbursements with electronic funds transfer capabilities simplifies these processes and provides overview or detailed analysis allowing you to manage all aspects of the supplier relationship.

Sales and Order Fulfillment

Whether your business is a heavy manufacturer from raw material to finished goods, a light assembly plant, or solely distribution, you require some level of sales and order fulfillment. Included in the mix could be processes as complex as engineering and product development, shop floor control, or manufacture-to-order. Certainly every type of operation requires the ability to process orders either from a web site or through a sales force. Inventory and stock levels must be managed. Quality controls have to be in place. Returns are a reality of life. Physical distribution, packaging and tracking, and logistics must be scheduled and monitored. All of these activities can and should be tracked and monitored by the ERP system. Closely integrated modules, business intelligence views, and reports provide a comprehensive view of material flows, stock statuses, work order progress, delivery dates, and logistics performance – making the management of Sales and Order fulfillment seamless and convenient.

Performance Management

Overarching every aspect of your business is performance management. Performance management answers the bottom line questions:

  • Are our costs within expected norms?
  • Are our profit margins sufficient?
  • Do our production lines operate at peak efficiency?
  • Is our productivity adequate?
  • Where can our quality be improved?
  • Is our customer satisfaction rating where we want it to be?
  • Is our workforce fairly compensated and sufficiently prepared to perform their functions?

Once again, the ERP system provides the means to determine these critical answers.

  • Costing calculations from production operations or purchases are pulled together with sales results to allow profit calculations.
  • Scheduling and productivity reports and analysis provide insight to efficiencies.
  • Quality review and returns analysis provide data to help identify possible areas where quality might need improvement.
  • Customer relationship management and returns analysis offer clues as to customer satisfaction issues.
  • HRMS provides compensation and benefit management, plus training and advancement planning.
  • Financial Reporting assesses the overall fiscal performance of the enterprise.

The implementation of an ERP system provides the structure and tools to coordinate, monitor, and manage a successful Supply Chain Management enterprise.