How to Use the Right ERP System to Survive the Supply Chain Crunch
The Covid epidemic and its numerous far-reaching restrictions on production and logistics around the world have further aggravated the supply chain squeeze that is currently affecting manufacturing and distribution businesses in major countries. Initially sparked by import duties. The fact that some businesses are already dealing with a slow market economy, a subpar product mix, and problematic inventory management procedures only serve to exacerbate the situation. Fortunately, businesses with strong ERP systems can not only survive these trying times but may even exploit the efficiency of their systems to achieve a competitive edge in these adverse business situations.
Therefore, it’s more important than ever that firms choose the correct ERP system to avoid failure during the upcoming supply chain crunch in 2021 and 2022. Is your company equipped with the appropriate ERP system to meet this challenge?
This article demonstrates how the best course of action for companies hoping to survive these unpredictable times can be to implement an enterprise resource planning (ERP) system with a strong supply chain, inventory management, and materials management capabilities.
The causes of the current supply chain crisis
Suppliers, partners or distributors, customers, third-party logistics providers, warehouses, transportation service providers, e-commerce platforms, retailers, and financial institutions are just a few of the stakeholders that make up the majority of firms’ supply chains. The capacity of a supply chain to effectively respond to demand changes is a crucial component.
However, the movement of commodities across nations and continents is significantly interrupted as a result of COVID’s growing impact on world markets. But there are other factors at play in the present supply chain crisis as well. Here are a few additional contributing elements:
Adapting trade regulations
Numerous industries are affected by the recent rise in import tariffs levied by governments around the world. Global trade patterns are rapidly evolving, and businesses now have to deal with higher expenses and uncertainty when doing business with overseas partners.
Rising costs for energy and raw materials
Crude oil producers have been severely impacted by rising prices. The cost of mining has also increased significantly, and this trend is expected to last through 2022. Additionally, the infrastructure for transportation is under stress from rising fuel prices. Meanwhile, increased natural gas prices would also result in further cost hikes for facilities used for electricity generation.
Rising input prices
Costs of raw materials increased in 2019 and kept rising through 2021. Particularly given that the epidemic is still unresolved across the globe and its numerous marketplaces, this increasing inflationary trend does not appear to be slowing down anytime soon. Rising input and energy costs for agricultural commodities like soybeans and corn account for a significant portion of the increase. Over the past year, production costs for other commodities including plastics and metals have also increased.
E-commerce platforms are becoming more popular.
It is no longer possible to hide behind physical distribution centers outside of China due to the rapid acceptance and popularity of online retailers like Amazon and Alibaba. Because of this, it is much more difficult for manufacturers to get their goods from factories throughout the world and into retailers.
5 Methods for Significantly reducing Supply Chain Disruption with the Right ERP System
Investing in the supply chain of the future is one of the first actions businesses should take to survive the current interruption and assure seamless trade operations after the pandemic. This calls for utilizing the appropriate technological solutions, such as ERP software. The top 5 ways that the best ERP systems may assist with supply chain management are as follows:
Improved Inventory Control
Every link in your company’s supply chain is visible with the help of an ERP-based inventory management solution. An ERP enables firms to keep track of inventory levels and schedule shipments appropriately by giving access to your complete network of suppliers, clients, and distributors.
The most effective systems track orders and shipping statuses with ease thanks to SCM technologies, which also increase forecast accuracy for customer order fulfillment and warehouse delivery schedules. Accuracy and cost-effectiveness concerning inventory management are assured by crucial data that compares the amount of inventory required for real demand vs predicted demands.
Simplify the purchasing process
Businesses can handle all facets of acquiring materials and goods, including vendor selection, contract negotiation, buy requisitions and payments, inventory monitoring, and order processing, using ERP software. Your business can also cut out manual activities, free up staff time for higher-value projects, and lower expensive errors and blunders by streamlining these procedures. Inventory tracking features, such as dynamic replenishment strategies and inventory analytics, are included in a powerful ERP system like ERPNEXT for Distribution. These features enable quick identification of products that may be running low by comparing actual real-time inventories against sales forecasts.
Management of Complex Supply Chain Networks Effectively
Many manufacturers and distributors rely heavily on third-party service providers who are essential to their operations and logistics (such as freight brokers, shippers, and carriers). The issue for many businesses is that these service providers sometimes don’t have integrated operating systems, making it challenging to understand where each supply chain component meets. These various elements of the ecosystem of your company can readily interface with an ERP system. Businesses can utilize data reporting to examine important indicators like landing costs, cycle counts, and warehouse activities because these interactions are recorded in a central database.
Higher Levels of Customer Service
As was already said, a badly constructed distribution network results in needless shipment delays, which lower consumer satisfaction. Customers do not give an accurate estimate of delivery times, which exacerbates these issues. If this occurs, people may complain about the terrible service you provided and decide not to do business with you again. You can create online reporting tools that offer real-time visibility into shipping status with a complete ERP system LIKE ERPNEXT. Based on anticipated demand, the integrated warehouse management system also aids in the optimization of storage space.
Internal Business Process Integration
Other business apps can be effectively integrated with a top-notch ERP system. Invoicing, for instance, is one of the most often used interface points between manufacturing ERP systems and accounting software. You can create invoices from sales orders automatically and deliver them right to customers or suppliers using an ERP solution. Even the procedure of accepting payments and issuing refunds can be automated.
The most effective business solutions are required to navigate these difficult times. The correct ERP system can help manufacturing and distribution companies navigate the current supply chain crises in 2021 and 2022 while also ensuring strategic growth in the years to come when market dynamics will be more predictable.
While it’s undeniable that there isn’t much you can do to alter some of the causes of the supply chain crisis, ERP systems offer solutions that have been successfully used to weather the storm and overcome the current difficulties.
Please feel free to get in touch with us right away if you need assistance getting started or if you want more details about how particular ERP systems might benefit your company.