Managing day-to-day business operations is not always easy, especially when efficiently managing materials and goods across your supply chain, improving returns on investment (ROI), finding the right ERP solutions for your needs, and ensuring optimal customer engagement and satisfaction.
Read on to learn more about how your company can leverage Supply Chain Management (SCM) throughout your Enterprise Resource Planning (ERP) systems to boost productivity, engagement, and profitability across the board.
Breaking Down the Role of SCM in ERP
Supply Chain Management (SCM) plays a pivotal role in Enterprise Resource Planning (ERP) systems by providing an integrated approach to managing the flow of goods, information, and finances across an organization’s supply chain. By linking SCM with ERP, organizations can achieve a synchronized and efficient supply chain, improving customer service and fostering better collaboration with suppliers, ultimately leading to a competitive advantage in today’s complex and global business environment.
What is Supply Chain Management?
Supply Chain Management (SCM) refers to a network of organizations, partners, resources, and employees involved in the manufacturing, production, and distribution of goods.
Here are the five main components of a Supply Chain Management strategy…
1) Planning
Goal setting is crucial for assessing how to meet consumer demand and reach supply chain objectives.
With advanced planning features and capabilities, companies can more proactively anticipate the quantity of supplies, labor, capital, and suppliers needed to streamline operations and lower overall operating costs.
2) Sourcing
An integral part of SCM involves identifying, assessing, evaluating, and engaging directly with suppliers to ensure that they meet regulations in the manufacturing industry and achieve business goals and objectives.
Often, contract negotiations are leveraged to create more favorable terms for both buyers and sellers on either end of the supply chain.
3) Manufacturing
Manufacturing lies at the heart of the supply chain management process, which involves transforming raw materials into finished products.
Once the products are constructed, they must be tested, inspected for quality, and packed correctly before being distributed to end-users to ensure the highest quality and reliability for both companies and consumers.
4) Delivery
The distribution process is the first time a consumer interacts with a finished good, so ensuring quality standards are met at this point is essential in not only upholding a positive reputation among consumers but also providing better customer service through optimized distribution processes and enhanced product quality.
This step involves delivering goods, prioritizing and organizing customer orders, accessing critical shipment and delivery data, ensuring products are delivered properly and efficiently, constructing and sending invoices, and collecting customer payments.
5) Returns
While delivering goods to end-users may seem like the last stage of the supply chain management process, this often is not the case.
Sometimes, customers order the wrong product, decide they don’t need it anymore, order multiple different styles, and return the ones that don’t work or aren’t satisfied with the quality or fit of a product.
In the case of a return, companies are responsible for determining the cause of the return (i.e., refund, replacement, exchange), leveraging real-time data to enhance product quality, and finding ways to limit high return rates for specific products.
Models of SCM
In addition to outlining an efficient supply chain strategy, a business needs to implement an SCM model that meets the needs of its SCM systems, keeps up with consumer demand, reduces production costs, improves operational efficiency, manages inventory control processes, and targets market disrupters.
Let’s look at the main SCM models used to improve supply chain management:
Continuous Flow Model
A continuous flow model is typically more suitable for companies in mature, stabilized industries, and it relies on manufacturers producing a uniform set of goods with little fluctuation in consumer demand throughout the quarter or year.
Fast Model
Fast models emphasize products with short lifecycles and higher turnover rates.
With this model, companies can respond and adapt to changes in the market, quickly produce goods, and continually release new products to keep up with changing trends or levels of demand.
Efficient Model
Efficient models offer advanced capabilities for companies in industries with slim profit margins to prioritize inventory management, maximize output levels, and achieve end-to-end supply chain efficiency.
This model not only helps companies outline more efficient supply chain processes, but it also offers features that improve the utilization of equipment and machinery across business units.
Flexible Model
The flexible model is designed for companies that are impacted by seasonality, and it helps them more effectively adapt to high-peak seasons and adjust their operations to meet the needs of the lower-demand seasons that follow.
This model offers advanced features and capabilities that simplify the process of ramping up production during periods of higher demand and winding it down when demand is reduced.
What is an Enterprise Resource Planning System?
Enterprise Resource Planning (ERP) software helps companies optimize, centralize, store, and manage all essential internal enterprise business functions, including:
- Financial Management
- Human Resources (HR)
- Customer Relationship Management (CRM)
- Manufacturing
- Supply Chain Management (SCM)
With the core functionality built into ERP solutions, companies are enabled to:
Improve Analytics
Real-time insights can help proactively anticipate future trends, reduce potential risks, improve decision-making processes, and provide a more in-depth look at the overall health of the company.
Save Time and Money
An ERP system helps streamline administrative tasks, improve process efficiency, maintain consistency between front and back-end operations, reallocate resources, limit business disruptions, and reduce costs.
Increase Collaboration
Integrated business processes with a single source of truth help streamline operations, increase data integrity and transparency, solve issues more efficiently, and improve cross-functional collaboration across business units.
Enhance Customer Service
ERP software can help companies easily access customer data, respond to questions or requests, improve overall visibility for production and sales statuses, and ensure on-time delivery for sales, shipping, and delivery processes.
How Do ERP Systems and SCM Work Together?
While cloud ERP system operations and supply chain management processes have their functionality, features, and benefits for companies in various industries, the two are often linked to further enhance business management productivity and improve supply chain adaptability.
Let’s take a closer look into the role of Supply Chain Management in ERP, as well as how integrating SCM and ERP systems can help improve supply chain efficiency and optimize business processes across all business units.
1) Logistics and Planning
Extensive logistics and planning capabilities provide advanced forecasting functionality to help companies keep up with current and future demand trends. With advanced analytics and better insights, companies can minimize inventory costs, optimize job scheduling more efficiently, and accommodate demand no matter what.
2) Procurement
ERP software solutions help automate supply chain activities like sourcing, contract management, order management, and payment processing to manage goods across the entire supply chain more efficiently.
With advanced procurement functionality, companies can track and manage supplier relations, stay up-to-date with relevant business documents, make more informed decisions, and communicate more easily with vendors and suppliers.
3) Production
A centralized ERP system is the home for all product and vendor information and helps create a bill of materials (BOM) for each product.
With real-time documentation and recording capabilities, companies have the functionality needed to eliminate manual errors, ensure production timelines are met, and modify work orders to accommodate minor changes.
4) Shipment and Delivery
An ERP system provides a centralized repository for a company’s product, shipment, and delivery data, making it easier to ship products on time and to the correct location.
ERP solutions also simplify the management and archival of product data, including shipment information, invoices, shipment methods, and delivery timelines, and resolve resource conflicts through well-defined quality control requirements.
Benefits of SCM and ERP Integrations
Regardless of the size, scale, or scope of your supply chain management strategy, finding an efficient and effective way to manage resources, address risk management, optimize demand planning processes, and improve performance in your supply chain processes is crucial to your success.
And, by leveraging optimized supply chain tasks throughout your ERP system, you can better support critical functions of your technology, take advantage of cost savings across the board, and facilitate overall business growth.
Let’s take a closer look at a few critical benefits of supply chain management in ERP…
Efficient Decision-Making
Advanced forecasting and planning capabilities allow for more effective inventory management and greater control over supply and demand activities, making it easier for companies to implement, formulate, and adjust SCM strategies to meet business needs.
Increased Responsiveness
With improved visibility and functionality through ERP tools, companies can boost overall responsiveness to business operations, improve engagement for employees and customers, and avoid the costly effects of market inefficiencies.
Reliable Documentation
An optimized ERP solution helps companies ensure that documents related to SCM practices are reliable, secure, and protected.
Internal permissions and guidelines also outline which employees have access to what data and how that data is being shared between internal and external stakeholders.
Reduced Overhead Costs
By leveraging an ERP system to improve relationships with suppliers and customers, manage supply chain activities, track inventory levels, and complete other supply chain tasks, companies can save valuable time and reduce overhead costs in the long run.
How Can We Help?
Whether you need help leveraging Supply Chain Management software in your ERP, navigating a new ERP system like Workday, Infor, JD Edwards, SAP, or UKG, or choosing the best ERP software solution for your needs, Surety Systems is here to help!
Your technology. Your priorities. Our expertise. That’s the name of the game with us.
Getting Started with Us
Our senior-level ERP consultants can work with you to determine how an ERP system in SCM can best suit your business to improve efficiency and meet your consumer and business needs.
From helping you manage global supply chains and warehouses to acting as a point of contact between supply chain partners, leveraging advanced flexible sourcing and reliable processing functionality, improving data security, and integrating SCM and ERP systems, we have the right consultant for the job.
Contact us today to learn more or get started!
