How customising ERP software can improve the supply chain
Limitations in the customisability of on premise ERP is a key culprit behind supply chain inflexibility. Organisations are forced to adapt their business processes to the constraints of their software, rather than adapting the software to their business processes. Yet for a growing number of enterprising firms, cloud ERP is changing the equation.
Rich customisability accessible to business users is a defining characteristic of a cloud ERP solution, enabling process changes in days rather than the months typical with on premise systems. Innovators are taking advantage to adapt a wide range of processes, such as demand planning, work orders, approvals, bills of material, sales orders and more.
Collectively, various customisations to optimise supply chain processes can deliver tremendous value. Savings in costs and time are the most obvious benefits, but not the only ones. Customisations can enable companies to improve access to mission-critical data and extend it to partners as appropriate, heightening collaboration and fuelling innovation. Customisations help companies build a highly visible single system of record that strengthens security and compliance with external and internal requirements.
Customisations can empower business users and the company as a whole to function more creatively and effectively, and channel savings into innovation and customer service. Real-world companies have unlocked the potential of customisations in cloud ERP to gain competitive advantage:-
CMP Corp. For the world’s largest independent supplier of replacement compressor parts for HVAC and refrigeration equipment, customisability in cloud ERP has been instrumental in a Lean manufacturing initiative that has helped reduce back orders by 90 percent, slashing production lead time from 85 to 10 days and reduce crankshaft production costs by 25 percent.
iAutomation. A supplier of machine automation products and services to more than 5,000 customers, iAutomation has built more than 240 customisations into its cloud ERP solution to optimise inventory, manufacturing, sales and more. The company has improved on-time manufacturing delivery from 70 to 95 percent, saved $1.3 million in excess inventory and increased cross-sell revenue by 200 percent.
Epec Engineered Technologies. A maker of custom-printed circuit boards, custom battery backs and other products in the electronics industry, Epec credits cloud customisability for enabling it to streamline workflows on a global basis across facilities in the US, UK and China. It helped to introduce an innovative configure-price-quote (CPQ) online tool for customers.
Lorie-Lyn Fernandez, Epec IT Manager, said: “With our previous on premise ERP, it was hard to create the custom forms, workflows, dashboards and reports that are crucial to running our business.
“With NetSuite, we were able to build all our necessary workflows and customised order management across the web through sales, fulfilment and accounting.”
Doing Business at Lightspeed
Cloud ERP customisability was a core element of an ambitious initiative to introduce demand-driven material requirements planning (DDMRP) at Lightspeed Technologies, a maker of classroom audio systems that help students better hear their instructors. Headquartered in Oregon, Lightspeed’s DDMRP solution is based on the NetSuite cloud ERP the company has run since 2006.
Lightspeed worked with Demand Driven Technologies and Head in the Cloud, a NetSuite partner, which formed a joint venture called IntuiFlow to develop the DDMRP solution. DDMRP builds on the principles of traditional MRP while borrowing the best features from Lean manufacturing and constraint-based modelling to build more closely to actual market requirements and enable better and quicker decisions and actions at the planning and execution level.
With the help of DDMRP, Lightspeed reduced inventory by 30 percent within five months and improved flexibility across its planning and overall supply chain processes. “It’s allowed us to have a more effective supply chain and handle a wide array of long-lead time products.” said Julie Rockford, Lightspeed Director of Manufacturing Operations.
Recognizing the power of customisability and exploiting it aggressively opens broad new areas of opportunity and positions a company to thrive in the face of constant change. Organisations will benefit by exploring how customizations to business needs that were once impractical with on premise software now become possible in the cloud.
For more ERP information, please visit: http://www.netsuite.co.uk/portal/uk/products/netsuite/erp.shtml
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”