TrueCommerce: key benefits of ERP systems in supply chain
Could you tell...
David Grosvenor, managing director at TrueCommerce (Europe), discusses the key benefits of an effective ERP system in the supply chain.
Could you tell us a little bit about your company?
“We work with retailers and manufacturers to help connect their business across the supply chain. Our aim is to help our customers to do business in every direction intelligently through both innovative technology and the additional support and expertise to manage it. We have a global presence but, in the UK, we are long-term partners with brands like Sainsbury’s, Hobbycraft and Travis Perkins.
What are the benefits of ERP systems? How can the supply chain industry benefit from an effective ERP system?
“ERP systems work by automating and improving visibility of the various functions and assets within a business – from inventory and order management, to accounting and human resources – to streamline processes and information-sharing.
“The key benefit to supply chains is that, by automating processes internally, businesses can use an ERP system to improve the way they interact with customers and suppliers. Ultimately it enables them to obtain the resources needed to process and distribute products to market in a much faster and more efficient way.
“However, for an ERP system to deliver true value, it’s essential that it is properly integrated with additional external systems to achieve end-to-end automation. For example, manually inputting data from another platform or marketplace – such as Amazon or eBay – into an ERP system immediately negates a lot of the internal efficiencies it will have been designed to deliver.”
What are the challenges of this technology?
“While releasing the ultimate potential of an ERP system, integration can also be a complex process and, therefore, a challenge for businesses looking to automate and streamline how they manage their products and resources.
“Our own research found that, despite huge desire among businesses to digitise interaction with their supply chain, many lack the required internal knowledge to implement such change effectively without support. Indeed, more than a third of the businesses we spoke to identified skills as the main barrier to better automating their supply chain, of which their ERP system would be a key component.
“Investing and upskilling teams internally is clearly a priority but seeking support to alleviate those pressures by working with an external partner should also be a consideration.”
What are the current trends within supply chains in relation to ERP systems?
“We’ve noted a significant rise in the number of retailers – particularly well-known brands who trade in volume – that are looking to integrate their ERP systems with popular third-party marketplaces like Amazon and Alibaba.
“Many vendors struggle with timely order processing and keeping inventory in sync as their order volumes begin to grow through these marketplaces. The main contributor to the bottleneck is the manual transfer of data from an external platform to an ERP system so we would expect to see more integration as online marketplaces continue to grow in importance.”
How can innovative technology such as AI, ML, Big Data, automation etc. improve ERP systems in supply chains?
“Currently, the benefits of ERP systems are largely focused on driving efficiencies by automating data-sharing. For example, there is still a major reliance among some businesses to feed into their ERP system with a ‘pen and paper’ approach. AI will reduce that burden, meaning less time is spent rekeying data and completing administrative tasks, allowing for human resource to be redirected to high value work elsewhere within the supply chain.
“Looking further down the line, we can also expect to see ERP systems recognising errors and trends so that they act in a predictive capacity rather than just providing real-time analysis. As a result, they’ll also become better at feeding into the actions of other integrated platforms or ‘bolt-on’ APIs.”
How can the industry ensure its data is secure when using an ERP system? What are the challenges?
“As ERP systems continue to become more cloud-based, it’s becoming increasingly important that businesses have detailed oversight of how their service provider is storing their data. Many businesses will look to those providers as security experts to outsource their GDPR responsibilities. However, outsourcing doesn’t necessarily remove responsibility.
“As such, it’s key that firms are looking to a vendor with a mature network, whose applications have been designed with security at the forefront.
“Equally, they should always be mindful to encrypt sensitive data and vet the suppliers whose systems might integrate with their ERP.”
What applications of this technology have you seen within the industry?
“We work closely with the seafood retailer and wholesaler Seafresh Group. They are a great example of how a business can generate a competitive advantage by having a well-managed ERP system that interacts with the platforms of their customers and suppliers.
“They count Tesco and Marks and Spencer among their customers and the perishable nature of their goods means that supply chain errors can be hugely damaging to their brand and bottom-line. They wanted to eliminate the risk of human error and the time and effort that was being wasted in rekeying and cross-referencing data caused by the disconnect between their new ERP system and external platforms.
“The decision was subsequently made to integrate our EDI solution with the company’s Oracle ERP system and WMS solution.
“Since integrating EDI with its back office systems, Seafresh has benefitted from significant productivity and efficiency benefits. The company now has a stable and scalable electronic trading solution that maximises efficiency and customer service levels.”
Looking to the future, what would you like to see developed in relation to ERP systems?
“As attitudes shift towards a more unified approach to commerce, it’s important that technology also adapts at pace. For example, it’s essential that ERP systems are developed with simple integration in mind. Only then will businesses be able to make the most of the technology and achieve their end-goals of increasing sales and doing so more efficiently.”
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
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.”