ERP offers important benefits for supply chain management, including visibility across the supply chain, automation, detailed analytics, and accountability that can cut down on fraud and malfeasance. There’s only one problem, though many businesses don’t use the features that deliver many of the benefits.
Sometimes firms don’t fully leverage their ERP system because the features are new and outside the firm’s existing processes. More often, though, businesses fail to take advantage of what their ERP system can offer for improved supply chain management because they just don’t know the possibilities.
If your business uses an ERP system for supply chain management (and that should be every business with a supply chain), here are six feature areas that often go underutilized. Is your firm taking advantage of these features and using your ERP system to the fullest?
ERP can be more than a storehouse of information about your supply chain. It also can be programmed for automated workflows that handle many routine supply chain decisions without manual intervention.
“While we have a massive amount of data in our ERPs, we are still dependent on human operators to make the decisions on transactions,” “There are many approvals and functions that can be automated through workflow automation. Many companies don’t take the time to set these up.”
Many businesses use their ERP system for inventory location assignment, pick optimization, ABC classification and other basics like labor utilization. But ERP systems often can go beyond that, with features such as identifying and reducing excess stock levels, locating obsolete inventory for removal from warehouses, and the calculation of dynamic demand forecasting.
“There are many functions, such as quality, that companies aren’t fully taking advantage of in their ERP”
Surprisingly, given the emphasis on big data as a vehicle of transformation within the enterprise, a third underutilized ERP feature area that can improve supply chain management is analytical reporting. Classify this as something most businesses know they should be using in their ERP system but fail to actually implement.
“Too many times, manufacturers fatigue before completion or immediately following their ERP deployments. They have no energy and/or budget to build analytical measurements and reports that could possibly provide large amounts of data into actionable data".
“The truth is, we have more data than ever at our fingertips, but most companies are not utilizing it to its fullest potential, leaving valuable insights on the table,”.
Most companies risk never being able to truly unleash the power of big data because they aren’t taking advantage of what modern ERP systems can offer in the way of analytics.
Another area of ERP functionality that often goes underutilized for supply chain optimization is transport management. ERP systems can be used for synchronizing order pickup with load assignment, load building and route planning, and added visibility during transport, along with features such as deadheading minimization.
“Many companies just use rating engines in their ERP systems, but many ERPs have the ability to manage more than just rating,” says Elliott at Blue Horseshoe. “They can also be used to optimize their spend and determine the best modes for a given shipment.”
No business likes product or component recalls, but ERP can make recall management easier by taking advantage of routine transactional data.
Businesses are missing out on the ability to better handle these recall procedures by not using the transactional data in their ERP system for such recalls, according to Welsh at Revolution Group. This is relatively easy with most ERP systems, but businesses fail to take advantage of the functionality.
Firms can be doing a lot more than just managing their vendors through ERP. Many ERP systems offer a range of procurement and sourcing modules that go unused, including procure-to-pay automation, exception-based enforcement, embedded terms and conditions, and policy-driven self-service.
Firms such as Alcoa have reduced purchasing processing costs by nearly 90 percent through ERP procurement features, and companies such as UPS and Pella have reduced cycle time by more than 75 percent.