We’ve come a long way since Wal-Mart innovated with its just-in-time supply chain management system. What once was innovative is now commonplace, and supply chains are more dynamic and complex than ever.
We can thank ERP’s move to the cloud for a lot of the recent dynamics and connectedness with modern supply chains. Cloud ERP is helping businesses from retail to manufacturing develop more complex, agile supply chains that share information across suppliers and dynamically adjust when manufacturing, shipping or other logistical challenges arise.
“Business are transitioning from on-premise, legacy ERP systems to cloud-based tools to leverage the power of big data and analytics, and attain improved scalability and connectedness for real-time decision making, senior supply chain consultant for Tyco Electronics. “Manufacturing firms with presence across different locations or geographies [are using] cloud ERP systems to get on-demand access to data for changing business needs.”
Cloud ERP is improving supply chains in many ways.
First, cloud-based ERP makes it easier for all parties within the supply chain to get visibility, no matter their location or relationship with the company. Because the ERP system is in the cloud, its footprint greatly expands and can be used by all core functional areas of a business, including suppliers and customers.
A supplier in Malaysia can see that a partner firm is running low on a particular part and fire up production to meet the demand even before the firm itself knows it needs additional stock, for instance. Or a firm can easily see if a contract manufacturer has had a breakdown and automatically adjust production schedules to reflect the delay or even route around it.
Cloud ERP also is a boon for quality control and traceability. By managing material resource planning in the cloud, businesses can more easily leverage IoT data and identify quality issues that might arise related to part failures or defects because all data is in the cloud. Having a single source of truth instead of having to track the trail of an item from manufacturing production through delivery can be critical, especially as it relates to product recalls.
“Cloud-based ERP solutions now make supply chain visibility and collaboration a real possibility,”, Infor. “In the past, these ideas were dependent on the hardware, applications and network of the participants.”
The cloud allows companies to remove their technical debt immediately and no longer be tied to the IT decisions of the past
The connectivity from cloud ERP also extends to workers in the factory and out in the field, not just among suppliers and partners.
On-premises ERP systems come with limitations as employees typically have to be on-site to track or enter information. With cloud ERP, employees can access information on any device at any time, whether a laptop or Smartphone, enabling quicker response time and a greater user experience.
This access in the field significantly improves supply chain management because information from inbound freight, such as warnings for late delivery, can be sent and transmitted much more easily. Employees on the shop floor, or even equipment itself via IoT, also can signal potential downtime, delays, or adjustments that should be made.
Anywhere access via any device creates a significantly more dynamic and informed supply chain with all stakeholders potentially coordinating in real-time.
A big part of how cloud ERP is improving supply chain management is through its relationship with IoT.
“With developments like autonomous shipping, networked warehouses and global asset tracking, industrial IoT will cause major changes in the way companies manage their supply chains,” APICS.
Companies like GE and Siemens are building platforms focusing on industrial IoT that enable them to run smart factories by utilizing advanced IoT sensors that feed data to their cloud-based ERP systems.
“By connecting assets, operations and business systems, more insightful decisions can be taken on capacity utilization, predictive maintenance, inventory management and other core business functions,”
Cloud ERP is a crucial component in this connected future, but businesses still need to be mindful of how they put together the pieces.
“Businesses need to focus on investing in solutions that work together and provide value instead of adopting new technology without providing employees with background on the inputs or attempting to integrate disparate systems,” warns Collins.
The flexibility and connectedness of cloud ERP also helps supply chain management keep up with technological changes elsewhere, as well as new business models and processes.
Since cloud ERP is easily connected to other systems, it is far more nimble and adaptable than its on-premise counterparts. It also is updated more easily and with far more regularity, a hallmark of the cloud. This means that businesses can evolve more quickly and avoid the rip-and-replace and slow-moving ERP system upgrade path that plagued previous generations of the technology.
“The rate of technological innovation combined with the increasing complexity of global supply chains creates a need for customizable, adaptable and continuously updated ERP systemsCloud ERP is enabling supply chains to evolve more quickly with changes and advancements in the field.”