How to Use Your ERP to Achieve Supply Chain Resilience
When the demands to a supply chain are smooth and predictable and the supply always matches the demand perfectly we can all live the life of Riley. Who is ready to take off work early this afternoon?
But in real life we know we have to deal with change and unpredictability. So supply chains need to be resilient. Fortunately our ERP systems can help us deal with real life and help provide supply chain support and resilience.
Sharing our ERP with suppliers is one way. We can provide a portal where they can see demands on our inventory immediately. We can also link our suppliers through an extranet. By seeing changes in our ERP they can adjust their own capabilities to resolve an imbalance before our buyers can react and request a change.
Our suppliers can provide feedback to us in real time on the status of our replenishment requirements. If we know of a hiccup in their material supply or capacity, we have a chance to help them or to locate an alternate supplier by scheduling with the ERP system. This feedback can move through the same extranet system linking our ERP systems.
Besides the suppliers, we need resilience against unpredictability caused by transportation systems and other third parties in the supply chain. If the ship sails without our cargo, our ERP links can help us request an alternate shipping method well ahead of the day we expected a delivery.
Remember lower tech remedies too. That alternate supplier might cost a little more but can save our bacon when the primary supplier is unable to meet our demand. Safety stock is another tried and true solution. Safety stock provides a buffer against an unpredictable supply and that resilience is right in our own stockroom.
Many businesses use their ERP to place a purchase order and wait for it to arrive – or not to arrive and then react. Using ERP as a communication tool externally can make us proactive. Something will interfere with our supply chain and the ability to immediately react helps us make our supply chain resilient.
We also need to improve our demand management. ERP helps here too. Use the data collected in every past customer order to develop better and better forecasting tools. Get our customers to provide an extranet to link ERP systems upstream as well. We are part of our customers’ supply chain. Think of the supply chain from the earth to final consumption. Work on improving visibility in both directions and optimising your supply chain. You won’t eliminate the need for resilience but you will develop an ERP that has supply chain support and resilience.
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