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6 Ways ERP Can Help Optimize Supply Chain Costs

The supply chain is one of the most vital and complex aspects of a business. Consisting of a wide network of manufacturers, suppliers, distributors, retailers and customers supply chain management (SCM) is instrumental to achieving business growth in a highly volatile market scenario. It is noteworthy that supply chain costs feature strongly in the financial stability of a business, or lack thereof. It is here that implementation of a feature-rich Enterprise Resource Planning (ERP) solution can help to streamline and automate processes like demand, procurement, supply, transportation, inventory and end-customer product delivery, significantly optimizing supply chain expenses and increasing business efficiency.

Let’s take a look at the key ways in which an ERP solution can help to cut down supply chain management costs:

Effective Demand Monitoring and Planning:

Inventory management is critical for the smooth functioning of all business processes. A robust ERP solution with demand monitoring module helps to ensure optimal stock levels.  The system monitors market trends and customer demand to help supervisors plan replenishment orders accordingly. It also sends notifications about depleting stocks so that timely restocking can be arranged and issues resulting from under or overstocking can be avoided.

Smooth Communication:

ERP facilitates inter-departmental communication, eliminates information silos by implementing a centralized database. Auto-generated reports can be viewed and shared by those with access rights. This ensures communication transparency and credibility, reducing confusion and delays.

Operative Automation:

Inventory monitoring and management, vendor management, tracking the market, generating bill of material (BOM) for each item, production-procurement and delivery management – there are a plethora of tasks that can be automated with a robust ERP, which would not only reduce human errors but also cost for human labour.

Process Standardization:

Process standardization is necessary to avoid confusion, discrepancies and delays which typically lead to expenditure of resources and subsequent monetary loss. An ERP-enabled standardization review will help to identify current ways of working that are inefficient or don’t deliver any benefit. Standardization of tools and processes with ERP will ensure that the system is modified as and when required, as per the requirements and recommendations from team members and stakeholders, which will ultimately eliminate confusion, increase accuracy, reduce wastage and increase productivity.

Real-Time Analytics:

66% of supply chain leaders are of the opinion that advanced supply chain analytics will be crucial to their operations in the next two to three years to achieve complete control over operations in order and meet tight turnaround times. An ERP solution, integrated with data-analytics can provide detailed scrutiny of finances, capability constraints and potential supplier risk. Real-time analytics can help stakeholders make informed and quick decisions to minimize monetary loss in the later stages of supply chain management.

Streamlined Accounting:

Besides integrating with critical business aspects like HR, management and finances, an ERP system can also be integrated with Electronic Data Interchange and Electronic Funds Transfers. This integration can significantly reduce payment processing administration, minimize reduce excessive paperwork, eliminate the possibilities of invoice mix-ups and lessen associated wait times.

One of the major advantages of ERP is enabling a business to effectively manage supply chain risks and become more agile to accommodate changes. An agile supply chain not only helps to optimize costs but also brings increased productivity to the table, thereby increasing ROI, gaining a competitive edge and securing sustainability. If you still haven’t made up your mind about ERP implementation at your organization, knowing how a National Print and Packaging Organization leveraged ERP to streamline processes and save up to INR 5 lakhs per quarter, might help you make a decision.

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