ERP In Supply Chain: Definition, 4-Step Selection, & Top Vendors

Orders are piling up, delivery is running late, and constantly dealing with inventory problems - in this case, you're not alone, which is why a lot of companies are moving to ERP for supply chain management.

This article is your ideal road map to simpler ERP selection. We'll delve into supply chain ERP, exploring its advantages, and guiding you to choose the best solution.

How An ERP Contributes To Supply Chain Management

1. Defining ERP for supply chain

An ERP (Enterprise Resource Planning) system provides a centralised data hub and integrates its key business operations across departments. Not only finance, sales, human resources, or marketing, the system also delivers an extensive set of features to optimise every phase of a supply chain lifecycle.

Using an ERP system to manage and optimise the supply chain offers multiple advantages such as:

• Better Visibility: Getting an in-depth overview of the whole supply chain. This allows for better decision-making and proactive adjustments towards bottlenecks or disruptions.
• Higher Productivity: Automating manual jobs and simplifying processes. This helps increase teams' productivity and efficiency, allowing them to focus on other important tasks.
• Greater Collaboration: Facilitating communication between multiple departments, from manufacturing and distribution to procurement. This makes sure that everyone is contributing to the same objectives.
• Decreased Costs: Optimising inventory control, logistics, and resource allocation. This leads to less overstocking and stockouts throughout the supply chain, lowering the costs.
• Proactive Risk Control: Providing real-time data throughout the supply chain. This enables users to proactively detect and mitigate any potential interruptions.
• Integrated Analytics: Integrating data across the entire organisation. This makes it easier to conduct extensive reporting with valuable insights and maximise supply chain efficiency.

Integration capabilities are the building blocks of an ERP system's performance. These features share data and functionalities seamlessly because they are ''integrated' modules - not separate elements. For example, the production planning and inventory management modules of an ERP are automatically connected so that users can easily adjust production schedules based on existing inventory levels. This ensures no data silos and a comprehensive supply chain overview.

Learn more about:

• ERP Inventory Systems
• ERP vs MES (Manufacturing Execution System)
• ERP vs WMS (Warehouse Management System)

2. Supply Chain Management (SCM) vs ERP Systems

Whether an SCM system or ERP for the supply chain is best will depend on your business demands. An SCM system might be perfect if optimising particular supply chain functions is your main goal. However, an ERP is a better option if you’re aiming to integrate your supply chain workflows with other core business functions, streamlining the entire operations. Many growing companies now utilise the advantages of both systems by integrating the SCM into their ERP.

4 Stages To Select An ERP For Supply Chain

It is important to select the right ERP for the supply chain to maximise productivity and fulfil your business demands. We break down the main steps in the selection process as follows:

Step 1: Taking notes of essential features

First, determine what features are must-haves in your supply chain ERP system. Consider the following features:

Step 2: Analyse your business scenario

After you have identified all the essential features, investigate your business setting. With an in-depth evaluation of your business conditions, you can figure out exactly what you need and make sure the selected ERP can help solve your supply chain issues. Here are a few important areas to look into:

• Business scope & complexity: The advanced level of features you need in an ERP for the supply chain depends on the scope and complexity of your supply chain procedures.
• Industry-specific requirements: Supply chain management is unique across different industries. Take note of ideal features that will address specific difficulties in your industry.
• Existing bottlenecks: Investigate and list all the hurdles throughout your supply chain. These can be false demand forecasting, manual order processing, lack of inventory visibility, and more.
• Growth plans: Think about your business objectives in the long term, such as launching new products or targeting new markets. This is when a scalable ERP system shows up to support your journey.
• Financial restraints: Get a quote and estimate your budget for the ERP implementation. Take notes of not only the upfront costs but also any expected costs for customisation, support, and integration.

Step 3: Understand what ‘fit’ to your ‘gaps’

This phase requires connecting the gaps in your current supply chain procedures in Step 2 with the ERP features that have been identified in Step 1. Discuss with key personnel to analyse how desired supply chain ERP features align with the unique problems you have and fill in the gaps.

• Prioritise solutions over features: Pay attention to your desired solutions rather than the ERP features.
• Conduct the gap analysis: This analysis helps evaluate how the features of ERP systems align with your supply chain operational gaps and business goals. You can discuss this with a reliable ERP partner who can help you identify features that directly solve your problems.

Step 4: Craft your ideal solutions & evaluate best-fit vendors

Based on your findings, create a document that describes your desired ERP solution and develop a Request For Proposal (RFP) based on your findings. In this document, list all the ERP capabilities you need for every aspect of your supply chain. Then, create a shortlist of vendors who provide solutions that closely match your requirements based on the RFP.

When evaluating vendors, consider these areas:

• Industry Experience: Explore the vendor's track record of customers plus their experience deploying supply chain ERP systems in your industry.
• Implementation & Support Services: Assess the vendor's implementation strategies and ongoing support offerings.
• Customisability: Evaluate the vendor's capability of customisation to fit your unique supply chain requirements with the ERP.
• Total Cost of Ownership (TCO): Consider all costs related to ownership, such as licence, installation, and maintenance costs.

These four stages set a great foundation for selecting an ERP system that meets your supply chain management requirements. Note that the perfect ERP system should not only meet your current needs but can also evolve and expand with your company in the long term.

Top 3 ERP Vendors For Supply Chain Management

Dynamics 365 SCM

Dynamics 365 Supply Chain Management (SCM) is an enterprise supply chain ERP solution developed by Microsoft. It helps operations professionals to transform their manufacturing and supply chain workflows. Dynamics 365 SCM offers a central location for business analytics, leveraging predictive insights, AI intelligence and the Internet of Things (IoT) across the entire supply chain. This enables users to optimise operational efficiency, product quality, and eventually, profitability.

Odoo For Supply Chain

Odoo is an open-source ERP that centralises every function of a company's operations in one single location. With a high customisation capability, it lets you easily configure and customise the supply chain management workflows. Moreover, Odoo has a modular infrastructure where dedicated modules such as Inventory, Material Requirements Planning (MRP), Purchase, and Finance integrate seamlessly with each other. This offers businesses complete visibility and control over their entire supply chain.

SAP S/4HANA Cloud

SAP S/4HANA for Supply Chain Management is a cloud-based ERP with built-in intelligent technologies for complex business processes. Most enterprises utilise SAP to streamline their supply chain management, from the order production process and managing inventories to fulfilment and deliveries.

Have A Great Start: Conducting Your ERP Demo

From our experience, conducting a demo for ERP in your supply chain is the most valuable and practical approach to seeing the system in action. This can help you quickly determine if it is the right fit for your supply chain. 

We highly recommend you request a custom demo that illustrates how the chosen system handles your workflows and difficulties. Don’t forget to involve key personnel in the evaluation so that the final option will satisfy everyone's demands.

ERP Supply Chain - Frequently Asked Questions

1. What is CRM and ERP?

Both ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems help streamline business operations, but each aims for different objectives. CRM helps manage your customer relationship and generates all customer-related data in one location. Its final goal is to streamline processes in the customer journey, such as sales, marketing, or customer support. ERP centralises your key operations data in one place. ERP gets data from various business functions such as supply chain, human resources management, accounting, or marketing. Learn more: ERP & CRM - Differences & Integration.

2. Are ERP and SCM the same?

Both ERP and SCM systems can help your supply chain to operate efficiently, but each of them has a different focus on business functions. ERP integrates organisation-wide data, from supply chain, manufacturing, and sales, to marketing, human resources, and finance. SCM systems focus on supply chain data, such as stock levels, order processing, suppliers or logistics metrics.

3. What is an ERP system example?

Odoo and Microsoft Dynamics 365 are examples of ERP systems with integrated features that help businesses streamline operations, improve productivity, and accelerate better decision-making.