Here’s how ERP can solve your Supply Chain problems…
Global supply chains have been through a rough period over the last couple of years. Between the Suez Canal incident, Brexit and the COVID-19 pandemic, there have been plenty of supply chain problems that have affected businesses and their customers.
The just in time supply chain model is one that is commonly used around the world. It works perfectly fine when everything is flowing without any disruption, as it focuses on moving items just before they are required in the manufacturing process. One slight kink in the chain, however, can cause the entire supply chain to stutter, with knock-on effects felt throughout different levels of the chain.
Recently, this has led to shortages of some groceries, car parts and toys in the UK. This has led to disgruntled businesses, who, in turn, are met with frustrated customers who cannot purchase their desired goods. While some of the knock-on effects of Brexit and the pandemic are unavoidable, there is much more businesses can do to help themselves by using systems at their disposal.
As ERP specialists, Neuways has provided companies with business systems that deliver improved supply chain management for decades. Our depth of experience has seen us implement ERP business systems in companies of all shapes and sizes across a variety of industries, all of which rely heavily on excellent supply chain management to survive and thrive.
Managing Director, Martin Roberts, has led numerous ERP implementations, and believes ERP can transform a business’s supply chain management:
“ERP systems provide comprehensive management systems that allow for transactions, material planning and other functions to be brought together into a single system. This makes it easier for users to better manage all their operations, as an ERP system, when implemented correctly, can do much of the heavy lifting in terms of process automation and accurate record keeping as much of it can be automated.”
But it’s not just the basic function of an ERP system that helps improve the supply chain process. No, the in-depth information businesses are presented with from their system gives them intelligent data which allows for quicker, better-informed decision-making, as well as giving staff the ability to spot behavioural patterns and trends early.
Here’s Martin to explain more:
“Was that recently delayed delivery of goods a one-off or is it becoming a regular occurrence? It has always been crucial to review your data and trends, but it is even more important now, as these will tell you whether everything within the supply chain is going well or if change needs to take place. I always advise businesses to, ‘Plan, Execute, Measure and Adjust’. It’s a circular process that needs to be continually carried out in order to be a success.
“A lot of people put time into planning and executing, but do not think about measuring and adjusting – which means their execution is not as strong. A coherent planning system looks at your stock in real time, such as when you receive items and your company’s requirements, before telling you what you need.”
This makes accuracy of your data critical. If any of those elements are consistently wrong, then the number of incorrect advisory messages coming from your ERP system will increase with them. If one message in ten goes wrong, then it is a problem, but one that more than likely can be solved – any more than that and it becomes a critical issue for your business. This affects the level of trust staff will have in the ERP system.
After a certain number of errors following supply chain problems, key departments such as Planning and Purchasing will give up and revert to their manual processes. Once those departments do this, it’s a very slippery slope and will very quickly undo a lot of the hard work a business has put in with its ERP system. To reiterate, inventory accuracy is key – maintaining 99% plus accuracy of key data will mean that you can trust what your system is telling you and manage with confidence. Ensuring that you have lead and safety times as accurate as possible on your master item records will mean that you are dealing with only the unexpected rather than the day to day.
As we all know, there have been several incidents that have tested supply chains that were thought to be without fail over the last 18 months. The likes of the Suez Canal blockage and the COVID-19 pandemic sent sudden shockwaves around the world that could not have been anticipated whatsoever. But, as Martin says, while some issues are unavoidable, it doesn’t mean your business should do nothing: “The Suez Canal incident and the COVID-19 pandemic are completely out of your business’ control and are ultimately unavoidable. The problem was that no one saw it coming.
“Some of the communication lines that were built to deal with problems like this worked successfully, as many businesses didn’t realise their goods were on boats that were affected by the blockage of the Suez Canal, for example. If you’re sharing data regularly across your supply chain, then the negative effects might’ve been less felt. A good ERP system also could’ve helped your business to look for alternatives to those goods that were delayed.
“The most proactive thing businesses can do is to try and understand the ‘New Normal’ as best as they can, to avoid repeatable incidents. While the future is unclear, the present is actionable.”
The whole situation has really illustrated how just in time supply chain models work fine, as we know, when everything is going well. But, as the last 18 months have shown, that isn’t always the case. But, just in time models aren’t completely obsolete in 2021 or beyond.
Well organised supply chains provide businesses great value. For example, when everything is on time and working as it should, there’s simply less of a requirement to hold stock on hand – it comes in and goes out swiftly. This means that for many businesses there’s no need to plan to have expensive stock sitting in expensive warehouses.
Compare that to the present: if the current problems, which are being described as temporary, become the norm, there may be more of a requirement to hold additional stock for longer periods due to customs clearances that have changed because of Brexit, for instance. Martin sees an understanding of stock levels and warehousing requirements as being key to a successful supply chain:
“Organisations need to fully evaluate their required stock and stock levels – it is one thing having a physical warehouse to hold your stock, but do you have the right systems to efficiently manage this stock? Due to the in and out models many businesses have successfully implemented and the resulting changes that have occurred, it might be time to consider a form of automation, such as bar coding or RFI to help identify stock using location control in larger warehousing.
“I have seen plenty of warehouses where stock holding has expanded, and the business involved has lost control of the warehouse as they simply cannot find their items. This is counterproductive, as it is not taking advantage of your business system’s full potential – automation can help make a tricky situation a lot better.”
We know why ERP systems can help, then, but why specifically Microsoft Dynamics 365 Business Central?
“A system like Microsoft Dynamics 365 Business Central is incredibly adaptive – it does it all, regardless of disruptive supply chains or not, it caters for all environments. It is crucial to keep it under regular review to ensure it is doing what you want it to do but it truly is a difference maker.
“With volatility in exchange rates as well, can your current ERP system cope with that? It is worth considering, as we have discussed, what the ‘New Normal’ looks like, as this could drastically change economic environments. And if the world’s economics are going to change, then what else is?
“While nobody can predict the future, you can best prepare for it. Business Central is essential for your business to be able to react and change depending on what is going on in the world around you. In an unpredictable environment, flexibility is key. If you want to change your existing supply chain model, by expanding your warehousing capabilities, then it is wise to think of a system that can be adjustable and cope with automation that will be beneficial, in order to make the most of the business system and improve your existing supply chain.”
