ERPs have their place, but let's face reality.

Most ERPs can't cut it when it comes to managing the complexities of your extended raw material supply chain. It’s not what they’re designed for. At a macro level, ERP (or Enterprise Resource Planning) systems help streamline business processes and facilitate internal collaboration for a manufacturing organization, often with the goal of having all customer and financial information in a centralized repository.

Supply Chain Management & ERPs

From a supply chain management perspective, ERP allows you to order stock, schedule deliveries, track time from order to fulfillment – but again, that’s all at a macro level. What about the things you cannot see or predict?

Just so it’s clear, we know an effective ERP system is key to a manufacturer’s success, and we would certainly never suggest anyone abandon theirs.

However, we’ve heard from customers that internal IT departments either mandate procurement groups utilize ERPs supply chain modules for supply chain/procurement analysis or have [understandably] strict guidelines around integrating ERP with other systems.

Balancing IT Requirements with Supply Chain & Procurement Data Needs

While we empathize with IT’s goal to streamline IT system management, supply chain leaders require more data than an ERP system can provide - and there’s quite a business case for a platform with the ability to draw insights and analytics from all levels of their extended supply chain.

Manufacturers often have more ERP systems than they can manage, whether from growth through acquisition or siloed business strategies among business units. A couple of our customers have upwards of 25-30 separate ERPs due to countless acquisitions over the years. How is a supply chain professional supposed to harness information from these disparate systems? Even if they could, does the data they need even exist in their ERP?

If your company depends on an ERP for support in reducing costs, improving quality and efficiency, and strengthening the relationship with your extended supply chain, consider whether your ERP is doing the job you need it to do. 

Here are 5 Supply Chain Insights Your ERP Isn’t Telling You

1. Aggregate Purchasing Opportunities Across ERPs and Other Systems

Many customers of ours have grown through acquisitions. As a result, they lack ERP and other system commonality. We often see different business units and divisions with siloed IT strategies, as well. A group purchasing, or supply chain leader, needs a system to aggregate raw materials and parts across these business units. After all, you know your company could reduce raw material and part costs if your different business units and divisions could purchase like parts and materials off a common contract, your ERP just can’t provide the data you need. And, at this point, they cannot provide prescriptive recommendations utilizing artificial intelligence to optimize sourcing opportunities.

2. Hidden Layers of Supply Beyond Tier 1

An ERP will have vendor information for Tier 1 suppliers, however what about sub-tier suppliers beyond the Tier 1, as well as raw material distributors and mills? Consider the optimal insights an OEM supply chain leader could draw from knowing all manufacturing capabilities of sub-tier suppliers and critical dependencies within their supply chain.

3. Up-to-Date, Aggregated Bill of Materials

Anyone who knows raw material sourcing knows the challenges of keeping data up-to-date and accurate. New Part Introductions, design changes to existing parts, and transitions from one Tier 1 supplier to another could all potentially change a bill of material. You need a system in which suppliers from Tier 1 - N Tier can validate and confirm bills of material. Traditional systems put together dreaded spreadsheets for Tier 1 suppliers to use to cascade NPIs, design changes, or other communications down the supply chain rather than interacting quickly and efficiently with all associated sub-tier suppliers.

4. Potential Manufacturing Delays & Risks to Supply Continuity

Every procurement leader has been there - a few dollars’ worth of material at a Tier 3 supplier is holding up the shipment of tens of thousands of dollars’ worth of product. The delay could result from a myriad of circumstances from a stock outage to a natural disaster. While an ERP shows late deliveries from an OEMs Tier 1 supplier, it cannot foresee potential delays before they occur, especially down the supply chain. A system that can notify procurement leaders of risks to supply continuity is a must.

5. Impact of Tariffs and Sanctions on the Supply Chain

The volatility of today’s economic and government regulations are shaking business leaders to the core. Most VPs of Supply Chain at large manufacturers cannot confidently state, for example, how much steel and aluminum go into all their products and from where that material originates. Raw material, component data, and supplier information resides across disparate systems in different formats – or they don’t have the information at all. Harnessing this information from an ERP would be a burdensome endeavor – and could take months to determine.

Achieve Supply Chain Visibility & Advanced Analytics

Supply chain visibility requires advanced analytics beyond what an ERP can offer. Business leaders who discover themselves lacking these insights may find it worthwhile to explore supply chain optimization solutions that can provide the analytics and tools that an ERP cannot.

SDX, Supply Dynamics’ SaaS based, multi-enterprise platform, allows for unprecedented cooperation and collaboration with your supply network and helps drive powerful insights for finished parts and the raw materials and component parts that go into them.

We start by ensuring you have clean, reliable, accurate data about your parts with PAC, our software-driven engineering service. We harness the information directly from your engineering drawings – no spreadsheets and no supplier surveys.

Once we have all part attributes captured, we’ll link it with your master production schedule in SDX and you’re off to the races with full end-to-end visibility and analytical insights from your raw material supply chain.

For the record, SDX requires no integration with your existing ERP systems, though it can integrate if desired, of course.

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