Enterprise resource planning (ERP) tools help supply chain professionals overcome numerous obstacles. However, deciding to use an ERP for improvements brings challenges, too.
1. Choosing an ERP to match your order volume
Maybe you’ve noticed an increase in recent orders. Getting more business seems like a good thing, and it’s generally a positive occurrence.
However, it’s important to select an ERP that can keep pace with the orders coming in and allow you to scale up even further if required. Consider how certain ERP supply chain features could streamline the workflow, too.
For example, some products can brand and print shipping labels and packing slips as part of the order-picking process, eliminating the need to switch between tools. Think about any slowdowns currently happening that affect order volume, plus how an ERP could mitigate them.
2. Determining the required features
An ERP tool may have dozens of features relating to several departments within your business. For example, some products have tools for accounting and customer relationship management. There’s also a trend of ERP tools offering artificial intelligence (AI) capabilities.
People already rely on AI in the supply chain, even outside of an ERP. One study confirmed a 25 percent reduction in fulfillment errors when companies used AI.
While evaluating ERP features, you’ll want to consider the most applicable ones for your business and its supply chain. Think about what you need immediately and how your requirements could change in the relatively near future.
3. Giving and getting the necessary data access
Using an ERP can make you aware of what happens within your supply chain. However, if you don’t request data from suppliers and share some with them, opportunities get missed.
One survey found that 53 percent of managers use ERP software. Moreover, 59 percent of people had their data consolidated into a central location. However, only 21 percent share their information with suppliers.
If you don’t currently have data-sharing in place, investigate why not. Information sourced from suppliers can help you spot bottlenecks and proactively engage with suppliers. If you give some data to those parties, confirm they have adequate cybersecurity measures.
4. Selecting the most appropriate ERP model
An ERP tool may operate with the on-premise, cloud or hybrid model. An on-premise ERP runs on a company’s own servers, and employees tackle security and maintenance. A cloud-based ERP runs on remote servers with third-party management. A hybrid model combines both approaches. It’s a flexible option, although it requires a thorough integration between the two deployment models to succeed.
Due to benefits like its lower operating cost, accessibility, scalability and flexibility, the cloud model is gaining popularity among people looking at ERP solutions. In any case, you and any other decision-makers involved must take the time to understand the pros and cons of each option before reaching a conclusion.
5. Avoiding using too many ERP tools
Some supply chain managers deal with a challenge commonly termed “ERP sprawl,” which often happens due to the acquisition of more companies or locations. The additions are good news for a company’s bottom line, but they could complicate data management.
Consider the example of every acquired company using a different ERP tool. That makes it challenging to get a complete picture of what’s happening across each of those enterprises. Company leaders in this situation should aim to consolidate ERP usage by choosing a single solution to use at every location.
However, they must also be aware that this approach involves a major, time-intensive process that can cause some degree of business disruption. Planning for those obstacles before they occur is a good way to minimize the potential difficulties.
6. Deciding how best to implement the ERP
Some company leaders may decide their supply chain needs an ERP tool before taking a closer look at operations to determine the best ways to implement it. That could mean it takes longer than expected to make the investment pay off.
However, when people have a clear idea of why and how they’ll use the ERP, they’ll see the benefits faster. Consider the example of Ethical Products, a New Jersey pet supplies company. It uses an on-premise ERP and worked with the provider to develop a complementing mobile app. Ethical Products made other warehouse improvements around the same time, including a powered conveyor and mobile thermal printers.
Employees use the mobile app to facilitate order picking. “The mobile app and the other improvements have added an incredible amount of efficiencies," said Frank Lucente, vice president of operations. "Our sales have grown rapidly in recent years, and we’re able to keep up with the same number of employees in the warehouse.”
These six challenges are not the only ERP-related obstacles, but they’re among the most common. Anticipating and addressing them leads to successful ERP implementation.