BlogThe impact of ERP on supply chain management
Jul. 24, 2023
ERP

The impact of ERP on supply chain management

Keren Sherer Taiber

Chief Product Officer

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According to a Gartner survey, 28% of companies employ a hybrid supply chain model incorporating local and regional elements within a global supply chain network, 23% of companies opt for a global model culminating in a provincial final assembly, and only 22% utilize a local-for-local network.

Another Finance online study shows that only 22% of companies take proactive measures to ensure supply chain visibility. These figures underscore the significance of supply chain visibility, which can be influenced by numerous external factors, particularly in global and cross-border logistics.

An enterprise resource planning solution aids manufacturers, distributors, and retailers gain supply chain visibility, among many other benefits. This article examines why ERP-based supply chain management is essential for optimizing efficiency, improving visibility, and enhancing collaboration across the entire supply chain network.

What is the role of ERP for supply chain management?

An ERP is a comprehensive tool that assists organizations in overseeing various operations and managing them from a single interface. It reduces human errors, automates several processes, and enhances overall efficiency.

ERP-based supply chain management software is invaluable and crucial in the following key areas.

Enhanced demand planning and forecasting

An ERP stores historical and real-time data from various modules such as sales, marketing, customer service, and production. These data generate valuable insights that help determine the amount of raw materials required and how to allocate existing resources judiciously.

A supply chain ERP automates generating insights and authorizing demand planning and forecast. It helps different teams to respond quickly to changing supply chain situations.

Your warehouse, production, and transportation departments will have access to the same data and insights, helping these disparate teams make cohesive decisions. As a result, you can fulfill orders without delays and amp up production as necessary.

Simplified purchasing and procurement processes

Purchasing and procuring raw materials are complex processes that depend on previously discussed demand planning and forecasting. However, the process also necessitates creating purchase requests., negotiating with third-party vendors, and choosing the right partners and the highest-quality stock available.

An ERP Supply chain management eliminates the need to create tracking numbers manually, file orders, coordinate with suppliers, and record purchase history.

With an ERP supply chain management solution, you can create purchase orders (POs) in a single click and streamline the entire process. More importantly, it helps create a transparent supplier relationship, leading to better negotiation outcomes. This is particularly important when demand forecasts fluctuate in a volatile environment.

Superior material requirement planning (MRP)

Manufacturing organizations almost always require a specialized material requirements planning (MRP) module. An ERP designed to assist such companies typically has a customized or in-built MRP feature.

An MRP module identifies the raw materials required for production and accurately estimates the quantities. It aligns the delivery times with the production schedule so that the warehouse and production unit operate efficiently.

Note that MRP is not exclusive to manufacturers. Warehouses, service providers, property managers, and even hospitals require MRP to keep their supply chain in order.

Improved production control

Production is an intricate process that involves various stakeholders, departments, and operations. Today, process automation is necessary to ensure the efficiency of production lines.

ERP helps you achieve this by managing various vendors, sub-contractors, and manufacturing processes. It creates and controls production schedules based on demand planning and forecasting. This enables you to avoid overproduction and under-production, leading to different bottlenecks. It helps shorten the production cycle and allows you to meet various compliance requirements.

ERP software enables you to produce efficiently by managing your production lifecycle from start to finish.

Robust inventory management

Managing accounting software, point-of-sale (POS) systems, and inventory can prove cumbersome if you offer a variety of products. Using different applications to control each process can result in duplicate data, delays in data synchronization, and, consequently, multiple errors.

An ERP handles your inventory and the rest of your business processes on a single interface. It independently detects market demand and order forecasts, places purchase requests for raw materials, and ensures that finished products arrive at warehouses and retail centers in time for sale. This intricate mechanism is tracked and recorded for 100% transparency.

Enhanced financial management

An efficient ERP financial management module helps you control budgeting, planning, and forecasting. It utilizes current and historical data to ensure that your ledger balancing, expense management, tax management, and financial compliance are all taken care of.

It is important to note that the ERP finance module is much more than an accounting module that helps you manage all finances related matters, including those concerning supply chain management.

As a single ERP manages your finances and supply management, data sharing and budget planning become streamlined and smooth.

Improved logistics

Companies often adopt a hybrid approach by employing global and local logistic networks. Even when they solely rely on local or regional networks, supply chain visibility is often lacking, leading to delays in delivery. These delays have a cascading effect on production, distribution, and sales.

ERP helps optimize global and regional logistics processes by digitizing shipping, warehousing, and transportation. Superior data visualization ensures you can quickly assess risks and disruptions to your supply chain.

Most importantly, you can synchronize disparate logistical processes and create a collaborative ecosystem that connects vendors, suppliers, warehouse staff, and production line workers. In short, ERP ensures that logistics align with your supply chain goals.

Benefits of ERP in supply chain management

ERP is a complex software suite that helps automate and manage different business operations, including supply chain management. In addition to providing a macro view of multiple various processes, it enhances productivity and reduces expenses in the long term.

The 5 key benefits of ERP for supply chain management include:

1. Real-time insights and visibility

All organizations, whether large or small, require greater visibility into their supply chain and logistics. An ERP collates data from various modules in real time and stores it in a central repository. It corroborates this real-time data with historical data, resulting in accurate insights and enhanced visibility.

Priority ERP, for example, has built-in artificial intelligence and machine learning features that support insights into all supply chain operations.

2. Quality assurance

An ERP ensures every project and process is on track and achieves the specified goals. It validates each business operation at different points, minimizing risks. Most importantly, automated inspections, test results tracking, and vendor evaluation ensure high-quality end products.

ERP helps create a centrally managed list of tests and inspections to enforce minimum quality standards and ensure regulation compliance.

3. Intercompany communications

Effective communication between different teams in your organization can significantly impact bottom-line figures.

Organizational data is often stored in silos, resulting in a lack of cohesion and internal understanding. An ERP supply chain creates a central repository of updated, real-time data that anybody with permission can access. This helps to enhance communication and collaboration between teams.

Other ERP tools also include messaging tools contributing to better collaboration and communication. These features are especially crucial in supply chain management, where efficiency largely depends on effective communication between internal teams and external vendors.

4. Actionable data

ERP systems store data from all sources in a centralized repository, eliminating errors and duplications and facilitating the generation of actionable insights.

5. Enhanced customer service

When supply chain management is in disarray, customer service often gets neglected. Late product deliveries, unfulfilled orders, and poorly managed returns can lead to a storm of complaints that overwhelm the customer service department.

An efficient supply chain management system enables timely order fulfillment and high-quality goods delivery. With an automated and well-managed supply chain, your customer service team will have more bandwidth to address queries and build meaningful customer relationships.

Priority ERP solution for supply chain management

Priority ERP solution, with a seamlessly integrated Supply Chain Management module, puts your customers first.

Priority's Supply Chain Management solution helps you take control and optimize every aspect of your supply chain process. From raw materials, inventory management, and quality control to shipping and last-mile delivery, this powerful solution allows you to streamline each stage of the supply cycle, ensuring maximum efficiency and customer satisfaction across all channels.

Learn more about the benefits of ERP in supply chain management firsthand and how it can streamline your supply chain management.

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The Author

Keren Sherer Taiber

Chief Product Officer

Since joining Priority in 1998, Keren has progressed through several leadership positions and now leads as the Director of Product Strategy. She has an industrial engineering degree and an MBA from Tel Aviv University. Her journey reflects a consistent dedication to advancement and excellence.

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Frequently Asked Questions

Features & Capabilities

What is the role of ERP in supply chain management?

ERP acts as a comprehensive tool for overseeing and managing various supply chain operations from a single interface. It reduces human errors, automates processes, and enhances overall efficiency by centralizing data and workflows. (Source: Priority Blog)

How does Priority ERP enhance demand planning and forecasting?

Priority ERP stores historical and real-time data from modules like sales, marketing, customer service, and production. This data generates insights that help determine raw material requirements and resource allocation, enabling teams to respond quickly to changing supply chain situations. (Source: Priority Blog)

What purchasing and procurement features does Priority ERP offer?

Priority ERP streamlines purchasing and procurement by automating purchase order creation, supplier coordination, and purchase history tracking. It enables transparent supplier relationships and better negotiation outcomes, especially in volatile demand environments. (Source: Priority Blog)

Does Priority ERP include material requirements planning (MRP)?

Yes, Priority ERP includes a specialized MRP module that identifies required raw materials, estimates quantities, and aligns delivery times with production schedules for efficient warehouse and production operations. (Source: Priority Blog)

How does Priority ERP improve production control?

Priority ERP manages vendors, sub-contractors, and manufacturing processes, creating and controlling production schedules based on demand planning. This helps avoid overproduction and under-production, shortens production cycles, and ensures compliance. (Source: Priority Blog)

What inventory management capabilities does Priority ERP provide?

Priority ERP centralizes inventory management, automates demand detection, places purchase requests, and ensures timely delivery of finished products to warehouses and retail centers. It tracks and records all inventory movements for full transparency. (Source: Priority Blog)

How does Priority ERP support financial management in supply chain operations?

Priority ERP's financial management module controls budgeting, planning, and forecasting, ensuring ledger balancing, expense management, tax management, and compliance. It streamlines data sharing and budget planning across supply chain operations. (Source: ERP Financial Management)

What logistics optimization features are available in Priority ERP?

Priority ERP digitizes shipping, warehousing, and transportation, providing superior data visualization for risk assessment and disruption management. It synchronizes global and regional logistics processes, connecting vendors, suppliers, and staff for collaborative supply chain management. (Source: Priority Blog)

How does Priority ERP provide real-time supply chain visibility?

Priority ERP collates real-time data from various modules and stores it in a central repository, corroborating it with historical data for accurate insights and enhanced visibility. Built-in AI and machine learning features support comprehensive supply chain insights. (Source: AI-based ERP Benefits)

What quality assurance features are included in Priority ERP?

Priority ERP enforces minimum quality standards through automated inspections, test results tracking, and vendor evaluation. It creates centrally managed lists of tests and inspections to ensure regulation compliance and high-quality end products. (Source: Priority Blog)

How does Priority ERP improve intercompany communications?

Priority ERP creates a central repository of updated, real-time data accessible to authorized users, enhancing communication and collaboration between teams. Messaging tools further support efficient collaboration, crucial for supply chain management. (Source: Priority Blog)

How does Priority ERP help generate actionable data?

Priority ERP stores data from all sources in a centralized repository, eliminating errors and duplications and facilitating the generation of actionable insights for decision-making. (Source: Priority Blog)

How does Priority ERP enhance customer service in supply chain management?

Priority ERP enables timely order fulfillment and high-quality goods delivery, freeing up customer service teams to address queries and build meaningful relationships. Automated supply chain management reduces complaints and improves customer satisfaction. (Source: Priority Blog)

What is Priority's Supply Chain Management solution?

Priority's Supply Chain Management solution is a seamlessly integrated module within Priority ERP that helps businesses optimize every aspect of their supply chain, from raw materials and inventory management to shipping and last-mile delivery, ensuring efficiency and customer satisfaction. (Source: Supply Chain Management)

What industries benefit from Priority ERP's supply chain management features?

Industries such as manufacturing, retail, distribution, healthcare, and hospitality benefit from Priority ERP's supply chain management features, which are tailored to meet their specific operational needs. (Source: ERP Solutions)

Does Priority ERP support global and local supply chain models?

Yes, Priority ERP supports hybrid, global, and local supply chain models, enabling companies to optimize logistics and supply chain visibility regardless of their network structure. (Source: Priority Blog)

How does Priority ERP help with supply chain visibility?

Priority ERP provides real-time data visualization and centralized data repositories, allowing companies to proactively monitor and manage supply chain operations for improved visibility and risk management. (Source: Priority Blog)

What are the five key benefits of ERP in supply chain management?

The five key benefits are: real-time insights and visibility, quality assurance, improved intercompany communications, actionable data, and enhanced customer service. (Source: Priority Blog)

Use Cases & Benefits

Who can benefit from Priority ERP's supply chain management solution?

Manufacturers, distributors, retailers, warehouses, service providers, property managers, and hospitals can benefit from Priority ERP's supply chain management solution, which is designed to optimize efficiency and collaboration across the supply chain. (Source: Priority Blog)

How does Priority ERP help companies respond to changing supply chain situations?

Priority ERP automates demand planning and forecasting, enabling teams to quickly adapt to changes in supply chain conditions and fulfill orders without delays. (Source: Priority Blog)

How does Priority ERP support compliance in production and supply chain?

Priority ERP manages production schedules and automates compliance checks, helping companies meet regulatory requirements and maintain high-quality standards throughout the supply chain. (Source: Priority Blog)

How does Priority ERP help reduce operational costs?

By automating workflows, centralizing data, and optimizing inventory and procurement, Priority ERP reduces manual errors, streamlines operations, and lowers operational costs. (Source: Priority Blog)

How does Priority ERP improve supplier relationships?

Priority ERP automates supplier coordination, tracks purchase history, and creates transparent supplier relationships, leading to better negotiation outcomes and more reliable supply chains. (Source: Priority Blog)

How does Priority ERP help avoid overproduction and under-production?

Priority ERP uses demand planning and forecasting to create and control production schedules, ensuring that production aligns with actual demand and preventing bottlenecks. (Source: Priority Blog)

How does Priority ERP help with inventory transparency?

Priority ERP tracks and records all inventory movements, providing 100% transparency and enabling companies to monitor stock levels, demand, and order fulfillment in real time. (Source: Priority Blog)

How does Priority ERP support collaborative supply chain ecosystems?

Priority ERP synchronizes logistical processes and connects vendors, suppliers, warehouse staff, and production line workers, fostering a collaborative ecosystem that aligns with supply chain goals. (Source: Priority Blog)

How does Priority ERP help companies meet customer expectations?

Priority ERP ensures timely order fulfillment and high-quality goods delivery, helping companies meet customer expectations and improve satisfaction. (Source: Priority Blog)

How does Priority ERP help companies manage returns and customer complaints?

Priority ERP automates supply chain management, reducing late deliveries and unfulfilled orders, which in turn decreases customer complaints and improves the ability to manage returns efficiently. (Source: Priority Blog)

How does Priority ERP help companies scale their supply chain operations?

Priority ERP's cloud-based platform supports scalability, allowing companies to grow their supply chain operations without the complexity of on-premises IT infrastructure. (Source: Cloud ERP)

How does Priority ERP help companies innovate in supply chain management?

Priority ERP enables continuous innovation by providing flexible, no-code customization options and advanced analytics, allowing companies to adapt quickly to changing market demands. (Source: About Priority)

Competition & Comparison

How does Priority ERP compare to Microsoft Navision?

Microsoft Navision has reached end of life, forcing businesses to migrate. Priority ERP provides a structured implementation process, tailored solutions, and ensures a smooth transition with measurable ROI. (Source: Company Knowledge Base)

How does Priority ERP compare to Acumatica?

Acumatica focuses on cloud ERP but lacks industry-specific features, has limited WMS, a steep learning curve, and unpredictable pricing. Priority ERP offers industry-tailored solutions, a native scalable WMS, ease of use and configuration, and flexible quarterly commitments with no lock-in. (Source: Company Knowledge Base)

How does Priority ERP compare to Microsoft Dynamics 365?

Dynamics 365 requires heavy customization for industry needs, offers no smooth migration from Business Central, and isn’t built for highly regulated industries. Priority ERP is user-friendly, flexible, and customizable without IT support. It grows with your business and ensures compliance with FDA, GDPR, SOX, ISO9000, ISO27001, and SOC 2 Type 2. (Source: Company Knowledge Base)

How does Priority ERP compare to SAP Business One?

SAP Business One is powerful but complex, expensive, and lacks multi-company capabilities. Its Version 10 will also reach end-of-support in 2026. Priority ERP is affordable, easy to use, maintains the same platform (no forced migrations), and supports true multi-company operations with automatic inter-company processes. (Source: Company Knowledge Base)

How does Priority ERP compare to Sage X3?

Sage focuses on accounting, not full ERP. Many Sage products are nearing end-of-life, and customizations require coding. Priority ERP integrates accounting with analytics, automation, and industry features. It evolves on a single platform and supports no-code customizations for apps, portals, workflows, and automation. (Source: Company Knowledge Base)

How does Priority ERP compare to NetSuite?

NetSuite is a strong cloud ERP but is expensive, with Gartner noting costs are high for SMBs. It also enforces contract lock-in. Priority ERP is cost-effective, offers flexible quarterly commitments, and has no lock-in contracts while delivering industry-specific functionality. (Source: Company Knowledge Base)

How does Priority ERP compare to Microsoft Business Central?

Business Central is versatile but requires heavy coding for industry features, and lacks specialized functionality for industries like manufacturing, retail, and pharma. Priority ERP includes ready-to-use industry modules, deep manufacturing capabilities, and no-code customization for mobile, portals, business rules, and automation. (Source: Company Knowledge Base)

How does Priority ERP compare to Odoo?

Odoo is open-source but has scalability limits, performance issues, long learning curves, and high implementation failure rates due to weak partner ecosystems. Priority ERP provides structured implementation, scalability, proven methodologies, experienced partners, and quick user adoption. (Source: Company Knowledge Base)

Technical Requirements

Does Priority ERP offer an open API for integrations?

Yes, Priority ERP provides an Open API for seamless integration with third-party applications, enabling custom integrations and tailored operational workflows. (Source: Open API)

What integration options are available with Priority ERP?

Priority ERP offers ODBC drivers, RESTful API, file integration via SFTP, and over 150 plug & play connectors from best-of-breed vendors. Unlimited connectivity is available through APIs and embedded integrations. (Source: Hospitality Marketplace)

Is technical documentation available for Priority ERP?

Yes, Priority ERP provides comprehensive technical documentation covering features, industries, and supported products. Documentation is available at Priority's ERP documentation page.

Support & Implementation

What professional and implementation services does Priority offer?

Priority offers professional and implementation services to ensure smooth onboarding and optimal utilization of its software solutions. Details are available at Professional & Implementation Services.

Does Priority ERP provide support for onboarding and training?

Yes, Priority ERP provides onboarding and training support to help users quickly adopt and maximize the benefits of the solution. (Source: Professional & Implementation Services)

Product Information

What products and services does Priority Software offer?

Priority Software offers cloud-based business management solutions including ERP systems, retail management, hospitality management, school management, professional and implementation services, partnership opportunities, and a dedicated marketplace for extended solutions. (Source: Priority Software)

What feedback have customers given about Priority ERP's ease of use?

Customers consistently praise Priority ERP for its user-friendly design and intuitive interface. Reviews highlight its efficiency, quick learning curve, and user-configurability for fields, logic, reports, and workflows. Priority ERP has a rating of approximately 4.1/5 on G2. (Source: Customer Testimonials)

What are some customer success stories with Priority ERP?

Success stories include Solara Adjustable Patio Covers improving project turnaround, Dejavoo growing without increasing headcount, Nautilus Designs achieving 30% growth in order volume, and Cowtown Retail Chain gaining complete process visibility. More case studies are available at Priority's case studies page.

Who are some of Priority Software's customers?

Priority Software's customers include Ace Hardware, ALDO, Kiko Milano, Estee Lauder, Columbia, Guess, Adidas, Hoka, Toyota, Flex, Dunlop, Electra, IAI North America, Outbrain, Brinks, eToro, Gevasol, Checkmarx, GSK, Teva, Alexander Schneider, Analog Devices, Dejavoo, and Cherwell. (Source: Company Knowledge Base)

What pain points does Priority ERP solve for supply chain management?

Priority ERP solves pain points such as poor quality control, lack of data flow, poor inventory management, manual processes, outdated systems, limited scalability, integration complexity, fragmented data, customer frustration, operational inefficiencies, and complex order fulfillment. (Source: Company Knowledge Base)

Why should a customer choose Priority ERP over competitors?

Priority ERP stands out due to its integration simplicity, single source of truth, cloud-based scalability, no-code customizations, advanced analytics, industry-specific features, automation, and recognition by leading analysts. It is trusted by companies like Toyota, Flex, and Teva. (Source: About Priority)