When ERP systems fail the supply chain

How do you connect ERP systems, suppliers, distributors and cloud computing? In today’s world of global supply chains, ERP systems are somewhat like hardened props in Super 14 rugby. They remain at the heart of the team but need to change in order to cope with the pace and flexibility of the modern game. For ERP systems it is not so much a technology solution, as it is a different way of thinking about supply chain collaboration.The integration of systems has delivered a lot but it has not delivered the same benefits for supply chain management. In the past, companies were more vertically integrated and made goods from their own stock of raw materials. Now it is about managing multiple suppliers and assemblers to deliver products to tight timeframes. Due to growing levels of compliance around consumer safety, trade barriers and freighting, it is clear the modern supply chain is a tangled mix.The fundamental issue with ERP systems is that they cannot share data between different computer systems and with different companies. ERP vendors have done well to make it easier to share data with other systems. But these solutions have only worked to a degree and often from only one system to another. This does not fit in with modern supply chains.A typical New Zealand exporter could be sourcing components from five different suppliers in three different countries, and then the have the products assembled by another company in another country. Through the whole supply chain process, all these companies are using different systems of varying sophistication levels. The result is poor collaboration across the supply chain because the data is not easily accessible.Error rates can be high within manually orientated systems and communication between companies can suffer. The volume of transactions within busy supply chains can result in details being missed or orders not being completed on time. The information management implications can also be significant, as information is not only the core of an ERP system, but also extends across spreadsheets and other departmental databases, as well as email. Trying to aggregate data across the supply chain is impossible. There is little ability for management to establish key performance indicators that can be tracked day by day. Communication becomes a real problem and it is hard to pinpoint accountability for certain transactions. This raises questions such as “who made the order and arranged the shipment?” and “why have certain key steps been missed in the chain?”The solution to the problem is only partly a technological one. Instead of a focus on sharing data, the key is to think about communication between the supply chains in terms of business processes. All systems have purchase and sale orders, and requisitions requests. These factors run businesses and need to be shared between systems in a supply chain. Viisibility has created an Internet-based community platform, which allows companies to better communicate with each other. Through the community, systems from various different companies within the supply chain can come together and share information on the basis of business processes. A purchase order entered into one organisation’s ERP system can be securely and instantly shared with both suppliers and customers. This makes it easier to track the progress of items right through to delivery.With a few links, groups in a chain simply can join their systems to the community to become part of the forum. A key benefit is how one community services the whole supply chain and provides a tracking system. The performance of the supply chain can be tracked and analysed in real-time, with the ability to pinpoint weaknesses before they become problems. The result is that the whole chain becomes more transparent and operates with less friction.Like the strong prop in the Super 14, ERP systems are the foundation for many companies. But for such systems to be able to cope within the modern world, they need to be able to keep up with the rest of the team. By looking at the problem in different ways and using the power of cloud computing, ERP systems can remain relevant to the global supply chain.