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Supply Chain Benefits of an ERP System

Supply ChainBecause many organizations implement enterprise software in order to achieve internal benefits, they are sometimes surprised by the positive effects that the integration can have on their supply chain on a whole. Some of the main benefits to target and prepare for include:

1.    Enterprise-wide Visibility – ERP software end-users enjoy permission-based visibility into material need and material use across the organization. This means that they have the data to optimize inventory levels, purchasing and production for enhanced performance.

2.    Automated Purchasing – Systems such as SAP, Oracle and Microsoft Dynamics, among others, can be programmed to automatically place orders with vendors when inventory levels drop below a certain point. This feature minimizes the chances of running out of materials at critical times in the production schedule.

3.    Vendor PerformanceERP systems give end-users and executives the opportunity to track vendor performance through metrics such as cycle time, cost, error rates and more. Data of this nature can be used to negotiate better terms or to justify switching vendors.

4.    Exposure of Fraud and Malfeasance – Building on point one above, ERP systems offer visibility and that visibility serves to not just provide information regarding existing corruption in the supply chain but also to deter those with a deviant mindset. Organizations can rest a little easier knowing that the data they need to put their suspicions at rest (or pursue prosecution in a worse case scenario) is being tracked by their ERP system.

5.    Economies of Scale – Knowing how much, where and when the organization spends can be an unbeatable point of leverage in price negotiations across the supply chain. Consolidation of enterprise spending for favorable terms is a key benefit of ERP integration that organizations should absolutely strive to achieve.

The advantages of implementing a new ERP system (or upgrading the one you’ve got) are many but no company will achieve benefits without first identifying them. Take the time to talk to your ERP vendor or consultant about the specific benefits your organization wants to achieve and then be sure to install the performance measures to track against these goals.

Learn more about achieving key ERP benefits (and lessons learned from the front lines of ERP projects) by downloading our white paper, Where’s the ROI?

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Written by Brevard Neely

Bree brings over a decade of experience in public relations, marketing and internal communications to her position as Manager of Organizational Change Management Services and Marketing at Panorama. Prior to founding her eponymous consulting company in 2007, she worked as a senior editor in consumer products for Edelman and a creative director for Mitchell & Associates. She also served as the Director of Development for the Worldwide Fistula Fund, a nonprofit focused on maternal health care in west Africa. Bree holds a BA from the Colorado College and an Executive MBA from Daniels College of Business at the University of Denver.

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