What Can ERP do for the Supply Chain?

Our manufacturing and retail industry teams have been busy of late speaking to press and analysts about what they see as some of the key trends dirivng change in their industries, how IT will play an increasing role moving forward and the Microsoft position of Microsoft and our solutions in helping retailers and manufacturers embrace change and drive opportunity from it. Following on from a recent post Why connected retailers are making the switch to ERP I wanted to highlight an article from Supply Chain Europe magazine featuring our Global Industry Product Director for Manufacturing, Rakesh Kumar. You can read the article in full below:

The goal for any manufacturing operation – whether it is a discrete or a process manufacturing business – is to produce quality products at the lowest possible cost while striving to exceed customer expectations. Achieving this consistently and cost-effectively depends on gaining deep insight into the supply chain, especially when it comes to managing the complexities of formulating and producing products to custom specifications. Maintaining market share in today's ever more competitive landscape requires that manufacturing industries process orders faster-increasing execution and delivery reliability rates-while giving customers better information on order status and simultaneously managing compliance with legal and regulatory requirements. All of this requires tremendous agility and a truly dynamic operating environment that's capable of assimilating real-time information flows across supply-chain touch points with ease. But when it comes to joining the supply-chain management "dots," manufacturers face serious technical challenges in terms of process and data flows – especially when it comes to integrating the "spaghetti soup" of systems controlling individual customer, supplier and production functions. To resolve this integration challenge, manufacturers are taking a fresh look at enterprise resource planning (ERP) as a means of gaining that all important "single version of the truth" and equally crucial seamless connectivity to customers and suppliers.

In the past, ERP has received a mixed reception. When the first commercial ERP software packages exploded onto the market in the 1990s-promising to integrate all data and related organizational processes into a unified single information system-ERP acquired a reputation as an unwieldy monolith that was unsuited to supply-chain management, being inflexible, costly to implement and complex to operate. But manufacturers-regardless of their size or the industry in which they operate –have been missing out on a critical IT opportunity, because ERP has changed.Previously software vendors tried to fit a single ERP solution around the needs of diverse industry verticals, such as semiconductors, chemicals or food/beverages, resulting in shortfalls in the levels of support needed for industry terminologies and industry-specific complexities in the manufacturing operations. Today's next-generation out-of-the-box, supply-chain-management-specific ERP solutions, such as Microsoft Dynamics AX, have evolved, becoming impressively scalable end-to-end offerings that effectively streamline and automate business processes across the supply chain.Alongside delivering that all important data unity within the enterprise, today's ERP solutions use customisable Web services to make it simple and quick to connect with suppliers, logistics providers and customers and enable seamless real-time data exchange and process sharing. Easy to deploy and featuring easy-to-use intuitive tools that can be accessed across the manufacturing operation-from the shop floor to the top floor-today's ERP solutions make "joined up" streamlined supply-chain management an achievable reality. It's this unique ability to integrate external business processes and support application-to-application connectivity across multiple systems in a cost-effective manner that now makes it possible for manufacturers to respond quickly to changing customer and supplier demands.

Supply-chain optimization also is possible now. Powerful inventory management tools help to improve forecasting and planning, so supply and inventory levels can be fine-tuned to customer demand. While access to real-time data gives users faster access to the tasks and critical business intelligence information-like key performance indicators-needed to optimize the supply chain. Finally, ERP makes it easy to simplify government and corporate compliance commitments by defining custom business rules and workflows based on risk scenarios.

Today's ERP solutions provide the vital backbone on which effective, cost-efficient and dynamic supply-chain collaboration can take place. Besides unleashing demand-driven production, organizations of any size in any sector can respond faster to change, incorporate new customers and suppliers with ease, and adapt their operation on the fly as business needs change.


–Rakesh Kumar, Global Industry Product Director Manufacturing Industry, Microsoft Business Solutions