Before the Covid-19 pandemic, many businesses took their supply chain for granted. As well as the disruption caused by Covid, there was Brexit, shortages of key commodities, and labour shortages.
These challenges taught many organisations that their supply chains and sourcing programmes were not adequately prepared for such consistent disruption. Issues still continue into 2023 and businesses must build resilience into their supply chains. One way to build this strength is with an Enterprise Resource Planning (ERP) system to manage the supply chain and build resilience into operations. Below, we highlight some of the supply chain challenges that can be eased by using a modern ERP system, designed specifically for managing inventory across supply chains:
1. Lack of raw materials/oversupply
Material shortages and disruptions – both fuelled by Covid and geopolitical conflicts – continue to plague the supply chain. Rising demand combined with a lagging supply chain due to a lack of raw materials has now resulted in oversupply in some areas. With a decrease in demand due to inflation, oversupply may continue to be a problem in the short term.
How ERP can help: An ERP system gives visibility across the entire business and with integration into other business-critical systems, as well as supplier information, pain points like backlogged orders and missed shipments can be identified and mitigated before they cause disruptions.
2. Rising fuel and energy costs
Today’s rising fuel and energy costs are a huge threat to the bottom line, especially with no price cap on business energy costs. Add to that the high fuel costs and every stage of your supply chain is under threat of cost increases.
How ERP can help: An ERP system can help you identify and track costs in real-time, allowing you to find areas for cost saving. Once you start looking at the right data, the results can lead you to solutions you hadn’t imagined.
3. Labour shortages
It’s a well-known fact that the ongoing labour shortage affects warehouse operations, transport and manufacturing facilities. Labour shortages in every industry create a ripple effect out to multiple sectors, making this issue more difficult to solve. This risk can of course be managed through hiring processes, retention practices and compensation, but an ERP system can certainly play a role in helping to manage this issue.
How ERP can help: By enabling you to automate manual tasks and processes, you can accelerate your operation and improve accuracy. The ERP system can instantly trigger the next step of your supply chain process, allowing users to focus on value-added tasks and reducing the demands for labour resources.
4. Increasing inflation
The effects of inflation on the supply chain industry are a complex issue. Inflation impacts the supply chain at every step – from sourcing raw materials and parts to transporting goods, to packaging and storage – forcing companies to evaluate their next move constantly.
There is no easy way to mitigate this impact. Many companies have chosen to carry more inventory to combat delays, increasing warehousing and storage costs. But as inflation is starting to bite, consumer spending is decreasing, causing many companies to have excess inventory.
How ERP can help: By providing visibility across the business and the supply chain, as well as having access to real-time data and the ability to collaborate across the supply chain, businesses can focus on more complex tasks at hand to solve these challenges.
5. Lack of sustainability
Businesses need to build sustainable practices into their supply chains to reduce costs and waste, improve efficiency and enhance regulatory compliance. In fact, in Deloitte’s 2021 survey, 2021 Climate Check: Business’ views on environmental sustainability, almost half of the 750 executives surveyed reported that their environmental sustainability initiatives measurably boosted their corporate financial performance.
How ERP can help: An ERP system can help you to measure your carbon footprint, as well as add sustainable practices to your business processes, which can then be measured. As mentioned above in point 2, costs can be identified and tracked, helping you to become more sustainable.
6. Regulatory compliance
Most supply chains share common compliance risks, ranging from environmental compliance, social and governance, labour law compliance and health and safety laws, among others. Add to that the German Supply Chain act and other planned directives across the EU and North America and you have a whole lot of rules and regulations to keep track of and adhere to.
How ERP can help: A modern ERP system should come with regulatory compliance packs for many countries, allowing you to manage the latest regulatory versions. In addition, an ERP system will provide you with full traceability.
Sage X3 ERP from Inixion
Most of these issues depend on having visibility across the supply chain and the ability to deal with market volatility and new challenges quickly. Visibility and agility are not possible without having a modern ERP system, like Sage X3, providing a single-version-of-truth with all relevant real-time data, as well as having the ability to quickly adjust processes in your business system to adapt to changes.
Sage X3 has specific supply chain and inventory management functionality and integrates with other business-critical systems, providing you with a single overview of everything that is happening in your supply chain. This enables you to forecast with ease, plan ahead and stay compliant. In addition, it’s highly configurable, providing the ability to adjust processes in line with new requirements and your unique business needs.
Check our guide ‘Solving supply chain woes‘ to discover the future of supply chains and the role of ERP in supply chain management.