During the past two decades, enterprise resource planning (ERP) systems became the big dog in many corporate data centers. By providing integrated suites encompassing everything from financial operations to sales and marketing to manufacturing—with all the elements sharing a common database and a consistent user interface—ERP suites managed to displace many best-of-breed point solutions.
Despite the ERP suites’ many benefits, however, not every component provides the top-level visibility and control required in today’s fragmented supply chain, where brand owners are working with multiple trading partners. Many business operations now involve multiple collaborating players spread across different geographies and time zones. ERP’s limitations are especially evident in the complex, diverse, and interdependent realms of supply chain management (SCM) and material requirements planning (MRP).
Many organizations have established global outsourcing operations and have critical components and products being manufactured by different companies at different stages throughout the supply chain. The supply chain itself encompasses not just primary manufacturers but also contract manufacturers, distributors, retailers, and other channel partners.
Each one of these independent cogs powering the supply chain may well have its own ERP system, of course. And the central company’s ERP system often doesn’t have the ability to collect data from the systems of all of its supply chain partners in real time and to aggregate that data to produce a common, end-to-end view and make intelligent decisions by using this information.
In short, in a network consisting of many players and many ERP (and other) systems, no single ERP system can sit at the top of the data and operational hierarchy. What’s needed is an overarching facility that can collect, normalize, and analyze all relevant data from across the supply chain in near real time.
Look to the Cloud
Enter cloud computing—and, increasingly, cloud computing powered with artificial intelligence (AI) analytical capabilities. A cloud-based SCM service can provide cross-supply-chain connectivity and visibility as well as open-ended compute and storage scalability for handling pressing and demanding operations on an as-needed basis.
As significant, cloud-based SCM can provide a common security infrastructure that encompasses communications and data protection across all supply chain partners. There is no single approach for providing such end-to-end security and connectivity. What’s important is to implement methods that are suitable for all the companies and systems involved while avoiding the security gaps that can occur with reliance on many one-to-one and poorly integrated security regimes.
Ideally, the cloud-based SCM/MRP solution will create and house a data lake that serves as the repository for all the data continually being collected from each supply chain participant. Having a dynamic data lake residing in the cloud, rather than having partners work off a corporate-based copy, keeps delays to a minimum and ensures that everyone has access to the most-up-to-date and consistent information.
Only by establishing a single cloud-based representation of the entire supply chain can companies hope to respond immediately to supply disruptions, demand spikes, or other relevant events. If, for example, demand for a popular product suddenly drops, that change needs to immediately be reflected to scale back the production rates and targets of component manufacturers.
ERP systems will continue to serve as critical elements in company operations for the foreseeable future. But—at least for SCM—ERP suites will increasingly function primarily as data generators that feed into overarching cloud-based solutions.
Learn how GEP can help you aggregate and optimize your supply chain operations at www.gep.com.