Enterprise resource planning, or ERP software, is a great tool for businesses. This is a class of AI in Supply Chain software programming that makes managing day-to-day activities easier for companies. Understanding how it makes such a difference requires understanding more about the six core components involved.
The Six Core Components
1. Supply Chain Management
Supply chain management is the first and most important element that supply chain software simplifies. The biggest piece of supply chain management is organizing all the various suppliers involved. Rarely do companies use just one supplier. Keeping all the relevant information organized to the right supplier with orders, inventory, and payments can quickly become complicated.
Two main areas of collaboration that help improve supply chain management are purchase orders and requests for quotes.
Purchase Order Collaboration
Standardizing communication between suppliers improves communication across the chain. Each party can quickly send an acknowledgment on a shipment, notify others about delays, and changes in pricing, decrease errors and reduce frustration overall. Fewer emails are missed on average when automation is involved.
Companies can also use supply chain software to communicate with consumers. Whether they are another stop on the supply chain or at the end and ship directly to the end buyer, communication matters. Keeping everyone informed on their orders and shipments helps improve the chances of repeat business.
A request-for-quote process, or RFQ, is the start of a supplier relationship. Companies can send or request RFQ collaboration more easily with supply chain software. Each is delivered to the right person to get the quote and review it with a comparison chart within the software.
When receiving a request, suppliers can respond to multiple requests at once. The software then keeps track of these requests for later follow-up and future requests.
2. Human Resources
Employees are the heart and soul of a business. They determine if orders are fulfilled, help get the work done, and provide a face for the company. It is important to give human resources the tools they need to encourage and support employees.
Software that is cloud-based has an increased capacity for storage. Many programs come with extra resources already stored to help if needed. Some of these extra resources include support programs to connect employees to each other, managers, owners, and suppliers. Training, protocols, and automation are all centrally located to help set a company up for success.
3. Customer Relationship Management
A big piece of successfully working with suppliers is relationship management. To get the most accurate information on suppliers, it is helpful to track their performance.
This information helps decision-makers know which suppliers are best to work with and give the best deals. Paying a lower price isn’t always ideal if the shipping times take longer or the quality isn’t right. Deciding who to work with makes the biggest difference in getting a higher profit over time.
4. Business Intelligence
This software helps increase business intelligence by keeping track of income and expenditures. These two components are the determining factors if companies will succeed or not. Knowing how suppliers perform and monitoring costs is a great way to stay in tune with the business’s needs.
Another part of business intelligence is tracking employee performance. Knowing which departments are profitable, or which areas need more support, builds a stronger business base. This is all information that is tracked in software to improve company metrics.
5. Inventory Management
Tracking orders is invaluable for monitoring profits and losses. Knowing how long it takes to get supplies delivered, assembled, and shipped off to buyers is the base of any business. Using supply chain software simplifies and expedites the process.
Knowing how much inventory is available and estimated times for you to turn around and ship products can be beneficial to customer relationships. Inventory management helps you stay on top of this information and give accurate information.
Keeping good records helps solve disputes and clarify responsibility. As information passes between different stops on the supply chain, it can sometimes get lost or mixed up with other orders. Limit the confusion with proper digital documentation.
6. Financial Management
Paying different suppliers requires good records and excellent tracking. Using supply chain software to automate payments makes this part of accounting easier. Another benefit is that some suppliers will give early payment discounts that can save companies a lot of money.
Automated 3-way matching keeps everyone informed on payments. It tracks invoices, payments, and receipts so all parties stay in the loop. This improves supplier relationships by removing the uncertainty that can come with deliveries and payments.
Getting More with Supply Chain Software
ERP software is a great tool for companies to organize all their information in one place. Many struggles to know where they can improve their processes and utilize their full ERP software program.
Learning all the features of ERP software can be overwhelming. Using supply chain software to integrate with your ERP software can make it easier to use and provide needed support. The right tools are only right if they are usable for the company.