Opinion: Benefits of ERP for manufacturers and distributors
There are several challenges that are keeping manufacturers and distributors awake at night. The most dangerous of these is the uncontrollable forces driving fundamental changes in the industry and include the global pandemic, international trade wars, the rise of globalisation, changing regulations and emerging technologies, to name but a few.
While the industry figures out how to navigate these external shifts, there is still the need to resolve a few fundamental internal pain points that have been around for the last decade. The most critical of these being that many businesses are still reliant on manual or paper-based systems and on top of that, management systems are ageing and disparate.
Understanding the objectives of your ERP implementation
To address these challenges, IDC predicts that global spending on digital transformation technologies and services is forecast to grow 10.4% to $1.3 trillion in the next year. While the stats show an increased uptake in technologies such as Enterprise Resource Planning (ERP), for many businesses, there has been a hesitation around the adoption of ERP.
Concerns centre around costs and time considerations, while many still believe their legacy systems are doing enough to keep the lights on. ERP implementations are also a complex task for most businesses. According to a report by Technology Evaluation Centres, “Buying and implementing an ERP system is one of the most complex projects a business will take on, no matter the size of the company. In fact, nearly 50% of ERP implementations fail the first time around.”
While those figures are distressingly high, the key to a successful ERP implementation is to understand the key objectives of your ERP implementation, and how the ERP solution will address the pain points in your organisation, and how it will improve your customers’ experience. The organisation needs to be crystal clear on the expected outcome and why.
To realise those objectives, it is vital to understand what ERP is, what it is not, and its key benefits.
What is ERP?
In summary, ERP systems standardise, automate and integrate the core business processes. The standardisation of business processes allows the organisation to consistently do things the same way and easily understand if a problem occurs. The automation of business processes reduces human effort and consequently error, while improving operational efficiency and productivity. By integrating disparate business processes, ERP simplifies data and information transfer across the organisation, ensuring coherent information in all systems while also avoiding duplication of effort. Disparate systems encourage discontinuity between processes and result in people working at cross purposes in different parts of the organisation. Simply put, the ERP becomes the heart of a business.
ERP offers a single source of truth
As a single source of truth for companies, ERP allows businesses to operate with real-time data. Leadership can therefore take decisions consensually as they share the same data and insights. The business can also automate tasks, while eliminating the tracking of operations via spreadsheets, which in turn can drastically reduce manual errors, duplication of work and free up employees’ time so that they can focus on more important tasks.
The ERP platform also is able to connect to Internet of Things (IoT) devices to collect live data to assist in closely monitoring critical processes and quality. Having a shared the single source of information ultimately provides the business with a complete and detailed view of their sales forecasts, incoming raw materials to meet those forecasts, manufacturing operations and progress of orders through the factory, distribution of orders to customers, cash position and account status for suppliers and customers. In other words, all the key information required to make the business a success
ERP allows for comprehensive compliance and traceability
Globally, manufacturers and distributors need to comply with several regulations to ensure a safe working environment, product traceability and adherence to regulatory reporting. The ERP system can produce the reports that are required to comply with the regulated reporting.
From defence contracting through to food and beverage production, granular traceability of product details such as supplier and material sources, material changes and customer deliveries of specific batches, as well as the ability to audit all material transactions are expected. The requirements to successfully track and sort all this data will require the cross-organisation data collection of an ERP system.
From a traceability perspective, a product recall system allows manufacturers to perform a full product recall quickly and efficiently by having instant access to all the critical information needed to track a suspect product, throughout the value chain. It supplies the necessary information to identify, isolate and action the activities that need to occur within the predetermined recall time limit.
ERP offers accurate forecasts
With businesses increasingly shifting routes to market to remain competitive, having accurate and real-time visibility into inventory levels are vital to improve profitability as well as manage cashflow. The ERP system supports this and allows businesses to analyse forecasted demand, accurately predict production targets and meet demand levels. A strong point of any ERP is that it helps manufacturers and distributors by automating the processes of balancing material supply, and product and service demand. This allows them to optimise the ordering processes, take advantage of economic order quantities, batching and economies of scale.
By getting all these fundamental elements in place right at the start of the journey, a business can reap the benefits of an ERP and achieve the desired ROI for the investment.
Rainmaking + ESG Launch Supply Chain Resilience Accelerator
Rainmaking, one of the world’s leading corporate innovation and venture development firms that create, accelerate and scale new business, has partnered with Enterprise Singapore (ESG), a government agency that champions enterprise development, to launch Singapore’s first ‘Supply Chain Resilience Accelerator’.
The new programme will unite startups and enterprises to boost scalable technology solutions that help fuel supply chain resilience by addressing pain points in transport and logistics.
Over the last 13 years, Rainmaking has launched 30 ventures totalling US$2bn, including Startupbootcamp. Having invested in over 900 startups that have raised more than US$1bn, Startupbootcamp is one of the world’s most active global investors and accelerators.
The new programme looks to help build more resilient supply chains for Singapore’s burgeoning network of startups by leveraging its advantageous position as a global trade and connectivity hub. As part of the Supply Chain Resilience Accelerator programme, no less than 20 startups with high-growth potential will have the opportunity to become a part of Singapore’s vibrant ecosystem of startups.
Calling Supply Chain Solution Startups!
The programme will kick off with an open call for startups who specialise in supply chain solutions for end-to-end visibility, analytics, automation and sustainability.
Applicants will then be shortlisted and receive nurturing from Rainmaking, fostering valuable engagements with corporates to drive scalable pilots with the aim to stimulate investment opportunities.
“Covid-19 exposed the fragility of global trade, and the Supply Chain Resilience Accelerator is our opportunity to spot weak links and build back better. Piloting outside tech can be an incredibly efficient way to test viable solutions to big problems, provided you de-risk and design for scale. Our programme does precisely this by helping corporate decision-makers and startups to work on compelling business opportunities, anticipate operational risks, and ultimately co-create solutions fit for wider industry adoption,” said Angela Noronha, Director for Open Innovation at Rainmaking.
Pilots will run from Singapore, with the objective that relevant organisations may adopt successful solutions globally. To that end, Rainmaking is currently engaging with enterprises specialising in varying industry verticals and have expressed interest in partnering.
“Even as we continue to work with startups and corporations all over the globe, we are so pleased to be anchoring this program out of Singapore. With a perfect storm of tech talent, corporate innovators, and robust institutional support, it’s the ideal launchpad for testing new solutions that have the potential to change entire industries. We look forward to driving the transformation with the ecosystem,” added Angela Noronha.
One of the first selected corporate partners is Cargill, a leader in innovating and decarbonising food supply chains.
"Cargill is constantly exploring ways to improve the way we work and service our customers. Sustainability, smart manufacturing and supply chain optimisation are key areas of focus for us; exploring these from Singapore, where so many key players are already innovating, will help us form valuable partnerships from day one. We look forward to joining Rainmaking and ESG on this journey to work with, support, and grow the startup community by keeping them connected to industry needs,” said Dirk Robers, Cargill Digital Labs.
In order to raise awareness on the importance of building resilience and how technology can be leveraged to mitigate risks of disruption, industry outreach efforts will include fireside chats, discussions and demo days.
In July, Rainmaking will host a virtual insight sharing event for innovation partners as well as a ‘Deal Friday’ session that connects businesses, investors, and selected startups with investment and partnership opportunities.
Programme events will also benefit Institutes of Higher Learning by offering exposure to how advanced practitioners leverage new technologies to transform traditional supply chain management and share real-world case studies and lessons learned, better equipping next-gen supply chain leaders.
“As an advocate of market-oriented open innovation, we welcome programmes like the Supply Chain Resilience Accelerator, which aims to help companies resolve operational pain points, strengthen supply chain resilience and spur growth in a post-pandemic world. With a strong track record in driving open innovation initiatives for the transport and supply chain industry, we believe that Rainmaking’s in-depth knowledge of the ecosystem and network of global partners can complement Singapore’s efforts in accelerating our business community’s adoption of tech-enabled tools, to better manage future disruptions and capture opportunities arising from shifts in global supply chains. This will in turn help to strengthen our local ecosystem and Singapore’s status as a global hub for trade and connectivity,” said Law Chung Ming, Executive Director for Transport and Logistics, Enterprise Singapore.