SYSPRO Opinion: How ERP can help solve HR and cost concerns

By Sanjay Galal, Asia Pacific CFO and CRO, SYSPRO
ERP is helping businesses to adapt and scale to counter mounting HR bottlenecks and cost-cutting concerns, argues Sanjay Galal, APAC CFO, SYSPRO

We’re operating in remarkable times. While COVID-19 continues to stifle the global road to recovery, businesses in the manufacturing and distribution sectors have had to overcome many new challenges with the ongoing supply chain headaches occurring globally.

As our economies continue to recover, it is worth paying attention to the supply chain technology systems that are helping keep our local manufacturers across the global supply chain supplied with the raw materials they require, and our supermarket shelves stocked.

The recent SYSPRO Manufacturing CFO 4.0 2021 survey conducted with financial leaders across the global manufacturing and distribution sector in a wide variety of businesses, ranging from SMEs to large enterprises, shows signs that the sector is adapting to post-COVID trading conditions and sentiment remains high. Many have had to realign their business strategies due to the pandemic and now their financial stability is no longer under such a great threat.

In fact, COVID’s cost to these companies has been on the decline for a while now, with 13% now in the “no impact stage”, compared to only 4% from last year’s research, which denotes a sense of resilience and eagerness within a new, opportunistic atmosphere of transformation.

COVID’s innovation injection

The pandemic has been the catalyst for change: a chance for the manufacturing and distribution industries to reflect on the need for transformation and serves as a wake-up call for the future of sovereign manufacturing in Australia. The Australian Government has committed to investing US$1.5 billion to spearhead the Modern Manufacturing Strategy, which is aimed at facilitating the growth of Australia’s manufacturing industry and ensuring more resilience in our supply chains.

As lockdowns and restricted trade continued to hinder business growth, more and more companies have opted to take their trading operations into the digital space. This has the knock-on effect of shrinking overheads, as fewer goods and resources then exist to require storage, maintenance, or indeed a manufacturing cost until the order is made.

As novelty becomes necessity, new frontiers enrich from shifts in expenditure. Today, expanding operations and investing in new equipment dominate the spending metrics globally, ranging between 41% to 43%, respectively.

Many Australian businesses utilised government stimulus payments at the height of the pandemic as an opportunity to expand into or invest in new innovative technology and equipment as well as acquiring new talent due to skills shortages. 

Skills shortages impacts supply chain challenges

COVID-19 has made it extremely difficult to import low-cost labour, so many sectors including logistics, hospitality, agriculture and manufacturing are desperate to recruit new employees to fulfil these roles.

The existing worker shortage across the sectors in focus threatens to exacerbate supply chain challenges. Some have reduced hours or temporarily shuttered locations with the latest wave of Omicron cases. Hopefully, when the international borders open to everyone, the staffing issues will slowly resolve.

With more people shopping online than ever before and social distancing measures in place at both manufacturing plants and warehouses and many logistics employees forced into isolation it's taking a little longer to dispatch online orders.

Building workforce capability could help address the identified skills gaps in the workforce in the long term, so this reskilling is a focus of many in the manufacturing sector.

Lasting change caused by COVID-19

Critically, however, is the lasting change, with 89% of financial leaders agreeing that the new initiatives implemented to help address skills shortages and investing in innovation will receive support well beyond the scope of today’s pandemic.

This means that we aren’t simply analysing a short-term, interim solution; it means that COVID-19 has caused a fundamental shift in business protocols, not only enabling better supply resilience, but also a change that promises to be with us for many years to come.

Increasing logistical risks

With logistical pressures currently being placed upon supply chains, companies have noted that the costs of inventory management have the potential to rise to unforeseeable levels. As such, 40% of the participants in the survey noted it as the biggest risk for the next cycle.

Climate change and extreme weather events will present ongoing challenges for global supply chains in the coming months, even as pandemic-related bottlenecks ease. The recent impacts of the recent storms and bushfires in Western Australia on their grocery supply chain make it clear that the logistics sector is struggling to cope with much more than a health crisis.

Shipping from overseas also remains delayed, impacting everything from imported foods to packaging that is printed overseas. Supply chain bottlenecks are going to be causing supply issues for the next few months due to omicron-related absences and shutdowns of facilities.

How has ERP helped husinesses adapt?

The need for agility right now is obvious and companies in this sector require greater real-time visibility of their operations, inventory and supply chains with powerful data insights, to be able to pivot and manage accordingly. This will allow supply chains to compete with other supply chains and injects more innovation into companies in this sector. Adopting ERP as the backbone to the business has enabled many businesses to centralise their manufacturing and distribution operations.

By capturing insights from the factory floor coupled with integrated smart technologies, such as machine learning, ERP is helping businesses to easily adapt and scale to counter burgeoning human resource bottlenecks and cost-cutting concerns.

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