March 4, 2024 - 7 minutes read
The Data Chain: Bridging the Gap Between ERPs and Supply Chain Visibility
In the modern business environment, end-to-end supply chain visibility is more than a convenience—it’s a necessity. Recent surveys show that 77% of supply chain decision-makers say real-time visibility is essential to their operations, yet only 25% have implemented visibility solutions. This gap between necessity and reality highlights a critical challenge in the global supply chain. The ability to track and manage products, transactions, and finances from supplier to manufacturer or retailer to consumer is paramount, but many organizations struggle to achieve it.
Adding to the complexity, many companies find themselves entangled in complex technological ecosystems in their quest for true visibility. Enterprise Resource Planning (ERP) software is often at the heart of these systems, and while they are integral to managing various business processes, ERPs are not necessarily the answer to supply chain visibility challenges. In this blog, we will explore the realities of ERP capabilities, shed light on their strengths and limitations, and present an emerging platform-based approach to supply chain visibility.
What Do ERPs Do?
ERPs are the foundation of core business processes for many modern business operations, including finance, HR, manufacturing, services, and procurement. ERPs act as the system of record, primarily focusing on commercial product data and actual costs. This makes them indispensable for financial purposes and provides a mechanism for managing revenue-related sales and facilitating internal collaboration across departments.
One of the key strengths of ERPs is their ability to house actual data related to commercial products, providing a single source of truth for the organization. This centralized data repository is crucial for cross-departmental visibility, enabling different departments to work together more efficiently. For example, sales teams rely on ERPs for accurate and up-to-date information on customer orders, while logistics and procurement teams use them to track inventory and supplier interactions.
ERPs also help optimize resource allocation and streamline business processes, leading to cost savings without sacrificing quality. They facilitate planning and coordination, allowing for a detailed view of inventory, customer orders, and supplier interactions to prevent issues before they arise. Moreover, ERP systems are able to transform vast amounts of commercial product data into actionable insights, through reports and analytics that highlight trends and forecast outcomes, aiding executives in strategic decision-making.
Unfortunately, while ERPs excel in providing visibility into financial and commercial product aspects, they fall short in offering comprehensive visibility across the modern, complex supply chain and logistics environment. The details of logistics operations, including granular transit data and nuanced supplier interactions, often remain outside of traditional ERP systems, underscoring the need for specialized solutions that can bridge the visibility gap.
Can ERPs Provide Supply Chain Visibility?
As businesses navigate the complexities of global supply chains, the role of ERPs in ensuring transparency may come under scrutiny. ERPs are essential for integrating key business functions and providing valuable insights into financial operations. But are they equipped to deliver the full spectrum of supply chain visibility needed today? Arguably, ERP capabilities for supply chain management and visibility have limitations, including:
Inbound Visibility
The ability to track and manage inbound orders for raw materials and supplies is critical to business continuity, but ERPs inherently face challenges in providing visibility on these shipments. As self-contained data sources, ERPs excel in handling internal data but have difficulty incorporating information generated outside of their ecosystem. Achieving visibility into inbound logistics and anything managed by a third party typically requires supplemental software modules and extensive IT integrations. Such enhancements demand significant IT resources and substantial financial investment, posing a challenge for organizations that expect a holistic view of their supply chain through an ERP system alone.
Outbound Visibility & Transportation Management
The process of monitoring outbound orders and their transportation is a vital aspect of supply chain management, yet it is one where ERPs are often lacking. The system’s ability to track transactional occurrences–like carrier rating and selection–of a given PO is limited unless organizations once again invest in additional software modules and IT integrations. This limitation contrasts with the capabilities of a dedicated Transportation Management System (TMS), which can analyze transit history, evaluate transportation costs, and compare carrier services. Without access to this kind of detailed data, companies risk inefficiencies in fulfillment processes, potentially leading to excessive and unnecessary freight charges.
What’s more, the inherent design of ERP systems makes it difficult to share transactional data on individual POs with external parties, like transportation providers or end customers. This lack of transparency and collaboration is increasingly problematic in today’s supply chain environment, where both stakeholders and consumers have come to expect accessible, real-time updates on all orders. The inability of ERPs to meet these expectations impedes operational efficiency and detracts from customer satisfaction.
Add-On Module Limitations
Most ERPs feature add-on modules to support specific business functions like finance, procurement, or manufacturing. These modules are intended to provide department-specific insights and facilitate transactional processes critical for employees’ daily tasks. However, the implementation of these add-ons often requires costly and time-consuming efforts to integrate systems properly, and even then, they may not effectively link transactions and data across different modules and departments. This fragmentation can hinder the timely flow of information, essential for operational efficiency and decision-making.
In regards to enhancing supply chain visibility, the limitations of add-on modules become more pronounced. Many TMS modules, crucial for supply chain management, are designed to address specific modes of transportation, like ocean, air, or truckload, and fail to account for the complexities of a global multi-modal supply chain network. Integrating mode-specific data into a system not designed by supply chain professionals is incredibly challenging and can lead to severe data gaps. Achieving comprehensive visibility across a varied carrier network requires extensive integrations, data transformations, and IT deployments, making it costly, time-intensive, and difficult to implement at scale.
Capital Equipment Moves
While ERPs are adept at managing commercial products, they often fall short in tracking non-commercial assets like corporate shipping and capital equipment moves. This includes shipping laptops, office supplies, and other valuable assets between facilities. Such a limitation poses challenges in managing accurate asset depreciation schedules and maintaining regulatory compliance. The inability to accurately track assets can also impact an organization’s ability to ensure adequate insurance coverage and promote efficient use of property, highlighting a critical gap in ERP capabilities that affects financial integrity and operational compliance.
Stakeholder Access
The supply chain is made up of a wide variety of stakeholders including suppliers, transportation providers, freight forwarders, customs agents, warehouse personnel, internal employees, and end customers, each requiring access to specific segments of transactional data for an order. ERPs, however, struggle to efficiently segment and provide access to data according to the nuanced needs of each individual group. Addressing this challenge demands complex IT programming to ensure appropriate data access, and is further compounded when stakeholders need to modify or update data for shipments—a functionality many ERP systems lack.
While ERPs play a critical role in integrating core business processes, they simply were not designed to provide comprehensive supply chain visibility. The complexity and breadth of modern supply chains demand a solution that fills the gaps left by ERP systems and facilitates easy collaboration and data sharing among all parties. A dedicated supply chain visibility and transportation management platform is an essential tool in bridging these gaps, ensuring that businesses can meet the dynamic demands of today’s global supply chain.
Agistix: Comprehensive Supply Chain & Transportation Management with End-to-End Visibility
As businesses grapple with the limitations of traditional, legacy ERP systems in providing holistic supply chain visibility, Agistix offers a forward-thinking solution. This platform is specifically designed to extend beyond the confines of ERP capabilities, delivering deep insights into end-to-end supply chain dynamics. Agistix is dedicated to arming its clients with advanced tools and resources to navigate the complexities of the modern business environment, ensuring access to actionable information and thorough data analysis for strategic decision-making.
Agistix has built its platform around four pillars of visibility, each designed to address specific areas within supply chain management.
- In-Transit Visibility: Enables tracking of shipments in real-time across all carriers and modes, facilitating proactive exception management.
- Transactional Visibility: Centralizes supply chain data to track transactional changes over time, helping to identify and quantify inefficiencies, uncover hidden costs, and detect savings opportunities.
- Financial Visibility: Assists in forecasting freight spend, measuring routing guide compliance, and comparing estimated payments to actual invoices to optimize financial management.
- Data Ownership: Empowers businesses with full ownership of their supply chain data, facilitating compliance, governance, and the sharing of insights with stakeholders for enhanced decision-making and reporting.
Achieving end-to-end supply chain visibility is a necessity for thriving in today’s market and demands innovative solutions. By transcending ERP limitations, Agistix equips businesses with the insight needed to navigate modern logistical complexities effectively. Explore the transformative impact of Agistix on your supply chain operations. Request a demo today and step into the future of supply chain management.
