This article was originally published by Supply Chain Digest. View the article here.
Using Outsourced Suppliers Requires a Front-end Collection Solution that Seamlessly Syncs with your ERP System
The early ’90s were an exciting time to be part of the software industry. Reengineering was hot and companies realized how revamping processes could improve business performance. Add to that the accelerating trend of client-server computing and the fears of Y2K in legacy systems and the environment was ripe for something radical. And so ERP systems were born.
The idea that a large enterprise could operate seamlessly across separately managed functions – and record results in a common set of financials – had been unconceivable until this point. But ERP did just that, integrating information across an entire organization in a single system that users could access and act on as needed. And while many of those early ERP implementations were costly and complex, the resulting level of companywide visibility and integration was revolutionary. For the first time, companies could provide accurate, real-time Available to Promise (ATP) commitments to customers. End-to-end processes – such as order to cash – were defined and became transparent.
ERP systems were designed to integrate processes and operations within the enterprise and they are still great at doing that. Today, organizations of every size use ERP systems to streamline, rationalize and run their businesses. Operations can approve an order entered by sales, check in-house product availability and process billing to the customer. The challenge arises when a product is not manufactured or distributed within the four walls of the enterprise. We recently sponsored a Supply Chain Digest survey, which found that the majority of manufacturers are outsourcing at least part of their supply chain (particularly in distribution and logistics) and plan to increase the amount of outsourcing in the next few years.
While outsourcing offers many benefits, it also begets challenges, especially around visibility and data integration. End-to-end visibility across your entire supply network is key to efficiently managing your products and processes, but can seem impossible with partners spread across multiple geographies, disparate systems within and outside of your organization, and an ERP system that simply cannot (and was never intended to) connect all of those pieces.
Manufacturers today need to find new ways to get the same level of information they were accustomed to when everything took place within the enterprise – and when everything was readily available in the ERP system.
If you try to push ERP past its boundaries by providing access to outsourced suppliers, subcontracted manufacturers or other partners, the corresponding risks and costs can be severe. And typical approaches – from Electronic Data Interchange (EDI) to commercial, hub-based networks – require a consistent and common way of sharing information between partners.
The lack of consistency from partner to partner makes it difficult to securely gain the reliable, real-time information necessary to track product, answer customer queries, and eliminate stockouts and overstock situations.
When it comes to incorporating partner and third-party data, use front-end collection solutions that seamlessly sync with your ERP system. Such solutions can accommodate outside access and data sharing, while allowing you to maintain control, ensure security and eliminate the need for excessive training.
Here are four key attributes to look for in such a partner integration solution:
- Data is captured from any and all devices and applications and converted into business processes for ERP synchronization. You can then use your existing ERP to not only manage the manufacturing and distribution processes within your four walls, but also for the visibility and control of the processes outsourced to your partner network.
- Pre-configured supply chain transactions (based on best practices from dynamic supply networks) allow you to integrate your supply network faster and more effectively.
- Bi-directional integration allows you to complete any supply network transaction, from scanning at customer locations and recording consigned inventory consumption to label printing at third-party manufacturers.
- With the ability to efficiently create a private supply chain network that fits each partner’s unique data collection capabilities, you have little to no training or set-up costs and eliminate the risks of directly connecting partners to your ERP system.
Whether your employees are checking inventory levels, verifying distribution points or finding out the status of your outsourced manufacturing processes, you can no longer rely on an ERP system alone for visibility of your supply chain. But the right partner integration solution – one with granular data capture and real-time synchronization – will allow you to leverage your ERP investment and gain the supply chain visibility you need in 2016 and beyond.
To discover more about the challenges and benefits of partner integration, register for our videocast: A Benchmark Study on Supplier Integration in an Outsourced World – Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.