by Shamia Mohamed
In the past few years, the pandemic highlighted the vulnerabilities in supply chains and the unpredictability of the market. In order to tackle the resulting changes and challenges like evolving consumer demand, supply chain disruptions, and the shift toward remote work culture, businesses have begun rebuilding their operating models using AI-based enterprise resource planning (ERP) systems. Below, Venkatesh Iyer, a MathCo partner, draws on more than two decades of experience in ERP consulting and business development to highlight the need for integrating ERP systems into everyday business management to bolster organizational resilience and position businesses for success.
Question 1: The pandemic has exposed a lack of flexibility as well as other deep vulnerabilities in global supply chains. How can ERP help make our global supply chains more resilient?
Venkatesh: The pandemic has indeed highlighted as well as exacerbated preexisting issues in business operations, and the global supply chain is no exception. As organizations attempt to plan and increase business resilience, the race is now on for digital enablement and automation; as such, automated supply chains (with features like robots in warehouses and stores; driverless forklifts and trucks; delivery drones; fully automated planning etc.) are already here or will become mainstays of industries by 2025.
However, simply utilizing digital technologies does not equate to creating a digitized, autonomous supply chain—the supply chain technologies need to be connected across planning, procurement, manufacturing, and logistics. This is the difference between “doing digital” and “being digital,” a gap that is bridged by ERP technologies.
Ultimately, digital and autonomous technologies will help make people’s jobs easier and the supply chain more efficient and optimized. For example, in the supply chain industry, an ERP system could automatically run a financial analysis and predict future stock needs to maintain healthy levels of inventory. This process ensures that the manufacturing department is performing at optimal capacity and in-demand products are in stock.
Question 2: Which industry, according to you, has a lot to gain if ERP is implemented across its supply chain?
Venkatesh: Organizations gain many benefits by implementing ERP systems, such as enhanced operational effectiveness, optimized workflows, and reduced margins for error. Any industry that requires a management system in one place can benefit from using ERP because today's ERP softwares are completely configurable and can be applied across a range of departments, including customer management, administration, sales, and finance. All these advantages, and more, can help companies across diverse industries make improvements; as a result, the adoption of ERP systems across a variety of industries has increased significantly globally. This means that practically any industry can use ERP systems, including mid-market and small businesses. Sectors such as healthcare, manufacturing, hospitality, retail, and construction, where connectivity to multiple external and internal systems is paramount, will, in particular, benefit from a cloud- or AI-based ERP.
Question 3: While businesses continue to pursue real-time and complete supply chain visibility, how can they ensure that data—across the supply chain and across different platforms—are not siloed and speak with each other?
Venkatesh: Finding the exact cause for recurrent disruptions is not quite so simple nowadays because of how complex the modern global supply chain is; nonetheless, it is still necessary. Improving the supply chain in this manner requires insight into every touchpoint, with real-time end-to-end visibility of the logistics, inventories, bills of materials, and much more. Thus, it is crucial to have visibility into your operations at every stage of the supply chain so that any potential faults therein can be identified.
However, data silos are increasingly likely to develop when businesses gather more and more data. Without the necessary resources, the likelihood of silo formation increases, which, in turn, will eat into your profits considerably.
So, how do you break down silos? To do this, data from your various supply chain sources need to be able to interact with each other. The best way to ensure mutual flow is integrating data into a centralized platform. This offers real-time visibility into collected data and the ability to switch from reactive to proactive operations. Using ERP software is yet another strategy for preventing and eliminating data silos. ERP provides a complete picture of your organization's data. This improves multiple aspects of the supply chain like vendor management, asset management, inbound and outbound logistics, and other areas, which help the company make decisions based on unified data from your supply chain.
Question 4: What is the role of cloud-based ERP in making this possible?
Venkatesh: The use of cloud technologies in supply chain management is very logical. Every link in the supply chain is connected by cloud-based ERP, making all manufacturing business operations and data accessible at any time, from any location, on any connected device. When visibility is at its best, support and control are immediately available where they are most needed. Due to its ability to closely follow a product throughout its lifecycle, cloud-based supply management can also drastically reduce the amount of goods that are lost since it can find a product at any time along the shipping process.
Question 5: How is AI-powered ERP ushering in an era of innovation and what advantages does it offer over traditional ERP systems?
Venkatesh: AI has transformed the way ERP systems function. It empowers businesses to remain efficient and competitive by inducing flexibility, bringing business-wide automation, and enabling data environments that are free from errors and duplication. Using some specific examples, I will explain how AI is changing ERP.
While traditional ERP softwares can generate in-depth reports by analyzing historical data stored in it, an AI-enabled system takes this capability further. AI-integrated ERP software allows you to tap into real-time data from different departments and draw the right conclusions for more efficient planning. It enables organizations to perform data analytics to gain real-time and accurate insights, without having to worry about the size of data.
AI improves the functionalities of an ERP system and enables you to analyze larger datasets and read previous patterns more accurately. This helps you increase forecasting accuracy while significantly reducing the risk of loss or wastage from underproduction or overproduction.
Manual entry of data can cause heavy workloads for your employees and, therefore, cost you many man-hours. In addition to this huge investment, manual data entry can create additional expenses from reworking due to data feeding errors. By implementing an ERP system equipped with AI, you will be able to create automated workflows and save time by eliminating human intervention in uploading data and enabling increased operational effectiveness.
The inclusion of AI in your ERP system further improves the business processes. An AI-powered advanced ERP solution analyzes your historical data to suggest the most effective methods or workflows for maximum productivity. Business operations are optimized and every task is carried out effortlessly, without mistakes, thus resulting in significant time savings and increased efficiencies.
With AI-enabled ERP implementation, business processes become more streamlined and organizations more agile. Companies become more adept at tracking changing market conditions and reacting to the same in order to minimize risk and explore more opportunities.
AI-integrated ERP systems can extract business data and generate insightful reports in whatever format that users prefer. This eliminates manual efforts in extracting, calculating, and reconciling information while generating reports. Automation also makes finding specific information much easier and, most importantly, improves reporting accuracy to add more value in terms of analytical decision-making, driving business growth and enhancing ROI.
Question 6: When it comes to implementation, what are some crucial factors to account for before opting for a specific ERP system?
Venkatesh: Following typical ERP implementation methodology would help navigate the ERP nuances well. Apart from the core ERP, enterprises need to also understand the various data sources and data destinations in place. Sources could be external systems (like point of sale [POS], Internet of Things [IoT], devices etc.), peripheral systems, third-party systems (e.g., data marts etc.), vendor/supplier systems, and customer systems. Destinations refer to data warehouses, data lakes, clouds, reporting tools, third party/external customer/vendor systems. Compatibility and collaboration between clouds/systems is also required.
Question 7: As the use of cloud-based and online software has become widespread, data security has become crucial. How can an AI-driven ERP system help prevent data breaches and ensure protection?
Venkatesh: As an organization develops, its workforce becomes more global, diverse, and distributed. Enterprises then begin to adopt new cloud-based and/or on-premises systems and deploy intelligent devices. In such cases, old models of static policies based on a fixed set of contexts (for e.g., in the case of access management time, geo-location, device OS, etc.) starts breaking down. Policies simply grow in number and data security becomes an arduous task.
AI-powered security systems learn from historical incidents and breaches, and build their own models autonomously, without constant human supervision. These systems are intelligent, in terms of making decisions on their own, and insightful, in terms of their ability to look at data both broadly and deeply. They constantly learn and evolve by leveraging new data, so they are easy to maintain and proactive in nature. This area has evolved by leaps and bounds in the past few years and is critical in the detection and prevention of attacks and breaches. I will mention a few applications of AI-driven ERP in enhancing cyber security.
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