Businesses are being forced to adapt and change on the fly like never before. The ways of doing business are changing rapidly while, at the same time, we see more and more limitations to how business must be conducted as we work to control the global COVID-19 pandemic.
With these drastic changes, companies are realizing their existing ERP systems were not designed to provide the level of flexibility or nimbleness required for a reactive supply chain. These legacy systems were initially built to handle specific functions, namely financial transactions and HR management. It’s no surprise they lack the capabilities to efficiently manage inventory.
Here are the 5 most commonly identified ways your ERP system fails to meet your needs as they relate to your inventory:
- ERPs are Financial Systems. ERP systems were created with the general ledger (GL) at the forefront. But what about the myriad of transactions and details your inventory has that don’t fit neatly into a financial transaction? Not all inventory-related information has a direct impact on a GL (transactions like inventory movements, product dimensions or other characteristics, pictures, and image files, etc.). So why try to wedge it into a software designed to focus on the GL instead of inventory management?
- Inventory is Complex. As global supply chains evolve, the data required to track these supply chain components must also evolve and become more sophisticated. Organizations are demanding more and more detailed information as it relates to their inventories and assets. Unfortunately, the ‘out-of-the-box’ data capabilities of most financial systems are simply not equipped to handle this added complexity. Trying to add those capabilities to an ERP can require significant customizations.
- End-to-End Visibility is King. True end-to-end visibility of an organization’s assets is paramount in the modern economy. Without real-time, detailed knowledge of everything you own, whether it be raw materials, work in process, finished goods in the warehouse, consignment inventory, or assets in the field, you cannot effectively make decisions on the fly. Given the data limitations already discussed, this means that true end-to-end visibility is likely not possible by leveraging only the ERP; another approach must be considered.
- The Organizational Need to Adapt Quickly is Not Going Away. COVID-19 has illuminated numerous problems and areas of opportunity for global organizations to address. One of the most impactful has been the need to quickly acclimate to a changing, unpredictable environment. As production lines shut down and supply chains seized up, organizations that were nimble and flexible enough to adapt quickly were the most successful in dealing with this crisis. Moving forward, organizations that prioritize this adaptability will be best positioned for future disruptions. Investing in technologies and solutions that enable automation, data flexibility, endless integrations, and contactless execution of work will be critical to positioning yourself to ride out the next storm — and perhaps even thrive in it.
- Modifying the ERP is Painful and Costly. One approach often considered for addressing some of the limitations outlined in this article is to extensively modify or customize the ERP system to accommodate data, transactions, and records that do not neatly fit inside the box. This is a costly, lengthy process that will cause more headache than moving inventory management outside of the ERP.
As we navigate this global pandemic together, it’s critical that we carefully look at the lessons learned and make the necessary changes to ensure the success and longevity of our supply chains. Organizations must be willing to look at the systems that manage their supply chains from an entirely new, more critical viewpoint. This will hopefully result in companies finally migrating supply chain data and transactions into systems that are properly equipped and purpose-built to handle the complexities and nuances of supply chain information to provide the visibility and agility needed to thrive in this constantly changing marketplace.
Looking to move inventory management outside of your ERP? Our team of supply chain experts are ready and available to discuss your unique challenges and provide a roadmap for success. Learn more about DSI solutions or schedule a demo here.
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