ERP, waste, and the supply chain: The real connection
Sustainability. It’s not just a growing concern for regulators and businesses. It’s gone far beyond the six o’clock news, so much so, that today, it’s everyone’s concern and as such, everyone’s problem. As global leaders tackle the causes of climate change and fervently attempt to reduce energy emissions, both are fast becoming #1 priorities for enterprises and governments alike. There are numerous plans and policies being put into motion to safeguard our environment, such as electric cars and factory exhaust filtering systems, but there is still so much room for improvement to reduce waste, lower the carbon footprint, and achieve true sustainability.
Enter the supply chain. It’s an integral part of the manufacturing process, and one where unnecessary waste is, bar none, a growing concern. Today’s supply chains are exceptionally complex, deploying massive amounts of resources and materials, with much of the latter, either discarded or trashed. With the rush to get products to market quickly and keep pace with fierce competition, excess waste exists in virtually every industry sector, and is, at the end of the day, inevitable. There is, however, some good news. A fair amount of this waste can be averted when the right technology is put in place.
Make haste, not waste
According to WRAP, a UK-based environmental organization that develops campaigns to help citizens prevent food and clothing waste and recycle as much as possible, an estimated 5-7.5% of total annual waste stems from over-production and over-purchasing of materials. This means that forecasting errors, for example, are among the leading causes of waste in the manufacturing sector.
That said, manufacturers who are committed to reducing waste and lowering their carbon footprint, must first identify the causes of waste in their supply chain. Purchasing of raw materials, insufficient inventory tracking and mismanagement of logistics, including distribution and transport, collectively contribute to supply chain waste.
To handle the problem head-on, manufacturers must work towards nurturing an “agile supply chain” – a system of product distribution committed to working quickly, saving costs, being responsive to the market and consumer demands, while maintaining flexibility and productivity. This can be achieved by using best-in-class technologies, such as ERP – advanced business management software, to eliminate workflow processes and streamline activities that do not bring added-value to the enterprise.
It’s the agile supply chain that effectively manages an organization’s data in real time to boost efficiency and reduce overstocked inventory shelves. According to a recent report on agile supply chains from market analyst, McKinsey, an agile business can deliver greater levels of service, even with its smaller inventories. According to the report, 94% of deliveries from agile businesses arrived as scheduled, compared to 87% by non-agile competitors, while agile businesses held inventory for 85 days on average, as opposed to 108 days by competitors. So, how can businesses really benefit from best-in-class technologies to become agile, save on costs and resources, and ultimately reduce their carbon footprint?
Enhanced visibility (you can actually ‘see’)
It’s today’s advanced business management solutions that connect the entire supply chain, linking communications between the manufacturing shop floor, back end, and the organization’s planning and control systems. Modern ERP solutions provide real-time system-wide updates and analytics, creating greater transparency throughout the entire supply chain, ensuring orders are met on time and on budget. By forming a principal route through which information can immediately travel between the links of the supply chain, manufacturers can enjoy these advantages if they have the right systems on board.
One of the key benefits of a modern ERP system is the automated management between supply and demand, coupled with tracking product loss and waste throughout the supply chain. Simply put, ERP presents an easy, straightforward way businesses can work towards becoming more sustainable and efficient.
Further, with the increased use of automation in the manufacturing process, companies can now relocate production facilities, packaging plants and other operations to bring manufacturing closer to their customers. For these organizations, the cross-functional data provided by best-in-class ERP systems enables them to make fundamental improvements to their supply chain model while dramatically reducing emission levels.
Are manufacturers getting on board?
What, if anything, is preventing manufacturers from deploying advanced technologies to become more sustainable and ultimately, reducing waste in their supply chain? Despite the growing popularity of ERP, some manufacturers still fear the unknown, such as adopting cloud-based ERP. In addition to being able to work anywhere, anytime and on any device, cloud ERP is a highly scalable solution, making it ideal for growing organizations because it grows as your business grows. Further, manufacturers gain real-time visibility into their operations, where an organization’s data, including the latest software versions and updates, are updated in real-time, enabling them to react quickly to changes in the supply chain.
With the right strategic approach to digital transformation, manufacturers are, albeit, slowly, getting on board. But to fully support sustainability and reduce supply chain waster, they must abandon legacy technology and welcome in a new wave of business management solutions. With a tried n’ true integrated approach that ventures across the entire supply chain, manufacturers will be able to streamline processes, improve collaboration, drive greater efficiency and yes, even help clean up the supply chain for generations to come.