Supply Chain ERP (SCM ERP) in 2022: Modules, Roles, Cost, and Examples
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Automation effectively builds the holistic scheme of a company's business processes, giving them the appearance of a single system representing a set of interconnected and interdependent elements. And supply chain ERP systems are the perfect tool to fulfill these tasks.
In this article, you’ll learn what a supply chain ERP is, what its advantages and disadvantages are, and most importantly, how to create your supply chain ERP system. Let's learn how to take your logistics business to the next level with advanced technology.
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Supply Chain ERP: What is it and which processes does it automate?
ERP (Enterprise Resource Planning) system is a software that integrates and manages finance, accounting, production, supply chain, commerce, human resources, etc. Among the processes that can be automated with the help of supply chain ERP are:
Back office automation
The main and most obvious task of implementing a supply chain ERP system is reducing the amount of "manual" work and transaction costs by creating a single space for planning and management.
Automation of transport
Autonomous objects, such as unmanned trucks and drones, can also be used to automate deliveries on the network. Even if you don't plan to go that far, you can still track vehicle movements with supply chain ERP in real-time.
There are various aspects of warehouse operations that can be automated. Supply chain ERP allows you to respond quickly to requests, make necessary calculations, make adjustments to plans, and generate necessary reporting, thereby increasing the efficiency of interaction between different departments.
According to Visual Capitalist, 55% of retail, management, and logistics professionals are already investing in automation and 47% are investing in predictive analytics. Let's take a closer look at what supply chain ERP benefits are pushing companies to implement such systems.
Benefits of ERP in supply chain management
ERP simplifies supply chain management and opens up new business opportunities. The benefits are as follows:
With logistics ERP, delivery times can be reduced drastically. This is made possible by predicting factors that may affect the process. For example, demand, weather, market trends, etc.
Real-time planning with supply chain ERP allows companies the flexibility to respond to any changes in demand or market trends. Delivery freeze periods are minimized through continuous analysis and planning.
Businesses can now find a personalized experience for each customer. Analytics tools help categorize and manage customers into distinct groups (clusters) and offer only the products and services they need.
Supply chain ERP solutions ensure transparency. Information ranges from KPIs to the exact location of transport units. Also, integrating data into the cloud allows all stakeholders to make decisions based on the same information.
Implementing the concept of automation and digitalization into business has already helped enterprises achieve positive results. For example, Amazon has reduced shipping costs by 20% by using drones to pack and deliver goods.
Supply chain management ERP modules
Each supply chain ERP consists of modules responsible for specific functions. When developing a supply chain ERP from scratch you can choose what you need. However, what exactly should you choose? Which modules are crucial? In general, a good supply chain ERP consists of the following modules:
CRM (Customer Relationship Management)
It includes a set of solutions to manage customer interactions through the standard communications (phone, e-mail) contact center, and so on.
Project Portfolio Management
This is a comprehensive tool for project management, alignment of interaction schemes within the project teams with the appointment of responsible persons, preparation and monitoring of project documentation, project procurement, and a rich tool for reporting.
Supply Chain Management
A set of tools for the step-by-step construction of logistics schemes, management of the entire supply chain, as well as planning of procurement activities.
Value Chain Execution
Work in this module has a specific purpose of reducing production costs and/or the cost of the final product by optimizing business processes. Here the emphasis is placed on the management of external and internal logistics, including transport, company mobility, and inventory accounting.
Its functionality completely covers external and internal financial management of the company, allowing it to quickly solve the tasks of asset management, lending, payroll, financial analytics, and reporting.
Roles of ERP in supply chain management
The functionality of ERP SCM systems can be essentially reduced to two main roles: Supply Chain Planning (SCP) and Supply Chain Execution (SCE).
The SCP planning block includes components responsible for modeling and optimizing supply chains (e.g., calculating the location of warehouses, their capacity, planning traffic flows), as well as the formation of schedules, demand, and supply forecasts.
The SCE is responsible for transportation and warehousing functions. Its tasks include determining the optimal route for transporting goods or raw materials. In doing so, the system is based on such criteria as delivery time, transportation, and handling costs. The SCE also monitors deliveries.
The introduction of SCE leads to a reduction in the number of operators managing the supply chain, and the amount of insurance inventory is reduced. Requirements for the quality of input data and the accuracy of operators' work are increasing.
In general, we can say that both supply chain planning and supply chain execution are essential tools that can bring the quality of the company's work to a fundamentally new level. Now, let's take a look at how to get such software.
Supply chain ERP: Custom vs Off-the-shelf solutions
Various software companies offer a wide range of supply chain ERP systems. However, essentially you’ll have to choose between off-the-shelf and custom solutions. What are these and what are their pros and cons?
Custom supply chain ERP is a unique software solution tailored for the company's processes.
Custom supply chain ERP platform gives your management a comprehensive set of tools to effectively solve problems with full confidence that they will fully meet not only the actual needs of the business but also the current legislation.
Custom supply chain ERP allows you to adapt the software to the needs of a particular area, and you choose the list of devices and operating systems on which the ERP should run. Thus, you can create a web and mobile version or a cross-platform solution.
The company doesn’t need to worry about the availability of certain functions, because the custom software is fully owned by them. The organization itself decides which features need to be enabled and disabled.
The company doesn't depend on the updates of the ready-made software and can independently decide how it will work and what solutions will be emphasized. This will help you to work more effectively and achieve your goals quicker. At the same time, competitors can use ready-made software which has limitations for the implementation of new solutions.
Scalable software solution, stable operation with large data volumes. Seamless integration with other solutions if the customer requires it.
Security is supported by a multi-level system of configuring access rights to blocks, data, or even specific transactions.
High initial investment
Developing your own solution from scratch you will have to invest a certain amount of money. In the long term, the solution will pay for itself, but you should know about it beforehand.
You need to find a good contractor
Supply chain ERP is a tool, and it is only as good as the specialists who develop it. For the development of such a solution, you need to contact only true professionals with a good portfolio.
Off-the-shelf software is standard software used to support the business processes of many companies. Such software solutions can be adapted to the company, but there will still be limitations in functionality.
Price in the short term
Readymade software is much cheaper than custom software in the short term. You can also take advantage of trial periods and change price packages depending on your needs.
Ability to get access quickly
All you need to do for the initial implementation of the software is to register and start using the functions of the software.
Availability of regular updates
Developers try to implement solutions in accordance with the requests of many companies. There is a chance that you’ll find exactly the features you are looking for.
So your company will either have to put up with the software solution and adapt your business processes to it or look for alternative software.
Risk of support end
There may also be a situation where the vendor closes the software for financial or other reasons.
For the finished software to work as expected, you need to configure it and study the functionality of the software in detail.
So which one is better?
Having your own software is always more profitable in the long run, but that's on the condition that the company is willing to invest time and money in development. With custom development, the company gets a software solution without unnecessary features and the ability to work more efficiently. After custom software development, the supply chain ERP solution is completely owned by the company that ordered it. Therefore, organizations can add or remove certain software features. Thus, companies have full control over various changes and data protection from third parties.
Custom supply chain ERP (SCM ERP): time and cost
We mentioned above that the main disadvantage of the custom supply chain ERP is the high cost at the start. But is it that high? Let's find out, taking the supply chain ERP developed by RexSoft company as an example.
The price of custom supply chain ERP is primarily influenced by the time spent on development of its functions and the number of specialists. In this case, the supply chain ERP had the following features:
- Communication between the customer and the dispatcher;
- Mechanism of sending and filling a form;
- Sending the request to the driver;
- Transportation tracking;
- Ability to view the status of the goods and sign the request;
- Viewing the route and movement of the driver;
- Planning of future transportations.
It took about 1110 hours or 3-4 months to create this supply chain ERP system. Six people were involved in the implementation of this project:
- PM - 80 hrs.
- IT architect - 40 hours
- Application design - 200 hours.
- Front-end development - 360 hrs.
- Back-end development - 320 hrs.
- QA - 110 hrs.
Thus, the development of a custom supply chain ERP from scratch, taking into account the time and rates of specialists, costs about $40,000. Using different cooperation models it is possible to reduce this figure even more.
Examples of supply chain ERP (SCM ERP) by RexSoft team
We figured out the cost of a custom supply chain ERP and why you actually need it. Let's take a look at what the final result looks like, using RexSoft projects as an example:
RexSoft developed supply Chain ERP, which is a truly multifunctional solution for relocation assistance. With the help of this system, the software owner was able to automate a number of crucial business tasks. The system includes crew time-tracking, fuel consumption, efficiency analysis of various crews, crew management, and much more.
A supply chain ERP for a company that provides transportation of used cars from the seller to the customer. The system has a number of indispensable features, such as transport tracking, communication with the dispatcher to clarify details, and easy management of everything related to documentation. The implementation of this software allowed the client to significantly increase the flow of orders and achieve an increase in business performance.
This supply chain ERP is designed specifically for transport tracking, route calculation, and order management. This cross-platform supply Chain ERP improves transportation security and transparency. Customers can integrate it into various applications for buying or booking tickets. Administrators can view ticket sales statistics from various platforms via API, track bus movements on a map, receive notifications of any malfunctions or unscheduled stops, and check vehicle statistics.
So, when implementing supply chain ERP, the manager is required to do a lot of work on the preparation of the project, collect data on logistics flows, costs, development plans of the company, and clearly monitor the situation on related projects that may affect the project implementation. This is why it is so important to find a company that can fully undertake the technical side of the issue, do it quickly, and without exceeding the budget. All of the above are the cornerstones of RexSoft. Our 10+ years of experience, successful supply chain ERP supply chain development cases, and professionalism speak for themselves. Contact us and we'll take your supply chain to the next level together.
How can supply chain ERP improve your business?
Supply chain ERP covers all the management and organizational needs of a company. The platform can use one or more modules for inventory management, production administration, CRM, accounting, after-sales service, and logistics.
Who is the supply chain ERP for?
ERP can be tailored when implemented to a company's specific industry: industrial, commercial, agricultural, or more individual. There are both universal ERPs on the market covering all business sectors, and specialized supply chain ERPs for one industry.
How can I get a supply chain EPR?
Along with the off-the-shelf ERP-class solutions on the market, it is possible to develop your own system. It will be fully tailored to your business processes.
Why is it worth developing a supply chain ERP at RexSoft?
When you develop your supply chain ERP with RexSoft, you get access to unparalleled technological expertise, backed by successful portfolio cases, over 10 years of experience, and the best talent from Eastern Europe.
Oleksandr KryvotsiukHEAD OF MARKETING AT REXSOFT