How Using an ERP in Manufacturing Supports Supply Chain Sovereignty

If you use an ERP in manufacturing, you already know the many benefits enterprise resource planning (ERP) systems offer. Faster access to data, real-time data visibility for cloud users, advanced analytics, predictive analytics, improved reporting, and better insights into companywide data are just some of the many benefits manufacturers gain when they add an ERP to their tech stack.

However, one benefit that shouldn’t be overlooked is an ERP’s ability to support supply chain sovereignty. An ERP system can play a critical role in supporting supply chain sovereignty for manufacturers. Supply chain sovereignty refers to a manufacturer’s ability to maintain control and independence over its supply chain operations, reducing dependence on external factors or entities.

Importance of Supply Chain Sovereignty

shipping dock with containers and truck to represent How Using an ERP in Manufacturing Supports Supply Chain Sovereignty

During the global pandemic, supply chains were disrupted. Factories shut down. Ports closed. Goods could not move freely into the supply chain. Bottlenecks resulted, and companies often waited weeks and months for parts and supplies.

Much of this was due to the push in the previous decades to move to a global supply chain. Manufacturers experienced the benefits of shopping on the worldwide market, including lowered costs, but were hit with the drawbacks during mass shutdowns.

As companies grapple with the pandemic’s aftermath, the concept of supply chain sovereignty has come to the forefront. The idea is that manufacturers must remain independent of any one supplier or supply route and own the supply chain to ensure uninterrupted delivery of goods. By maintaining control and independence, manufacturers remain theoretically free of the potential disruptions to production they experience when dependent on existing supply chains.

Complete End-to-End Visibility Through an ERP in Manufacturing

ERP systems provide manufacturers with real-time visibility into their entire supply chain. This includes tracking inventory levels, production schedules, order statuses, and supplier performance. This visibility allows manufacturers to make informed decisions and identify potential disruptions early enough to take immediate action.

By tracking suppliers through an ERP, manufacturers can identify suppliers that consistently struggle to complete orders or ship on time. In the future, they can avoid these companies and find more reliable suppliers to prevent stock-outs or delayed production.

10 Steps to Achieve Better Supply Chain Sovereignty

It may not be possible to be completely independent of existing supply chains. Manufacturing is primarily driven by price, and the suppliers with the lowest costs are often in greatest demand. However, there are steps companies can take to remain as independent as possible from existing supply chains and flexible enough to adapt to supply chain issues in the future.

To improve supply chain independence, manufacturers can:

  1. Explore local suppliers or in-country suppliers
  2. Maintain a database of alternative suppliers and links to their contact information
  3. Consider a satellite plant near end customers, thus lowering logistical costs and potential tariffs
  4. Review sourcing policies and focus more on reliable delivery than the lowest cost
  5. Develop collaborative partnerships with suppliers, so they have an incentive to innovate
  6. Improve your ERP use for detailed monitoring of the supply chain
  7. View cross-functional decision-making to ensure that procurement, finance, and suppliers are working together
  8. Enhance traceability of products down to the late detail
  9. Avoid data silos
  10. Allow analysis of supplier compliance, KPIS, and risks

ERPs in manufacturing provide the tools to take control of supply chains, reduce dependencies on external factors, and improve supply chain sovereignty. Through the wise use of your ERP system, you can optimize processes, make informed decisions, and use resources efficiently, all critical steps toward maintaining control and independence of your supply chain.

Emerald TC is an expert Acumatica and Sage consulting firm with over 23 years of experience. Our process is simple, but the results are dazzling. If you would like a consultation, we’d be happy to schedule a call. Please contact us at (678) 456 – 6919.

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