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How ERP data improves supplier performance and builds supply chain resiliency

Oct 15, 2018

“Garbage in, garbage out” may be a tech phrase, but the logic holds true across the board. The inputs to your manufacturing process have tremendous bearing on the quality of your products.

That means you need a way to monitor and manage each supplier’s performance to ensure it meets your expectations. And if a supplier can’t follow through on its obligations — as can happen during widespread supply chain disruption — you need data to determine your next-best move.

Enterprise resource planning (ERP) tools give you accurate and timely data about supplier performance, which you can use to improve results in five areas:

1. Quantity and order accuracy

A supplier’s most basic obligation is to deliver the right quantity of the right goods. But the purchasing department doesn’t typically receive or use orders, so there’s room for errors to slip through.

Not with an ERP. When buyers issue purchase orders, the data goes into the ERP. The team that receives the order can confirm and record quantity using a mobile device or tablet. Reporting is simple, so it’s easy to oversee receiving and inventory, even if you’re not on the floor. And the data is accessible to any department that needs it.

Electronic tracking eliminates the need to manage a paper trail of packing lists, bills of lading and purchase orders. You can keep that information — and create a clear and secure purchase record — without the hassle. You can also retrieve the data from anywhere within a few clicks.

2. On-time delivery

When suppliers are late, it disrupts capacity on the production line. Even small delays can derail your speed to market, financial performance and brand reputation.

With an ERP system, you can track the receipt of goods in real time and run reports to determine if a supplier’s tardiness is typical. You can also compare on-time deliveries between suppliers and decide how to address variances.

With data in hand, you can establish acceptable benchmarks for everyone and schedule work with confidence.

3. Quality

Modern ERP systems can track the quality of materials you receive, too. For example, it can show the percentage of units in a shipment that fail inspection.

Over time, this helps manufacturers proactively address quality issues and choose the best partners. If a supplier’s performance slips, you have metrics and timelines to address the issue. Maybe performance continually declined, from a 98% quality rating at the start of the relationship to 90% today. Or the deficiencies could be an anomaly.

With access to historical and real-time data, you can dig into what needs to be addressed, credited or returned — and whether you have the best supply partner.

4. Cost

What happens with the price on an invoice doesn’t match the purchase order? If you use an ERP, it will issue an alert to make sure you don’t overpay.

Companies can leverage performance metrics in the ERP to negotiate supply costs, delivery timelines and contracts. If data shows that quality and shipping times have been good (or improved over time), your supplier might have gained efficiency — and maybe that allows for a cost adjustment in your favor.

You can also rank suppliers based on performance and create a “preferred vendor” list. This can help you choose the next-best supplier if your go-to vendor is suddenly affected by supply chain issues.

5. Efficiency

In many organizations, departments are actively working against one another without even knowing it. Their processes are in conflict or redundant, which leads to errors, delays and overall frustration.

An ERP becomes the business’ “single source of truth.” There’s one system and one protocol to meet multiple business needs. Training is simpler, processes become more consistent, and results flourish.

Most ERPs are designed to be user-friendly, with built-in dashboards, reports and analytics features. It’s easy to assess supplier performance — which makes it easier to manage and improve. Users can see real-time metrics and run reports in a click or two.

Right out of the box, the visuals and reporting capabilities are robust. But if you want, you can customize them to match your unique functions and processes.

How Wipfli can Help

You need a solid supply chain to produce quality goods on time and on budget. Pick the best partners — and strengthen their performance — with an ERP.

Wipfli’s ERP specialists can help you select or customize an ERP to match your specific business needs. And we can create a training plan to speed up adoption and increase your ROI. Contact us today to get started.

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Wipfli Editorial Team