What are ERP systems really good at? Many things, of course, including automation of so many tedious internal processes. Turns out ERP systems are pretty good at automating interaction with customers, suppliers and partners, too.

ERP Software

The Frictionless Enterprise: Leveraging ERP for Real-Time Collaboration. (Part 1)

In these days of increasing pressure on companies to become more efficient and reduce the bottom line, improved communication with suppliers, partners and customers through easy-to-use collaboration tools can dramatically optimize business processes, increase responsiveness and enable new levels of achievement throughout the enterprise.  As a matter of fact, for many mid-size companies, providing higher visibility to business processes across functions and departments has become a priority.

In response, many enterprises are increasingly turning to Web-based ERP systems that – in addition to integrating all business processes and data into one coherent system –support multiple communication standards such as XML, UDDI, WSDL and SOAP, integrate Web 2.0 tools for users. Such systems support secure portals and peer-to-peer networking applications, and simplify the designing and publishing of Web Services to interact with third-party applications over the Internet.  The goal is to offer users more seamless integration and easier access to data, both internally and externally.  Progressive companies see connectivity – associated with easy-to-use Web tools – as a way of addressing time-to-market concerns and the need to access people, information and other resources quickly and easily and in real time.

Companies know how critical it is to improve collaboration with business partners in order to compete in the global marketplace, but few have successfully streamlined communications with them. Trading partners have been slow to adopt the technology when they don’t see the benefits for themselves.

Partner acceptance is critical to successful ERP-based collaboration. Traditionally, suppliers have resisted investing in technology and making changes within their organizations to foster collaboration because they perceive the efforts benefit only the manufacturers.  Sure, electronic collaboration with partners, suppliers and customers will help manufacturers manage end-to-end processes in a more efficient and cost-effective way.  But, business partners will also benefit in the form of increased reactivity from the manufacturer and reduced paper-based processes.

For example, a manufacturer can authorize a supplier under contract or blank order to connect to its system remotely and be automatically informed of a reorder  requirement triggered by a low stock alert. Exchanging purchase orders and invoices electronically speeds up business processes and enables both the business partner and the manufacturer to better manage their supply chain with more accurate data and make better cash management decisions.

Also, suppliers can monitor vendor-managed inventory more effectively if they have electronic access to inventory stock levels.  Instead of waiting for orders to come in, real-time information from the manufacturer’s enterprise system can alert the supplier when it’s time to restock and help its staff adopt a pro-active behavior.

Finally, the vendor portal can provide suppliers with key performance information they may not otherwise receive from the manufacturer.  Since business is exchanged electronically, data can be automatically analyzed according to pre-determined KPIs (key performance indicators) related to delivery, price and quality.  Suppliers have a clear picture of their performance and can make adjustments to improve their ratings and increase their chances of gaining more business in the future.

Continued in Part 2