How Do Your Business Building Blocks Stack Up?

How Do Your Business Building Blocks Stack Up?

Successful supply chain management requires an integrated management system providing an enterprise-wide view of key logistics activities.

Supply chain managers need the ability to monitor and direct every aspect of their business including customer relationships, supplier relationships, sales and order fulfillment, and operational performance. That’s where enterprise resource planning (ERP) comes in.

Customer Relationship Management

Customer relationship management starts with the initial contact and is often first tracked in a contact relationship management (CRM) system or module. Basics such as name, address, telephone, and other contact information is recorded and tracked in anticipation of the initial sale. Customer relationship management goes far beyond that initial contact. Once the initial contact is complete there may be payment terms, contracts, or other agreements to track. Favorite items, shipping preferences, or special instructions may also be vital to the relationship. An effective ERP system combines this information in a centralized fashion along with purchasing patterns, customer service information, information on returns and credit history.

Supplier Relationship Management

In today’s economy businesses need to take advantage of the best pricing, delivery and incentives available to them from various vendors. Additionally, lead times, quality control and payment terms such as EDI must be considered. Vendor performance and accuracy ratings are critical to the overall success of the enterprise. An ERP system integrated across purchasing, receiving, quality monitoring and disbursements with electronic funds transfer capabilities simplifies these processes and provides overview or detailed analysis to facilitate management of all aspects of the supplier relationship.

Sales and Order Fulfillment

Whether the business is heavy manufacturing from raw material to finished good, light assembly, or distribution, all require some level of sales and order fulfillment. Included in the mix could be processes as complex as engineering and product development, shop floor control, or manufacture to order. Certainly every type of operation requires the ability to process orders either from a website or through a sales force. Inventory and stock levels must be managed. Quality controls have to be in place. Returns are a reality of life. Physical distribution, packaging and tracking, and logistics must be scheduled and monitored. All of these activities can and should be tracked and monitored by the ERP system.

Performance Management

Performance management answers the following questions:

➤ Are our costs within expected norms?

➤ Are our profit margins sufficient?

➤ Do our production lines operate at peak efficiency?

➤ Is our productivity adequate?

➤ Where can our quality be improved?

➤ Is our customer satisfaction rating where we want it to be?

➤ Is our workforce fairly compensated and sufficiently

prepared to perform their functions?

An ERP system provides the means to answer these questions. Costing calculations from production operations or purchases are pulled together with sales results to allow profit calculations. Scheduling and productivity reports and analysis provide insight into efficiencies. Quality review and returns analysis provide data to help identify possible areas where quality might need improvement. Customer relationship management and returns analysis offer clues as to customer satisfaction issues. HRMS provides compensation and benefit management, plus training and advancement planning.

The implementation of an ERP system can provide the structure and tools to coordinate, monitor and manage a supply chain.

Erik Kaas is vice president of product management for mid-market ERP products at Sage (www.sageerpsolutions.com).

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