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4 Ways Your ERP Can Solve Supply Chain Disruption

November 22nd, 2023 | 4 min read

By Manuel Neyra and Mo Shujaat

The phrase “supply chain disruption” reached just about every corner of commerce in 2020…and each year since. While 2023 has seen the global economy reach a more stable point compared to the beginning of the pandemic that rocked the supply chain across every sector, the ramifications of that knee-buckling disruption are still being dealt with and likely will continue to impact us all for a few more years to come.

So how can we position ourselves and our companies to become more agile and resilient? Is an enterprise resource planning solution like JD Edwards the answer to all our woes? In many ways, yes. Read on to find out how you can use your JD Edwards ERP to supercharge – and protect – your own supply chain experience.

The Supply Chain of Yesterday: DTC

In the past, manufacturers relied primarily on sending their products to a variety of different big box retailers, such as Circuit City (RIP), Best Buy and Target. These retailers would then sell directly to end consumers. The traditional approach to inventory management followed the principle of “just in time” inventory. Under this method, businesses aimed to forecast consumer demand for a given product as accurately as possible in advance and send the retailer just enough stock to meet that predicted demand. Retailers would in turn maintain a safety stock of 5-10 extra units, to ensure they never ran out of inventory for the projected demand. This approach was designed to minimize inventory holding costs and optimize the flow of goods, and it worked – for a while.

Even before the pandemic spelled disaster for suppliers, the advent of e-commerce giants like Amazon, with their shiny and convenient direct-to-consumer platforms, was a harbinger of the immense change on the business-consumer relationship horizon. Companies adapted to the evolving sales landscape by diversifying their sales strategies, engaging directly with consumers through platforms like Instagram and other unconventional avenues. This, combined with the global halt in production and supply caused by the pandemic, effectively wrote the death warrant for the traditional supply chain.

COVID Cascade and the Advent of Nearshoring

As its name implies, a supply chain exists because of the interconnectedness of the parties along its route. The manufacturer, the retailer, the consumer; everyone is tied together along the life cycle of a product. When one element of that chain is disrupted, the whole thing cascades, creating a disastrous ripple effect that, in the case of 2020, led to extreme shortages, delays and backlogs across the world.

Companies realized the traditional supply chain wasn’t working so they instituted what’s known as “nearshoring.” Nearshoring is a workaround that involves moving manufacturing closer to the end market, in a bid to circumvent international supply chain bottlenecks. The challenge of nearshoring, and really any kind of supply chain overhaul – both ideologically and practically – is in adapting your strategy as inexpensively, efficiently, and quickly as possible.

So how do you pivot your industry’s known best practices, concretized as such over years of business, and ensure you’re not steamrolled out of existence?

JD Edwards to the Rescue

The answer is simple: JD Edwards. JD Edwards is such a robust ERP that it is more than well-positioned to handle the nuances of working through an international issue like supply chain disruption. It’s flexible enough to accommodate changes in strategy and to support initiatives like supplier diversification.

Data

Companies needed experts who could leverage ERP systems, including Materials Resource Planning (MRP), Distribution Resource Planning (DRP), Master Production Scheduling (MPS), and Capacity Planning, to adjust their master data and planning rapidly.

Businesses can use data from different JDE modules and system capabilities to establish and track a robust vendor compliance program. This program allows companies to incentivize or penalize suppliers based on their performance and key performance indicators (KPIs). Parameters are established, providing an additional layer of control over supplier performance.

In the world of ERP systems, metadata plays a crucial role. Metadata includes attributes about the data, such as the bill of materials, dates, routing (the steps required to create a product), and other attributes related to the product. These are fundamental to planning and forecasting in supply chain management, helping businesses answer questions about lead times, supplier availability, and production timelines.

Diversify suppliers

In direct response to supply chain disruptions, companies have sought to offset supplier risk by sourcing from different suppliers. JD Edwards offers features like supplier performance metrics, enabling companies to gauge supplier performance in terms of delivery timelines, quality control, and overall reliability. It also empowers organizations to create a risk profile for their items, helping identify high-risk suppliers.

Insourcing

In situations where suppliers fail to provide essential components or products, some companies have made the strategic decision to insource. Insourcing involves bringing previously outsourced functions back in-house, which can lead to increased control over the supply chain. However, this move may result in increased costs due to the need to cover in-house production expenses.

Supply chain tech

Technology plays a pivotal role in fortifying businesses against disruptions. Warehouse Management Systems (WMS), Transportation Management Systems (TMS), and other integrations act as indispensable tools in navigating the complexities of supplier diversification, insourcing, and leveraging ERP systems like JDE.

WMS optimizes inventory control, ensuring that diverse supplier channels are efficiently managed, and insourced products are strategically placed within the warehouse for streamlined operations. TMS, on the other hand, facilitates the seamless movement of goods, critical for a diversified supplier base and agile response to market demands. Integrations with ERP systems provide a holistic view of the supply chain, enabling companies to align diversification strategies with real-time data and forecast future disruptions and proactively shape strategies to build resilience and responsiveness directly into their operations.

Future outlook

The future is a bit brighter these days. The groundbreaking shock of the initial supply chain disruption has calmed down into more of a ripple effect. Supply chains are becoming more resilient and will only continue to do so, evolving in their agility and ability to weather any future supply chain shocks.

Your ERP – like JDE – provides alignment between your strategy and its execution and enables agility when your company needs to react to any potential future shocks. To that end, it’s likely that we will continue to deal with these occasional post-pandemic shocks for another year or even two until all the supply chains are caught up with production and filling backorders. Volatility is not unexpected, and now more than ever, we need the powerful tool that is our ERP system to be better prepared for any choppy waters ahead.

We’re here for you

Like what you see? Reach out to us and engage your friendly ERP team. With our expert team and decades of experience, we are advantageously positioned to help you transform your company by leveraging the manifold benefits JDE/ERP can offer.