Enterprise resource planning and supply chain management software have been essential tools in the manufacturing industry for decades. They provide visibility into production, scheduling, inventory, quality control, forecasting, shipping and logistics management and more. As manufacturers deal with complex global supply chains and changing market demands, the importance of modern ERP and SCM systems will only grow. These systems are increasingly being hosted in the cloud for greater flexibility and scalability; they enable manufacturers to manage large amounts of data to enable real-time decision making and problem-solving.
This article explores recent developments in ERP and SCM—including automation, security, AI and machine learning, smart factories and more—and the impacts these have on manufacturers amid the revolutions underway in data and AI. By combining advanced automation, AI and other innovations such as smart factories with human skills and ingenuity, modern ERP and SCM systems can help organizations optimize production, improve efficiency and create a more responsive and sustainable manufacturing environment.
Effects Of ERP And SCM On Manufacturers
Modern ERP and SCM systems centralize, govern, secure, analyze and utilize data across all operational aspects of an enterprise. They are fundamental to any manufacturer’s success, in both tactical and strategic dimensions.
On the tactical side, ERP and SCM systems enhance operational efficiency. ERP automates tasks and standardizes processes to reduce errors and free up resources, while SCM optimizes supply chain activities such as inventory management and logistics to reduce costs and improve delivery times. Collaboration is a key tactical advantage of these systems. ERP improves communication across departments, while SCM enhances coordination with suppliers and partners. Both types of systems support data-driven decision making; ERP provides real-time access to business data to enable rapid decisions, while SCM offers insights into supply chain performance to address bottlenecks and surface new opportunities for optimization.
At the strategic level, ERP and SCM systems unify business information to enable a complete view of operations. Thanks to their planning and forecasting capabilities, these systems also enhance enterprises’ ability to manage those operations in the short and long term. ERP tools help with financial planning, budgeting and forecasting, while SCM systems use advanced analytics to predict demand, optimize inventory and plan production.
Data Management And AI Essentials
Big manufacturers often count on new implementations or upgrades of ERP and SCM systems as part of their digital transformation initiatives. This can involve intense efforts across many teams, departments and facilities—but are these organizations truly prepared to transform? In particular, do they understand their data and have the necessary processes and resources in place to maximize its potential and leverage AI?
It’s important that manufacturers have a data management strategy in place to get the most out of ERP and SCM systems. AI and machine learning can significantly enhance ERP and SCM systems in manufacturing by improving production control, inventory management and other functions. AI automates routine tasks and enhances processes such as scheduling and maintenance. ML adds value by predicting equipment failures, minimizing downtime and maintenance costs and generating accurate demand forecasts. In short, data, AI and ML work together to simplify operations, reduce costs and strengthen manufacturing processes, making manufacturers more adaptive and intelligent. But they can do this effectively only if the data is accurate and properly formatted.
Getting to a solid data management strategy requires more than technical know-how; it also requires institutional discipline. As I discussed in a previous article, structured change management is essential for ensuring that data is accurate, integrated and ready to be used for advanced analytics and AI functions—including those embedded in modern ERP and SCM systems.
Influence Of Industry 4.0 And 5.0
I will discuss this topic fully in a future article, but here I want to take a moment to highlight the significance of Industry 4.0 and Industry 5.0 concepts for modern ERP and SCM systems. Industry 4.0 focuses on automation and connected enterprises (including smart factories) to optimize production, improve operations and enhance product quality. It does this by integrating digital technologies such as IoT, AI and advanced robotics. For example, in a car factory, IoT sensors can monitor equipment, and the data from them can then be used by machine learning systems to predict maintenance needs.
Industry 5.0 emphasizes collaboration between humans and machines to create personalized and sustainable production processes. This approach seeks to balance technological advancements with human and environmental considerations. For instance, in a custom furniture shop, collaborative robots can handle repetitive tasks, allowing human workers to concentrate on design and quality, resulting in more personalized products and a more sustainable production process. In practical terms, monitoring and managing the activities mentioned in these examples falls to modern ERP and SCM systems that can handle the large volumes of data and sophisticated analytics these coordinated approaches require.
Smart-Factory Technology Impacts Manufacturing
When considering modern ERP and SCM systems for manufacturers, the concept of the smart factory often plays a role. A smart factory is a digitized and connected production facility that leverages advanced technologies such as IoT sensors, AI, machine learning, robotics, analytics and cloud computing to optimize manufacturing processes. The goal is to enhance efficiency, flexibility and productivity through real-time monitoring, automation and the other capabilities of these advanced technologies. By integrating smart-factory principles with modern ERP and SCM systems, organizations can further improve operations and product quality while reducing costs.
Automation In Action
As discussed in another of my recent articles, modern ERPs and SCMs now use various automation types, including intelligent automation, robotic process automation, business process automation, business process management and hyper-automation. These technologies can enhance operations by reducing errors and providing better access to information.
An example of intelligent automation is Appian’s low-code, AI-powered automation and data analysis platform. Manufacturers use this platform to improve supply chain processes by automating vendor selection, onboarding and performance evaluation, as well as automating production schedules based on demand, inventory levels and resource availability. Meanwhile, RPA uses mechanical or software-based robots to perform tasks such as packing orders, moving boxes or entering data. One big user of this is Amazon, which deploys 750,000 robots to assist employees in filling orders. IA combines AI, RPA and BPM to handle tasks more efficiently, taking over manual or resource-intensive tasks.
Hyper-automation seeks to automate as many tasks as possible. For example, a manufacturing company might automate everything it can within a given production plant. As workers retire or change jobs, many of them are not replaced, reducing headcount. Ultimately, the remaining employees oversee automation processes and robots, troubleshoot any problems and focus on other higher-level tasks. By automating a wide range of tasks, hyper-automation frees workers and resources to be reallocated to other needs.
How Leading ERP And SCM Vendors Are Putting Advanced Technologies To Work
Let’s examine a few leading ERP and SCM systems and how they are integrating some of these advanced technologies to make manufacturers more productive.
- Microsoft Dynamics 365 differentiates itself by using data, AI and ML for predictive analytics and demand forecasting. It automates repetitive tasks and integrates IoT for real-time monitoring of manufacturing processes for a wide range of customers, from SMBs to large enterprises.
- Oracle ERP stands out for its integration of digital twins, a simulated virtual model that uses IoT sensor data to improve asset management, process optimization and decision making. Oracle ERP uses AI and ML for advanced analytics, RPA for automation and IoT integration for smart-factory data collection. Its manufacturing customers include medium and large enterprises across discrete and process manufacturing.
- NetSuite ERP is a pioneer in SaaS for ERP, as one of the first vendors to offer a comprehensive cloud-based system tailored for small and medium-sized distribution and manufacturing businesses. It incorporates IoT data for operational visibility and integrates with CAD applications to create and manage bills of materials. Netsuite also uses AI and ML to improve demand planning, and it includes CRM, HCM and e-commerce within its suite.
- SAP S/4HANA ERP serves many large manufacturers and is known for its extensive use of AI throughout its modules, as well as real-time data collection to generate predictive insights. SAP S/4HANA focuses on material requirements planning with real-time capabilities, allowing for quick responses to changes in demand and materials supply.
- Epicor ERP focuses on inventory optimization using automation, AI and ML. A key feature of Epicor is its manufacturing execution software, which connects production machines and tracks raw materials. It optimizes shop-floor operations, collects real-time data, provides visual insights and supports Industry 4.0 initiatives.
- Acumatica ERP offers cloud-based ERP software tailored for small and medium-sized businesses across the construction, manufacturing, retail, service and wholesale distribution sectors. It also features automated workflows, smart-factory technologies and real-time data integration via IoT.
- Infor is recognized as a modern ERP system for its cloud-based deployment, scalability, flexibility and user-friendly interface. It focuses on improving productivity in discrete manufacturing, and the Infor OS integrates AI and ML to automate routine processes. The platform features pre-built APIs for connecting Infor with third-party systems, as well as an app designer tool that allows users to create customized applications using a user-friendly drag-and-drop interface.
- Oracle SCM uses blockchain for secure tracking and traceability for multitier visibility across the supply chain. It also incorporates AI and ML for advanced analytics and uses smart-factory concepts to improve operations.
- SAP SCM focuses on collaboration by connecting customers with their suppliers for real-time management of supply and demand. It also enhances planning to optimize resources and material flows.
- Blue Yonder SCM emphasizes security, sustainability and ethical sourcing practices. It automates supply chain processes and uses IoT for real-time visibility, leveraging AI and ML for forecasting. Through its Luminate Control Tower, Blue Yonder connects partners and enables monitoring, analysis and prediction of disruptions and responsive resolution of issues.
- E2open SCM promotes human-machine collaboration in global supply chain management. It simplifies global trade management with automation and integrates IoT data in real time.
- Infor SCM focuses on collaboration through its supplier network platform that connects 85,000 manufacturers, suppliers, banks, logistics providers and other businesses. It uses IoT, data analytics, AI and cloud computing for real-time data collection, automation and predictive insights. Infor’s Global Trade & Finance tool manages supplier performance, payment processing, cash flow visibility and liquidity within supply chains.
ERP And SCM For Manufacturers Wrap-Up
As manufacturing evolves to meet changing market demands, modern ERP and SCM systems are crucial for managing global operations and supply chains. As discussed above, these systems integrate advanced technologies such as AI, machine learning, IoT, automation and smart factories. Cloud-based solutions can provide a unified system with flexibility and scalability, offering benefits such as accessibility, rapid deployment, improved performance and centralized data security.
Adopting these systems is essential for manufacturers to remain competitive by unifying operations, improving collaboration and reducing costs. More than that, as data quality improves, ERP and SCM systems can help manufacturers shift from a reactive to a proactive approach by taking advantage of greater real-time visibility into inventory levels, demand patterns and supplier performance. This shift allows manufacturers to anticipate and respond to market changes more effectively, enhancing overall operational efficiency and resilience.
