News Snippets, Strategy

ERP in SCM: keeping your head in the cloud, but your feet on the ground

By Arlene Wherrett, VP & Managing Director, Sage Asia

Supply chain management (SCM) is a crucial part of any successful manufacturing and logistics workflow. Yet, no SCM solution is complete without the support of an Enterprise Resource Planning (ERP) system. But, as the world of SCM goes more digital, should SCM companies opt for an on-premise solution or move to the cloud?

Singapore has traditionally been one of the stalwarts in the global supply chain business, and digital transformation is key to helping it remain so. The Singapore government’s Logistics Industry Transformation Map (ITM) is set to transform and drive excellence in logistics operations. In fact, the overhaul of the logistics space is expected to add S$8.3 billion in value to the sector and create 2,000 new PMET jobs by 2021.

 With Southeast Asia’s e-commerce retail market size projected to grow to S$117.4 billion by 2025, SCM companies including those in Singapore, need to be able to keep up with consumers’ high expectations, namely, affordability, flexibility, speed and transparency.

Logistics and supply chain companies should continue strengthening their operations by utilising automation and digitisation while exploring new technologies such as artificial intelligence (AI), robotics in automation, data analytics and the Internet of Things. Singapore enterprises in this space are well-positioned to ride the digital transformation wave, also known as Industry 4.0, the fourth industrial revolution where machines and humans interact closely through intelligent networks. Supply chain and logistics companies here benefit from Singapore’s strong infrastructure and stable economic framework, both of which enable ready access to a technologically supportive environment.

Where does Enterprise Resource Planning (ERP) fit in?

As businesses in the industry continue to become more software-driven, ERP software has quickly emerged as one of the key pillars of any modern digital strategy.

ERP systems give the supply chain management (SCM) industry such as logistics and distribution businesses greater visibility into their operations while increasing their speed, productivity and efficiency, leading to greater customer satisfaction. This is accomplished by better managing business information, integrating various systems and working processes while ensuring optimal operational efficiency. Key challenges faced in the supply chain from streamlining operations to managing complex business processes and using data to augment human decision-making are also addressed.

However, one size does not fit all.

The business benefits of ERP are clear to see but, when it comes to picking the right type of deployment, things aren’t quite as straightforward. From hosted and on-premise to public cloud and private cloud, there are a whole host of options for organisations to consider amidst a changing market landscape.

It’s important to remember that not all business needs are the same. The cloud may be the right option for one business but not for another, so understanding which deployment option best suits a company’s needs is vital to ensuring a smooth implementation.

On-premise deployments have traditionally been the norm in the ERP space. They provide businesses with full control and autonomy over their data and offer a greater scope for customisation. However, they tend to be perceived as expensive, complex and resource heavy.

As such, cloud deployments are coming to the fore, with a report predicting the global cloud-based ERP market reach approximately S$44,250 million by 2023. As well as the reduced up-front costs, this shift is being driven by factors such as the high level of performance that cloud platforms offer (e.g. high availability, low latency) and the fact that the business itself isn’t responsible for managing or maintaining the platform.

Public cloud environments provide businesses with the agility they need to remain competitive while generally being cheaper than private cloud platforms and enabling businesses to capitalise on their vendor’s innovation roadmap.

On the other hand, the private cloud can provide an added layer of security, as an organisation’s data will be completely isolated from anyone else’s. They can also offer greater capacity for personalisation, as businesses have more influence over upgrades and modifications.

Finally, we have hosted deployments, which in many ways provide a middle ground between on-premise and cloud. By hosting their platform in a third-party datacentre, businesses can maintain ownership and control of the database, but still hand the responsibility of managing the hardware over to the data centre provider.

Putting specific business needs front and centre in the decision-making process is key here, and a one size fits all solution simply isn’t available. So, ahead of choosing the right supplier, it’s imperative to put identifying the right deployment option for your business at the top of the ‘to-do’ list.

Meeting business needs

So, how can businesses pick the right deployment option to suit them? By focusing on a few fundamental factors such as which stage of the SCM lifecycle they are in.

Generally, businesses that opt for a hosted or on-premise deployment will have a perpetual licence with a one-off cost, rather than a subscription-based licence more commonly found in cloud environments. They will also manage software updates in house, at a time that suits their operations.

For a SCM business that is growing fast, a subscription licence in the cloud could be more appropriate because it will enable them to easily add services, scale up their infrastructure and continually be on the latest version of the software due to automatic updates. This in turn plays a key role in helping create a superior SCM process including planning, purchasing, procurement and execution, monitoring and maintenance, and measurement and assessment.

Choice is the operative word here. Ultimately, it’s important to remember that every business is unique. Rather than simply following the crowd, SCM businesses should take the time to work out their key requirements and choose a deployment option that will provide them with the best platform for future growth.

The inter-departmental and multi-organisational nature of supply chains make effective management very challenging for businesses that lack the right resources. ERP systems are key here, enabling the creation and implementation of a more efficient supply chain process. This in turn enables companies in SCM to better serve their customers while always ensuring top quality.

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