Supply chain disruption is one of the hottest topics being discussed in the boardrooms of manufacturing and distribution companies. Supply chain complexity and disruption are constant challenges, so executives need to focus on minimizing the impact they have on customers and the top line. What many leadership teams don’t realize, however, is that the key to business continuity may actually lay in their suppliers.
The Problem With Manual Communication
SourceDay customer Chatsworth Products is a global manufacturer of power management solutions. Their ability to be aligned with and connected with their suppliers ultimately determines their ability to meet their own customers’ demand.
Like many companies, Chatsworth Products struggled with late and incomplete deliveries from suppliers, leading to late shipments to their customers. That eroded customer trust and impacted their production schedules and cash flow. The primary source of these problems was manual and inefficient processes that provided almost no visibility to either buyers or suppliers. Both sides were overly dependent on spreadsheets and email communications when managing the purchase order lifecycle, from acknowledgements to price, quantity or date changes. In order to compensate for this, they carried too much WIP inventory, which eroded their profit margins and tied up their working capital. Although Chatsworth Products was using Epicor ERP, they needed to bridge the gap between the ERP and their suppliers.
That bridge consisted of the Chatsworth team being able to satisfy four key requirements:
- Reducing the number of late and incomplete deliveries, late customer shipments, and excess WIP inventory.
- Extending and expanding the investment they had already made in their Epicor ERP.
- Finding a way to ensure supplier adoption without their team being overwhelmed by supplier onboarding responsibilities.
- Increasing their operational efficiency through process automation.
Accomplish More With Your ERP
In the 10 quarters prior to Chatsworth sharing their story with us, they made substantial progress in all of the objectives listed above. On-time delivery is now over 90% and their work in process inventory is down 66%. They attribute this to streamlined communication with suppliers, which gives them better just-in-time management of raw materials. In combination, these improvements have allowed them to reclaim 90% of their warehouse space, which allowed them to expand their production capacity.
On average, more than 52% of all purchase orders will have a change to price, quantity, or delivery schedule over the course of the PO lifecycle. Unfortunately, most companies are still trying to manage that change through email, phone calls, and spreadsheets. It is an unsustainable approach for companies and their suppliers – their business partners best positioned to help them predict and prepare for supply chain disruption.
Connecting your Epicor ERP to your suppliers increases the velocity, accuracy, and transparency of communications. Best of all, it improves business relationships and supplier performance. By automating the process and eliminating manual steps, companies collaborate in a digital environment where they can effectively combine their people, processes, and technologies in support of high-performance initiatives.
Thanks to the challenges of 2020 and 2021, executive teams now realize that they need to digitize and transform their supply chains. Start by investing in a system that will automate the PO lifecycle, resulting in fewer risks, less cost, and better outcomes.
Article By SourceDay
SourceDay is a supply chain performance software that bridges the gap between the ERP and the supplier network.
For more information about how SourceDay can help you understand and control your supply chain, uncover new cost savings and optimize operations visit www.sourceday.com.
SourceDay is a Gold Vendor Member of the Epicor Users Group. The EUG do not endorse or recommend any software or service and it is up to members to ascertain the suitability of a product or service for their requirements.
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