In today’s fast-paced environment, stock-outs and supplier delays can severely disrupt business operations. According to Netstock’s latest Inventory Management Benchmark Report, 20% of SMBs risk losing customers due to incorrect inventory mixes or misallocated stock, while 72% struggle with delivery delays. This highlights the urgent need for effective demand and supply management. Remember, inventory is money—your biggest lever for profitability and customer experience. Leveraging the right planning tools is essential for growth!
ERP systems manage business operations and analyze historical data, but they often lack the predictive capabilities needed for future planning. supply and demand planning solutions fill this gap by providing real-time visibility and forward-looking insights.
In this article, we explore how integrating ERP systems with supply and demand planning solutions creates a powerful synergy, reducing time spent on ordering and forecasting, lowering inventory levels, and freeing up operating cash to enhance cash flow. So, let’s dive in!
In this article, we’ll explore:
1. Learning from the past: ERP systems
ERP systems are essential for supply chain management. They offer a view of your current inventory—what’s inbound, outbound, and in production. These systems provide vital functionality and when it comes to inventory ERPs focus on stock control activities and identifying how much stock you have in the warehouse. ERPs typically provide “MIN” and “MAX” levels to calculate the quantity of stock to order.
ERPs excel at analyzing historical data to identify seasonal patterns and demand fluctuations, which sets a solid foundation for supply and demand planning by helping you understand past trends.
However, ERP systems have limitations when it comes to forward planning. They are not designed to track, measure, or report on item-level fill rates, nor do they manage target fill rates across items, groups, or locations. ERPs also rely on static safety stock levels and ignore demand volatility and supply unreliability when calculating inventory needs. Furthermore, they lack the ability to build orders based on specific volume or weight limits, which is critical for planning around events like the Chinese New Year.
While ERPs tell you what inventory you have, you also need a solution to predict what you’ll need in the future.
By integrating ERP systems with specialized demand and supply planning solutions, businesses can bridge the gap between historical analysis and predictive forecasting—creating a more dynamic, forward-looking approach to inventory management.
2. Looking toward the future: inventory & demand planning solutions
Balancing inventory investment and stock availability while considering supply and demand risks adds complexity, leading to the inventory planning dilemma. Managing inventory with complex spreadsheets can be frustrating and time-consuming, making it challenging to determine optimal inventory levels to achieve your target fill rate. This dilemma underscores the need to integrate ERP systems with efficient supply and demand planning solutions to address pain points such as stock-outs, excess inventory, supplier delays, and the inability to adapt quickly to market changes.
Unlike ERP systems, supply and demand planning solutions offer predictive capabilities that enable proactive decision-making. With these solutions, you quickly gain visibility to monitor KPIs like fill rate and stock holding. You can also automatically classify each SKU according to sales velocity and profitability, ensuring that you know which items need urgent attention. This allows you to anticipate and adjust your plans in response to demand shifts and market trends before they occur.
A standout feature of these solutions is their demand forecasting capability, which accurately predicts future sales and customer needs, generating reliable forecasts that factor in trends and seasonality. This empowers you to receive up-to-date order recommendations and make timely adjustments to inventory levels. Planning for future events—such as product launches or marketing campaigns—becomes seamless, as these tools allow you to simulate various scenarios and prepare your inventory for anticipated demand spikes.
This proactive approach minimizes the risk of stock-outs and excess inventory by empowering you to monitor suppliers, accurately forecast demand, and adapt your planning to accommodate any delays.
3. Match made in heaven: ERP and Inventory & Demand planning solution
Integrating ERP systems with demand and supply planning solutions creates a robust framework for effective supply and demand management. This synergy provides businesses with a comprehensive approach to supply chain management, enabling real-time visibility into inventory levels, improved forecasting accuracy, and enhanced collaboration across departments. Ultimately, this integration helps businesses respond quickly to market changes, reduce costs, and improve customer satisfaction.
As a leading demand and supply planning solution, Netstock helps over 2,400 businesses worldwide optimize their inventory management. Real-world customer stories showcase how these businesses have successfully optimized their inventory by integrating their ERP with Netstock.
Customer success stories
Stonegate
After implementing Netstock with Microsoft Business Central, Stonegate gained instant visibility into its inventory. This integration allowed them to foresee potential stock-outs before they occurred. With all critical data available on a single dashboard, Stonegate could drill down into each category and access a full history of their items. As a result, they placed smaller, more frequent orders with suppliers, dramatically improving cash flow, boosting fill rates, and reducing excess stock. After only four months, Stonegate reduced excess stock by 50% and achieved a 96,26% fill rate.
“If you want to reduce your inventory to improve your cash flow and stock turns while improving service, I recommend Netstock every time. We can now forecast and project our inventory portfolio, which is critical for successful inventory management.” Alan Pollard, Operations Manager
Best Vinyl
With the implementation and integration of Netstock alongside Best Vinyl’s Acumatica ERP solution, the company transformed its ordering process, which had relied on complex Excel spreadsheets. This previous method was not only prone to human error but also required a full day to prepare orders, leading to concerns about data reliability. Thanks to Netstock, Best Vinyl has reduced its inventory from $2.7 million to $1.4 million in under two years while maintaining high customer service levels.
“With the Netstock dashboard, I can quickly see stock-outs and potential stock-outs, which allows me to have a focussed conversation with my sales team to determine what’s coming up and what else I need to consider when placing orders.”Justin Comish, COO
See how Netstock seamlessly transforms raw ERP data into predictive insights!
Risk-free Inventory Management
A demand and supply planning solution is an extension of your ERP. The sophisticated technology will do the heavy lifting, distilling, and prioritizing the information so that you can make quick, confident strategic decisions.
Netstock offers a risk-based approach to inventory management and optimization, with decades of supply chain best practices built into its software. This empowers small to medium-sized businesses to remain prepared, act fast, and plan for the future!
| Feature | ERP | Netstock |
|---|---|---|
| Fill Rate and Line Item Fill Rate | ERPs are not designed to track, measure, or report on item-level fill rate, nor are they designed to keep track of the target fill rate per item, group, or location. | Sets desired service level/fill rates. |
| Safety Stock Levels | ERPs have static safety stock levels for items. These systems ignore demand volatility and supply unreliability when calculating safety stock. | Adopts a risk-based safety stock model that dynamically increases safety stock for items with unreliable supply and volatile demand profiles. |
| Supply Planning | ERPs lack constraints on building orders to specific volume or weight limits, which is important for planning events like the Chinese New Year. | Automatically generates a rolling 365-day future projection for each item in each location, informing the user how and when to order while considering MOQs and Order Multiple constraints. |
| Demand Planning | Most ERPs provide a simple bin-level replenishment model, which is often insufficient for efficient planning today. ERPs lack exception-level planning, making it hard to identify high/low variance. | Developed inventory-specific forecasting methods to auto-fit the best model for each item, helping identify seasonality and slow-moving items. It also features an exception management dashboard for hard-to-plan items. |
| Bill of Materials | ERPs lack the capability to recommend stocking and replenishment for items within a multi-level BOM, especially when multiple finished goods demand the same components. | Imports BOM structures from the ERP and plans component demand based on the sales forecast of finished goods. |
| Performance Tracking | ERPs don’t have built-in targets. | Provides key supply chain metrics, including item-level stock projection and turns to group-level margin projection, all available in Netstock Inventory Advisor. |
4. Next steps: optimizing your supply chain
If you’re using an ERP system and looking to enhance your demand and supply planning capabilities, here are some quick tips to help you choose the right solution:
- Evaluate your current system: Assess whether your ERP system is providing the necessary inventory outputs to effectively support your business.
- Identify lost opportunities: Calculate the potential impact of lost sales resulting from having too much or too much or too little stock.
- Engage stakeholders: Connect with colleagues to gain insights into their supply chain challenges and understand how inaccurate information has affected sales and marketing efforts.
- Invest in a demand planning solution: Enhance your ERP system with a demand planning solution like Netstock, transforming it into a powerful supply and demand planning tool.
- Stop the excuses: Don’t let concerns about ongoing projects, or budget constraints delay necessary investments into a solution that will improve planning and unlock hidden capital in your inventory.
