Which ERP Trends Will Catch On in 2020?
Supply chain management involves planning, execution, control, and monitoring, and enterprise resource planning (ERP) solutions handle the physical aspects of supply. Next-generation ERP technologies have come to the forefront, and their powerful capabilities are having a great influence. Here are three ERP supply chain trends to watch in 2020.
1. Warehouse operations managers are more willing to apply automation and software. Approximately 23% of respondents to the 2019 Warehouse/DC Operations Survey report they are adding automation to contain costs, up from 15% in 2018. ERP systems or legacy warehouse management system options are the most popular choices. On top of that, 45% recognize that improving information technology in their warehouses is important for managing costs.
A positive and significant relationship also exists between ERP systems and software configuration management (SCM) performance, according to an Emerald Insight study. The successful use of ERP software can help enhance the integration of internal business processes and information flow among different departments, as well as collaboration with outsourcing suppliers, customers, and supply chain partners.
2. Cloud solutions are replacing legacy, on-premise solutions. The worldwide public cloud services market is predicted to grow 17% in 2020 to $266.4 billion, up from $227.8 billion in 2019, according to Gartner. Cloud-based ERP systems offer the same level of functionality and security as their on-premise counterparts, while also reducing the cost and customization issues that plague traditional software. Not many companies need an on-premise system anymore, so naturally, the market for cloud SCM systems is expected to grow in 2020.
3. The Internet of Things (IoT) is transforming business models. From pushing products out the door to forming highly engaged service providers, IoT has a profound impact on ERP systems and how manufacturers accomplish their daily activities.
More companies will likely use IoT sensors in 2020 to ensure that specific data factors into the information displayed in ERP interfaces. Supply chain managers can lose sight of a product after it ships, but IoT capabilities allow them to monitor products, better inform customers about delivery timing, and offer additional services.
IoT also has a transformative effect on forecasting and inventory control. By directly sharing point-of-sale inventory levels to the shop floor, IoT can give manufacturing companies a more profitable make-to-order model rather than a forecast-driven model.
Profitability Lies in the Customer Journey
Retailers who optimize their digital customer journeys find an increase in their margins three to eight points higher than retailers who don't optimize, according to a survey by Manhattan Associates and IHL Group. Fewer than 30% of the retailers surveyed, however, have optimized these processes.
Retailers often attempt to patch together legacy systems to satisfy growing fulfillment demands because new omnichannel fulfillment methods—such as buying online and picking up in store, shipping from the store, and curbside pickup—can be costly and complex. These additional costs cut into margins and create a greater need for optimization.
"Retailers need to quickly pivot to solutions designed and engineered for the way consumers shop today and into the future," says Greg Buzek, president of IHL. "Those who have optimized these customer journeys are racing ahead in profitability. Those who have not are losing many points of margin on every sale."