Can enterprise resource planning or ERP systems be beneficial to businesses? In a 2018 global survey of organizations that implemented ERP, 95% reported they either improved all business processes (49%) or improved key business processes (46%) upon ERP implementation.
Indeed, the answer is a big, resounding yes. Of course, one organization’s experience with ERP may not be the same as another’s — thus, the 5% reporting no palpable business process improvement. However, it is highly likely that with help from a capable independent ERP advisory, the remaining 5% might have a different story to tell.
Technology advisory services should be even more crucial now that so many ERP options are available. Companies can choose among local or on-premises, cloud, and hybrid. There are pared-down ERPs with the most basic features, and then there are add-on modules and ERP customizations. Some ERPs put a paramount on compatibility with legacy systems, but there are those that interface with robotic process automation and even artificial intelligence software.
This writeup, in particular, will look at how ERP and AI can and do work together. Before that, of course, there must first be a bit of discussion on what ERP is and what it does.
What is ERP?
ERP is a system or software that gathers, collects, and integrates a company’s data into an easily and conveniently accessible central repository called a database. Ideally, every division in a company — finance, purchasing, inventory, human resources, customer service, manufacturing, and order fulfillment, among others — is connected to the database.
For instance, when procurement places an order for textiles, that order is automatically logged and registered in the ERP database. Therefore, someone from manufacturing could go into the system, see the latest procurement data, and schedule factory operations according to the expected availability of the just-procured raw materials and supplies.
ERP, therefore, doesn’t only collect data into a central database. Properly implemented, ERP — specifically, the up-to-date, real-time data from the ERP database — should also be tightly knit into the very fabric of the company’s operations.
In other words, a company’s core business processes and workflows must be adjusted to ensure they’re amply taking advantage of the information that the ERP system makes readily available.
Thus, manufacturing no longer has to request and await data from procurement in a process that could easily take at least a few days of going back and forth for a big enterprise. Adjusted workflows will ensure that manufacturing can confidently make decisions based solely on data, reports, and insights displayed on the company’s ERP dashboard.
It’s important to note that management has complete control over who gets access to the company database. In fact, most ERPs have intelligent controls that will let you specify who has access to all or part of your company data. You can even implement an ERP that allows customers, partners, suppliers, and other external parties access to their specific accounts with your company.
The only rule about access is that you should make sure everyone who must have information to make decisions or perform their work have access to your ERP database. If data transparency improves an employee’s turnaround times, then that should be a good argument for giving that employee ERP access. Naturally, you should also be careful about safeguarding company information by creating specific access rules.
AI in ERP
ERP eliminates data silos and centralizes company data, ultimately streamlining a company’s data processing and decision-making tasks. What does AI have to do with ERPs?
AI and ERP are two different systems and processes, but they can be integrated for even better process improvement. Specifically, AI can sit on top of ERP systems and take over specific tasks.
For instance, in a traditional, non-AI implementation of ERP systems, someone from procurement will have to send out orders through the procurement module of the ERP system. Once the order has been registered, someone in manufacturing can estimate the day the raw materials will be available and schedule factory operations accordingly.
However, in an ERP system with an AI component, all of this could be accomplished without a human getting involved.
First, of course, you must train the AI in your business processes by providing it with massive amounts of data. This machine learning process will equip the AI to identify triggers for specific procedures and observe ceilings and thresholds. For instance, through historical procurement pattern observation, the AI could “conclude” that raw materials must be ordered whenever the supply warehouse reports being down to 30% capacity.
Once it has been adequately “trained,” AI can take over the tasks that a human would have otherwise performed. For instance, instead of someone in procurement placing an order for raw materials, the AI could be the one to do it. The AI could build a company’s database of suppliers, send quote requests to suppliers, select a supplier, and prepare and send an order — all on its own.
It doesn’t have to stop there, either. Any other processes that depend on procurement may also be automated through AI. To use the earlier example, the AI could create manufacturing schedules without human input, basing its actions solely on observing past manufacturing patterns and other relevant data.
However, AI software can also use data not only from procurement but also from inventory management, order fulfillment, and other relevant divisions. Thus, companies with AI-driven ERP systems can be much more efficient. For instance, a plastic pipe manufacturing company could prevent HDPE pipe fitting overruns because the AI would not trigger the manufacture of these fittings when the inventory management system reports there’s currently an excess of them stored in the company warehouses.
ERP and AI – A Perfect Match
ERP systems are beneficial because they centralize company data and make them accessible in real time. On the other hand, AI software can take massive amounts of data, read them, and analyze them in a fraction of the time any human needs to do the same.
Thus, ERPs and AIs are a match made in heaven. ERPs make the data available for the AI to study, analyze, and ultimately utilize — all for the benefit of an enterprise.
