March 25, 2020
January 3rd, 2023
ERP, also known as Enterprise Resource Planning, has had a significant impact on businesses throughout the world ever since the term was first coined back in 1990.
ERP has enabled numerous businesses, including retail stores, manufacturing companies, and technology moguls, to increase their profitability.
The software has also empowered these companies to minimize wasted time and to increase productivity by automating routine processes and giving employees more free time to work on more demanding tasks.
Most important of all, ERP software solutions has been essential to integrating various business functions, hence streamlining workflow.
Another type of technology that has been taking the world by storm over the past few years has been Artificial Intelligence. Thanks to Artificial Intelligence Services, companies have improved their products, enhanced their internal workflow, and made better decisions that were bolstered by the unique insights gathered from quasi-sentient machines.
The effect of AI has been so profound that Gartner predicts that almost every new piece of software coming out after 2020 will have artificial intelligence as one of its core components.
Another benefit of AI is that it can improve on other existing software systems, including ERP. To gain a better appreciation of how AI and ERP systems can intersect, let’s start with getting a better idea of what ERP systems are.
ERP software is an extensive database that aggregates the data coming out of different functions and then passes on the relevant information to the appropriate department; this software makes it easier to automate a lot of processes.
However, if you want a simpler definition, then ERP is a powerful system that lets the right hand know what the left hand is doing.
For instance, upon receiving an order from a client, the ERP system will automatically send that information to the relevant departments, including the distribution center best suited to fill this order.
Also, once the order is on its way, the ERP system will automatically send the customer an invoice.
Now, to be able to do all of this, most ERP systems consist of the following parts:
AI solutions augment ERP systems in two ways. On the one hand, AI can enhance each component of an ERP system. On the other hand, AI can complement an ERP system, providing businesses with a more comprehensive solution.
When ERP software becomes powered by AI, it becomes more proactive, which means that it can tell when an employee deserves a raise, when a candidate is qualified for a job, when a company might have redundant employees.
This means that not only will AI-powered ERP software lower a company’s churn rate, but it will also expedite the hiring and onboarding process while minimizing workplace inefficiencies.
For many companies, it is imperative to keep track of the different interactions they have with various clients.
Whereas ERP systems can help with that, AI solutions can notify a business when they need to reach out to a specific client, and it can assist in scheduling service calls and general planning.
Business Intelligence Solutions are all about how businesses gather and analyze data to make better decisions. This data may be collected from the outside environment or a business’s internal operations.
AI solutions can handle large amounts of data and glean insights from them, insights that normal human beings would have never noticed. Also, the insights produced can be generated in real-time, meaning the lag between when the data and the insight can be minimal.
With that in mind, seeing as ERPs are massive data aggregators, an obvious benefit of throwing AI into the mix will be all the insights gleaned from the mountains of stored data, which will inevitably lead to better decisions.
Businesses have to keep in mind that not all suppliers are created equal. Some suppliers can offer consistently high quality, while others may have sub-par offerings.
Also, some suppliers are punctual and can stick to a schedule, and others can harm the delivery dates of the entire supply chain.
For many businesses with complicated supply chains, it can be challenging to keep track of which suppliers are good and which aren’t. However, once AI gets integrated with ERP, companies could use track-and-trace applications that will let them know which lots from which suppliers to go for and which ones to avoid.
Inventory Management can be critical to the success of any business. If a company has too many products on its shelves, the storage costs alone can eat away any of the profits.
If a company doesn’t have enough products on its shelves, the opportunity cost of all the lost sales will also prove devastating.
Therefore, a vital aspect of balancing inventory is correct forecasting. The good news is that with all of the historical data stored within ERP systems, AI solutions can experiment with different forecasting models and find the one that best predicts the future.
Moreover, these predictive models will be able to account for numerous variables, including demand, the supply chain, and the competition.
With AI and ERP working together, companies should have no problem automating their monthly and quarterly processes. Also, AI systems can make sure that the issued reports are accurate by cross-checking the account balances with different systems.
One of the main benefits of ERP systems has been its ability to connect different functions within a business, desiloing the entire entity. With the power of AI, this ideal of centralization becomes even more possible.
After all, most businesses use different software solutions, such as CAD, CRM, and PLM, and there has been a configuration gap between these different technologies. But, AI and machine learning can prove integral to bridging that gap.
With the introduction of Industry 4.0, everything has been going digital and fast. Companies have been scrambling to harness the power of IoT, to maximize the efficiency of their robots, and to leverage the full capabilities of AI.
Nowhere is this digital transformation more apparent than on the factory floors of manufacturing companies, where the slightest advantage can make a huge difference later downstream.
Let’s take a look at the specific case of AI and see how its integration with ERP systems has affected manufacturers.
For starters, AI solutions can pore over the data stored in an ERP system and detect inefficient operations that take up too much time, energy, or resources. What’s more, artificial intelligence should be able to recommend fixes that can reduce costs, hence increasing profit margins.
Besides optimizing the processes, AI can optimize the equipment itself by maximizing Overall Equipment Effectiveness (OEE for short).
This is not to mention that AI can play a pivotal role in reducing breakdowns through predictive analytics, reducing downtimes, and increasing a factory’s utilization of its assets.
Regardless of how impressive AI solutions may seem today, their current capabilities will pale in comparison with those of the autonomous robots of 10 years from now, not to mention 50. And, the real power of AI can be seen in how technology can seamlessly integrate into every aspect of a business.
For instance, chatbots and virtual agents can play a titular role in almost every part of the manufacturing process. Technologies like Apple’s Siri or Amazon’s Alexa can guide employees and help them streamline their tasks.
Even at the sales stage, chatbots can help customers make excellent decisions based on the customers’ unique circumstances.
In short, we may not know what the future holds, but we can safely say that it will be built on AI.
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