Logistics has long gone away from being a paper business. Logistics companies have fully embraced IT solutions for creating smooth supply chains and getting everything from production to delivery on a nice hum. Let’s talk about three acronyms you and your logistics provider should know and use. Having these solid IT solutions—MRP, ERP, and EDI—logistics and supply chain providers can ensure high efficiency, reduced costs, and lots of happy customers.
MRP: Definition and Benefits
MRP stands for “material requirements planning.” As you can infer from the name, this system helps logistics companies plan for which materials they’ll need and how much of them they will require. These systems are predominately used to manage manufacturing processes and are used to forecast and order materials at the right time, so production is never slowed as a result of material availability. MRPs include inventory management capabilities and production scheduling software. When using an MRP, as with any system, data integrity must be a paramount concern because if it’s not, it will result in skewed forecasting and too much or too little of the required materials. This can cause slowed production and flawed inventory control.
MRPs have many benefits. Among them are ensuring material availability, keeping inventory tight which keeps costs down, reduces waste, and it automates all the planning and scheduling processes. Combined, the benefits mean that production is always moving, and products are always there when the customer wants them.
ERP: Definition and Benefits
ERP stands for Enterprise Resource Planning, which is one of the most common types of business software. Just like MRP software, it helps companies manage production, scheduling, and inventory. However, it can do much more. ERP systems are primarily used for data management, and they centralize the data into one place. This helps all processes draw from the same data, so nothing gets missed or duplicated.
ERPs can also go far beyond just managing production. For example, some ERP modules include human resources, customer relationship management, supply chain management, financial management, inventory management, warehouse management, and manufacturing management. Basically, it can handle nearly every kind of managing your business needs.
ERPs often include an MRP module, though it may not be as robust as a stand-alone. ERPs benefit businesses by giving a centralized location for all data, making it completely accessible and giving an ideal level of transparency to all task owners. It has all the benefits of an MRP as listed above, but is also able to analyze the profitability, performance, and liquidity of the business at any point in time. While an MRP can completely improve scheduling and planning on the manufacturing side, an ERP can do that for the entire business.
EDI: Definition and Benefits
EDI stands for Electric Data Interchange and is the “computer-to-computer exchange of business documents in a standard electronic form between business partners.” The system is paper and people-free. For logistics providers and the companies they partner with, this is ideal to ensure all stakeholders have all documentation to make decisions, plan, and monitor the business.
Why use EDI? First of all, it takes the personal element out of the equation. Automating paper-based documents, like say purchase orders, for example, can result in a higher level of accuracy and a reduction in the time it takes to do all the necessary tasks to process it. It’s also been shown to improve the business cycle by 61% and lower transaction costs by 35%.
Used separately or together, these IT solutions for logistics should always be a part of the conversation when you are shopping for a logistics partner. Third-party logistics providers, like JIT Services, harness this data to ensure high levels of accuracy and efficiency while cutting out unnecessary steps and human error. Contact us today for more information.