By Doug Hunter, Manager: Customer and Ecosystem Enablement, SYSPRO Africa
Manufacturers have to quickly realise that to overcome supply chain disruptions, their business operations need to consider a different approach to ensure supply-chain resiliency. Just recently, South African manufacturers and distributors have been tested once again, with some of the worst loadshedding since 2019.
Recently, the seasonally adjusted Absa Purchasing Managers’ Index (PMI), which is a key indicator of the confidence among manufacturers and industry health, declined to 52.2 index points in June from 54.8 in May. While this may seem like a small decrease, what is more concerning is the contraction in output for a third consecutive month in demand and that June’s survey was taken before some of the worst loadshedding since 2019 kicked in.
The survey requires respondents within the manufacturing sector to indicate each month, whether a particular activity (e.g. production) for their company has increased, decreased, or remained unchanged.
Notably, the business activity index also plunged to 39.6 index points in April, which suggests a sharp monthly contraction in manufacturing output at the start of the second quarter. Further, even businesses not affected by the flooding, either directly or indirectly, had to grapple with Stage 4 load-shedding during the month.
The decline in April’s headline PMI was due to a drop in the business activity and new sales orders indices, this time amid devastating flooding in parts of KwaZulu-Natal. This led to facilities in several manufacturing sub-sectors being forced to temporarily halt production to assess damage and address transport issues of staff. Even factories not directly affected by the flooding may have seen a drop in demand.
These disruptions will be felt by many businesses in direct and indirect ways, and when this happens, all the planning, forecasting, financing and work you did to get your product through the door instead goes out the window.
How ERP can assist businesses minimise disruption
An enterprise resource planning (ERP) solution with robust demand planning integrates from finished goods, through manufacture to raw and component materials procurement can help. As soon as something like a natural disaster halts production, an ERP system can notify you specifically where you’re going to have problems. It can tell you what the ripple effects of that disruption will look like, which customer orders you won’t be able to fill, which customer orders may be delayed, and even which distribution centres will be short on inventory.
In the case of ruined products that were lost in storage facilities during floods, when calculating losses, contacting vendors and partners, and restarting production, you need a solution to help you streamline, replan, and optimise your operations. It’s too much to manage manually—too much time, too much energy, too much stress.
ERP distribution functionality incorporates robust demand planning tools to integrate historical sales data, trends, customer forecasts, seasonality, and planned regional events (like sports) to form a clear finished goods/delivery schedule. Then Material Requirements Planning (MRP) uses this plan with supplier lead times, bills of material and stock information to form the manufacturing build and raw material procurement plans to help optimise your part of the supply chain. And because you often deal with long import lead times, ERP includes time-phasing to help further ensure customer service.
Real-time data analysis and connectedness are vital for greater visibility across the supply chain to ensure that the right levels of inventory and raw materials are ordered and delivered, in the right quantities, and at the right price. Accurate data has therefore become a deal-breaker in ensuring customer and supplier success.
For manufacturers and distributors to minimise future disruptions, an ERP system is essential technology to have within any organisation. The key to success is selecting an ERP platform that is built from experience and designed with the needs of your business in mind. By integrating that ERP platform to enable your operations, you can ensure agility, connectedness, and future-proof your business for enhanced growth and long-term sustainability.
