The Role Of ERP In Green Business Practices

Kevin Beasley is the CIO at VAI.

Enterprise resource planning (ERP) systems have expanded greatly over the years, adding diverse layers of functionality from front to backend, from the warehouse to accounting, and from the field with mobile computing to the cloud with data centers. An automated ERP solution is designed to cut waste and improve operational efficiency, which contributes to substantially increasing eco-friendly operations. Based on my industry experience, here are some examples of green sustainability being achieved through ERP systems.

Manufacturing

Manufacturing applications integrated with smart business analytics are a key feature of material requirements planning (MRP) coupled with automation for day-to-day activities, reducing manual labor and improving safety. MRP optimizes ordering raw materials and components from suppliers that follow good sustainability practices. This enables sustainable transportation that reduces the consumption of fuel.

Automated manufacturing tools like MRP and capacity requirements planning (CRP) systems can lead to environmentally friendly, efficient and profitable best practices because these tools bring all the components of inventory management together into a concise ordering and receiving system. These types of tools can quickly determine what components must be purchased based on sales forecasts, purchasing orders, current inventory and production, and geographic availability.

Supply And Demand Planning

Supply and demand planning includes suggested purchases, sales forecasting and targeted buying, which helps maximize inventory and customer service levels. Users, for example, can view and analyze real-time usage and purchasing trends on one dashboard, rather than printing out reports or analyzing spreadsheets. Businesses can better plan production, warehousing and shipping schedules and enable efficient cash flow management.

Logistics

Implementing green logistics is one of the most sustainable best practices that a company can deploy and often is the easiest to measure. Supply chain sustainability encompasses technology such as route optimization and truck routing capabilities, which feed into transportation management software (TMS) and ERP systems to store the information. Businesses involved in the supply chain analyze methods of transportation based on what is the most efficient, which minimizes fuel consumption and emissions.

The Cloud

Running ERP applications in the cloud enhances sustainability, as data center requirements are shared across many different “tenants” in the cloud, reducing their carbon footprint through using a common infrastructure network and security operations personnel. Cloud providers can now select locations where the most sustainable methods of power consumption and cooling can be utilized to run these large data centers. This reduces the use of traditional methods of power and cooling previously required at customer locations.

AI With Embedded Analytics

Artificial intelligence (AI) can combine a business’ historical data with targeted large language models for a specific industry to enable capabilities such as advanced forecasting based upon seasonal fluctuations in temperature, weather patterns and holidays, along with predicted short, medium and long-term supply and demand fluctuations across geographical locations. AI technology can allow executive management to track sustainability objectives across all areas of an organization, paving the way toward greater efficiency and cost savings.

Warehouse Management

Businesses can use the latest warehouse technology to help them be more energy-efficient and reduce their carbon footprints. For example, environmental detection systems such as proximity sensors can control LED lighting and HVAC systems to enhance green initiatives. A modern warehouse management system (WMS) can produce sustainability efficiencies through automating scanning, picking, receiving, palletization and truck loading processes. A WMS helps optimize operations, moving the flow of inventory more efficiently and accurately while reducing waste generation. A WMS can enable 99.9% on-time shipments, 99.9% inventory accuracy, and a less than .02% error rate in some instances, which can lead to substantial savings and greener operations across the board.

Conclusion

ERP software can improve corporate sustainability by incorporating measurable green capabilities into company operations. Some of these capabilities include enabling energy-efficient production, improving logistics and inventory control, lowering hardware requirements through cloud computing and improving forecasting through AI-driven analytics. With ERP systems, you can achieve environmental goals by streamlining procedures, cutting waste and optimizing resources.

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