ERP and AI: A Deep Dive
By
Erin Koss
, CPA is an Andersen
Business Consulting Alumni (1993-1999), and CEO of Syte Consulting Group, Inc.
With advanced technologies like ChatGPT and GPT-4 exploding onto the tech
scene, artificial intelligence (AI) has really taken off worldwide over the
past few months.
Now AI is the talk of the ERP market, too — and it's shaping the latest
features of the big vendors.
The bottom line: AI is revolutionizing ERP, making it more intelligent,
more efficient and simpler to use.
In this report, we’re taking a closer look at the current state of AI in
ERP. We’ll also make some predictions about what the future of AI could hold
for family-owned manufacturing and distribution companies, and talk about the
challenges of AI-enabled ERP systems.
When we pair ERP with AI, we get systems that can use and learn from
information to make decisions, predictions and recommendations. For example, an
AI-powered ERP system could predict when a piece of machinery is likely to
fail, and could even schedule maintenance in advance.
In the past, many data-related tasks in ERP required human intelligence —
but now manufacturing companies can use AI-enabled ERP systems to manage and
report on business data without needing to perform repetitive manual analysis.
With the help of AI, it’s getting easier for family-owned manufacturing and
distribution companies to perform many ERP tasks.
Adding AI to ERP can expand human capabilities and increase productivity.
By automating routine tasks, AI can reduce the possibility of human error and
cut operational costs — and we can already see AI’s impact on ERP systems
across a wide array of business functions.
The Current State of AI in ERP
AI and ERP: A powerful pairing for
efficient, data-driven manufacturing
Manufacturing is a highly data-intensive industry, and because ERP is
deeply entwined with all aspects of your operation, it generates a sea of data
about every element of your business.
AI can scrutinize larger datasets than ever before, giving you access to
real-time, accurate insights. This abundant information — often referred to as
“big data” — is a powerful tool for addressing common manufacturing problems.
And having access to real-time data and customizable reports from AI
doesn’t just benefit top management. It can help decision-makers at all levels
of your organization make quicker, smarter decisions.
Picture this: AI can analyze the purchasing patterns of your buyers, so you
can adjust your inventory to meet your customers' needs. AI-enabled ERP systems
can also explore historical data and extract lessons from past behavior
patterns to help you generate faster, more accurate quotes and estimates.
AI also revolutionizes process automation within your ERP system. In areas
like accounting and payroll, your team members will be able to automate many
tasks so they only require a few clicks. Integrating AI into your ERP can also
help you identify inefficiencies and find solutions to save money and make your
organization run more smoothly.
Predictive diagnostics, another AI perk, can help minimize waste on the
manufacturing floor and in warehouses.
AI is not just fitting into the manufacturing ERP equation — it's fundamentally
reshaping it. Family-owned manufacturing businesses that embrace this
transformation can expect increased efficiency and better decision-making,
which can give them a competitive edge in the marketplace.
The evolving integration of AI in ERP
The biggest ERP vendors are moving fast to integrate AI into their
functionality. Here's a rundown of where it’s currently adding value in ERP:
●
Intelligent data processing: With AI integration, ERP systems can now process
data and generate detailed reports at unprecedented speeds, without the need
for human intervention. With this help, companies can access real-time information
from departments and make data-driven decisions.
●
Predictive analytics: Companies that leverage predictive analytics in
AI-enabled ERP systems can use data to forecast future events, trends and
behaviors. This can help you predict production demand, manage inventory and
recognize upcoming equipment failures before they happen.
●
Increased automation: By merging AI with ERP, you can automate tedious
tasks like manual data entry. This can save time and reduce the risk of human
error.
●
Improved efficiency: AI integration with ERP systems helps you optimize
business operations. AI uses past data to suggest the most productive processes
or workflows, resulting in time savings and enhanced efficiency.
How the top ERP vendors are incorporating AI
Epicor released their Epicor Virtual Agent (EVA), an AI-based voice
command interface, in 2019. This digital assistant has been designed to
expedite business operations to help users work more efficiently.
EVA is accessible via text or voice, and can execute tasks, provide
recommendations and make adjustments within set guidelines. EVA delivers
relevant information to mobile users using natural language processing (NLP),
so they can make fast, informed decisions. EVA can even proactively send alerts
and perform tasks automatically by tapping into historical data and market
trends.
Epicor’s FP&A tool also harnesses AI and machine
learning to transform financial and operational data by automating complex tasks
and reducing errors.
Microsoft, a key investor in OpenAI, is integrating AI into its suite of
products, including ERP systems.
With the introduction of Microsoft Dynamics 365 Copilot, the company
offers the first AI assistant for CRM and ERP. This sophisticated AI tool
minimizes repetitive tasks, so you can increase the efficiency of your
workforce across sales, service, marketing, operations and supply chain roles.
Copilot in Microsoft Supply Chain Center also anticipates external factors
that might affect key supply chain processes — which helps you detect and
mitigate problems early.
In many ways, NetSuite was ahead of the AI/ERP curve. The company launched
its
Intelligent Cloud Suite in 2018, which helps
manufacturing businesses:
●
Generate real-time, role
and industry-specific insights
●
Get alerts and recommendations
about potential supply issues
●
Design and automate
workflows based on previous decisions and situations
●
Automatically execute tasks
or processes once workflows and insights are confirmed
NetSuite also recently released accounts payable automation (AP automation) technology
that gives manufacturing companies a more efficient and accurate way to handle
financial processes. AP departments can digitize incoming invoices using
Optical Character Recognition (OCR) technology, which scans and converts
paper-based invoices into digital data.
SAP has enriched its S/4HANA cloud with AI capabilities that improve processes across
a number of operational areas. SAP AI Business Services helps finance and sales
teams control costs and streamline order processing.
For procurement professionals, SAP uses AI in its spend management software
and Business Network to simplify processes and improve supplier engagement. Its
Customer Experience software portfolio now features an AI application that
elevates operational efficiency and conversion rates.
SAP SuccessFactors (under the company’s Human Experience Management
software portfolio) leverages AI to analyze employee skills and implement
continuous training and development programs.
Predictions for the Future of ERP and AI
Smarter ERP: Even more AI-driven
features coming for family-owned manufacturing companies
In the future, AI-enabled features will become more common in the back office,
on the floor and in the field for family-owned manufacturing and distribution
companies.
Conversational AI bots — similar to consumer digital assistants like Siri
or Alexa — will facilitate hands-free ERP operations. Sales reps will be able
to use these bots to place orders while they’re in the field, and warehouse
workers could use them to seamlessly reorder parts.
Autonomous mobile robots (AMRs), equipped with technologies used in
driverless vehicles, can move around and perform automated tasks. These robots
are becoming commonplace in manufacturing businesses of all sizes — not just in
the automotive sector.
AI, coupled with IoT devices, will continue to enhance Overall Equipment
Effectiveness (OEE) by monitoring and modeling equipment behavior.
Manufacturing companies will be able to get real-time insights into uptime,
performance and product quality.
Marketing and sales departments are already using AI to optimize their
processes. AI tools leverage historical data to set optimal product pricing,
automate upselling and cross-selling, and craft personalized, data-driven
messages — and these trends will continue in the future.
AI is already proving invaluable in warehouse planning too. AI-enabled ERP
systems can analyze data from ordering, manufacturing and warehouse systems,
then suggest optimal warehouse configurations to improve efficiency.
In production planning, AI helps companies predict how much product needs
to be produced over a specific period of time, given all the factors that could
influence purchasing behavior. Manufacturing companies can use predictive
analytics to dynamically adjust ordering changes.
The AI, DOP and 5G ecosystem for ERP
Keep in mind that the future of ERP is intertwined with AI advancement —
and it’s also connected with the rise of
5G and the advent of the Digital Operations Platform (DOP).
DOPs blend AI and machine learning with other digital tools to create
flexible, interactive systems. AI not only integrates seamlessly into DOPs but
expands their capabilities so companies can anticipate business needs, automate
workflows and leverage operational analytics.
5G, with its fast data transfer and extensive device support, plays a
crucial role in moving all kinds of tech advancements forward. In
manufacturing, 5G equips IoT sensors and AI-driven processes to collect rich,
real-time data from operations. This information integration leads to more
precise inventory monitoring, predictive maintenance cycles and adaptable
production lines.
However, even if a family-owned manufacturing company is not ready for a
full-fledged DOP, they can use AI to optimize network management, improve
security and personalize services. This, in turn, prepares the path for future
DOP and 5G integration.
While 5G and DOPs will continue to have relevance, their capacity to
leverage
and be leveraged by AI is
the key to realizing the full potential of ERP systems.
The Potential Pitfalls of AI-Enabled ERP
Incorporating AI into ERP systems is not without its challenges.
Even with AI's novelty and appeal, implementing it within ERP systems
requires strict adherence to fundamental project management principles.
Integration projects will need secure backing from sponsors, as well as
adequate staffing and funding.
AI systems require monitoring, maintenance and ongoing adjustments — you
can’t just “set it and forget it.” A dedicated, cross-functional team of
experts is essential to oversee the consistent and efficient use of AI tools
within your organization.
Using AI in ERP systems requires processing large volumes of data, so
addressing data privacy and security is also a concern. Implementing and
managing AI-enabled ERP systems require specific skills and resources, so companies
will need to invest in training or hiring.
As AI continues to disrupt the ERP landscape at an unprecedented pace, now
is the time for family-owned manufacturing and distribution companies to adapt.
Expert guidance can help you
make the most of these advancements, and having an advisor who knows the ropes
can make all the difference for the successful implementation of your upgraded
or new ERP solution.
The future is here, and the Syte team is ready to help you move forward with confidence. Schedule a conversation with us about what’s happening at the intersection of AI and ERP.