Enterprise resource planning (ERP) is morphing into environmental resource planning, according to Stephen Stokes, vice president of sustainability and green technologies for AMR Research.
As organizations look for ways to make environmental manufacturing sustainability strategies work, it's increasingly evident that one answer is to turn to the supply chain operation to manage the costs of energy, emissions and waste in sourcing, manufacturing and logistics.
Although software tools for measuring reductions in carbon emissions or greatly reduced power costs against existing regulations are just now becoming available, "ERP is well positioned for integrating data coming from manufacturing systems, human resources systems and supply chain systems," Stokes said.
In today's sustainability-minded manufacturer, the classic ERP model of integrating all facets of the enterprise becomes the core of its sustainability strategy. This manufacturing sustainability strategy might result in a project that lowers risks and costs by reducing water usage in production and slashing carbon emissions.
To attain sustainable development in manufacturing requires a broad spectrum of functionality from ERP applications.
ERP module integration central to manufacturing sustainability
Standard ERP business modules such as SCM, MRP (manufacturing resource planning), FRM (finance resource management), HRM (human resource management) and CRM (customer relationship management) must be integrated to support real-time representations of data from the many environmental sources that are affected by manufacturer activity.
For ERP to become environment resource planning and perform as a unified center of corporate green information, it must also be integrated with scientific applications that may include emissions databases, data management for inputs from external meteorological and air quality monitors, and geographical information system (GIS) modeling, mapping, assessment and reporting technology.
Business booms for green ERP
BioDynamicz LLC, a Cuyahoga Falls, Ohio, manufacturer of energy-efficient hydroponic (soilless) greenhouses for commercial growers, universities and farms, uses the Microsoft Dynamics AX ERP application to gather and track environmental data using the AX environmental sustainability dashboard toolset.
BioDynamicz originally purchased Microsoft Dynamics POS 2009 retail store management software in June 2009 and ran the package as standalone. In September, the company followed the suggestion of its IT consultant and began upgrading to Microsoft Dynamics AX for the product's Environmental Sustainability Dashboard.
The Retail Chain Manager (RCM) solution for Microsoft Dynamics AX uses Microsoft Dynamics AX as the main ERP system and still allows BioDynamicz to use its earlier POS software. BioDynamicz wanted to maintain its POS function and be able to track its energy consumption and greenhouse gas emissions (carbon footprint). In addition, it wanted to use AX to gain better control of its supply chain to improve planning, optimize inventory levels, reduce costs and respond more quickly to its suppliers.
Manufacturer uses ERP to track environmental compliance metrics
Tim Madden, CEO for BioDynamicz, said he wanted a green ERP solution to help monitor and track the company's carbon footprints and other environmental compliance metrics. "It's an easy transition to leverage Microsoft Dynamics AX ERP software," he said. "AX supports green supply chain strategies, and its environmental sustainability dashboard and environmental management accounting template can help us gain visibility into our energy consumption."
The combination of POS and AX for tracking environmental data and supply chain management in one package allows BioDynamicz to "streamline inventory management and reporting, maximize our environmental sustainability, and monitor the actual productivity and business value of our supplier relationships, and make changes when necessary," Madden said.
In the end, the challenge for vendors like Microsoft and SAP and for their customers in using ERP systems to facilitate corporate sustainability initiatives will come down to compliance. And once they've somehow integrated the ability to handle compliance issues with ERP, the next step with compliance will be across the supply chain.
About the author: Ned Madden is a freelance business writer, editor and journalist who specializes in technology issues. He can be reached at firstname.lastname@example.org.