Forward-thinking manufacturers are integrating geographic information systems (GIS) into their ERP systems as a means of bringing a geographic and spatial dimension to key business applications.
Analyzing data from a geo-demographic perspective can enhance the effectiveness of decisions in several key areas, said James Pick, a professor of business at University of Redlands in Redlands, Calif. and the author of a book on the subject.
GIS and ERP make complementary partners with ERP "enriched by map displays and spatial analysis while GIS gains access to deeper and broader attribute data," Pick said. Used in tandem, GIS and ERP can help manufacturing firms boost supply chain efficiency.
According to Pick, GIS can map plant locations and overlay ERP data to "geographically show flows of components and raw materials into a plant, and finished products out of the plant."
Specific ERP and GIS capabilities include functions that:
- Map relationships between customers and markets, and plant and warehouse locations. This enables companies to better manage transport costs and product distribution, as well as optimize the location of new manufacturing facilities (for example, putting a site in a low-rent district near a highly populated area).
- Analyze supply chain, distribution and service vulnerabilities from a geographic perspective. General Motors and other automakers have been using GIS demographic data to help figure out which dealerships to close. Companies can also analyze service response time by region, identifying areas where it tends to be slow. They can then institute training programs or hire more people in those regions, as Pick noted, "to beef things up."
- Sort customers by attributes such as preference for a particular product or attribute (low cost, low calorie, luxury), then map those preferences by region, state or neighborhood and use the data, in combination with demographic data, to focus marketing, sales or distribution.
Companies have several options for integrating GIS and ERP. They can build or purchase software connectors that directly connect a given ERP and GIS package. They can use passive middleware, which is fine as long as they can stick with generic ERP and GIS and don't need to customize their processes. Or they can deploy frameworks for comprehensive integration with a given GIS package from an ERP vendor.
"You can do without GIS, but GIS provides a more precise focus and greater efficiency," in terms of getting accurate results and making better decisions, said Pick. "If you can get 15% to 20% more accurate results in terms of shipping costs, or targeting a product to a region, or a more efficient way to build and configure a plant, it's worth it."
About the author: Elisabeth Horwitt is a freelance journalist who has covered business IT trends, issues and technologies for over twenty-five years. She is based in Waban, MA.