The Supply Network and its relationship with the ERP

I would like to write in this post about the Supply Chain Management Network (SCM) and its deep relationship with the Enterprise Resource Planning Systems (ERP) used in the enterprises nowadays.

As all know, the supply chain network management has recently become an area of great interest among academics, practitioners and the big enterprises and in the Management Science community in general. Today´s market place is competitive an dynamic. Rapid technology development, globalization and customers´ varied expectations are changing the type of markets´ competition from competitive independent firms to to Competitive Supply Chains (CSCs). Today´s e-business circumstance is another key factor that makes it possible for different firms to be able to compete as integral part of SCs. Naturally, efficient coordination of individual firms in the form of SCs requires better management of material flow throughout their network structure as well as a good integration between the company´s integrated systems . Here appears the importance of the Enterprise Resource Planning (ERP) software systems in any company today.

ERP have focused on internal process integration of traditional functions, such as sales, production, and inventory management. In essence, ERP systems are configurable information systems packages that integrate information and information-based processes within and across functional areas in the organization. Integration has been the holy grail of Management Information Systems (MIS) since the early days of computing in organizations (around the 70s). The current generation of ERP systems provides reference models of process templates that claim to embody the current best practices within an organization (see the figure below,  a sample of ERP Software System)

ERP software system

ERP is now consider to be the price of entry for running a business, and at least at present, for being connected to other enterprises in the network economy where we live. Furthermore, ERP is becoming a platform for applications such as executive information systems, data mining and, of curse, supply chain management.

This transaction based integrated processing provides different tools that can support supply chain integration. By gaining access to the suppliers´ production and delivery schedules, buyers can improve their own production plans and delivery schedules. Correspondingly, suppliers can use the buyer´s real time store level data to plan their inventory levels, and production schedules. Sharing order status information among the supply chain partners improves customer service  quality, speeds up the payment cycle and provides cost saving.

s. ERP

Definitely, sharing data regarding to performance metrics such as leads times, quality specifications, return status, etc., helps supply chain partners to identify and overcome the bottlenecks in the supply chain.

Hope you would find this information interesting, I will carry on sharing some more in the next weeks!

Henar Cervera

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