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Enterprise Resource Planning

&
Supply Chain Management

Introduction
ERP is a cross-functional enterprise system driven by

an integrated suite of software modules that supports


the basic internal business processes of a company.
Integrated real-time view of its core business
processes tied together by ERP applications software
and a common database maintained by a database
management systems.
ERP systems track business resources and the status
of commitments made by the business. ERP facilitates
information flow.

ERP Definition
An ERP (Enterprise Resource Planning) system

integrates virtually all operational business


functions and processes and automates entries
to finance and reporting within the
enterprise (the legal entity or entities that make
up an entire company no matter where its
operations are). ERP systems focus almost
exclusively on operational excellence value
propositions of process efficiency and automation.

ERP integrates all departments and functions

throughout an organization into a single IT system so that


employees can make enterprise wide decisions by viewing
enterprise wide information on all business operations.
Core ERP components traditional components

included in most ERP systems and they primarily focus on


internal operations
Extended ERP components extra components that

meet the organizational needs not covered by the core


components and primarily focus on external operations

Accounting and Finance Components


6

Manage accounting data and financial processes

within the enterprise with functions such as general


ledger, accounts payable, accounts receivable,
budgeting, and asset management

Production and Materials


Management Components
Handle the various

aspects of
production
planning and
execution such as
demand
forecasting,
production
scheduling, job
cost accounting,
and quality control
7

Human Resource Components


8

Track employee information including payroll,

benefits, compensation, performance assessment,


and assumes compliance with the legal requirements
of multiple jurisdictions and tax authorities

Extended ERP Components


9

Business intelligence - information that people use to

support their decision-making efforts


CRM - involves managing all aspects of a customers
relationship with an organization to increase customer
loyalty and retention and an organizations profitability
SCM - involves the management of information flows
between and among stages in a supply chain to maximize
total supply chain effectiveness and profitability
E-business - means conducting business on the Internet,
not only buying and selling, but also serving customers
and collaborating with business partners

E-Business Components
10

E-logistics manages the transportation and

storage of goods
E-procurement the business-to-business (B2B)
purchase and sale of supplies and services over the
Internet

ERP Characteristics
An integrated system that operates in real time (or

next to real time), without relying on periodic


updates.
A common database, which supports all applications.
A consistent look and feel through out each module.
Installation of the system without elaborate
application/data integration by the Information
Technology (IT) department

ERP Advantages
The fundamental advantage of ERP is that
Integrating the myriad processes by which
businesses operate saves time and expense.
Decisions can be made more quickly and with fewer
errors.
Data becomes visible across the organization.

Tasks that benefit from this integration include

Sales forecasting, which allows inventory

optimization
Chronological history of every transaction through
relevant data compilation in every area of operation.
Order tracking, from acceptance through fulfillment
Revenue tracking, from invoice through cash receipt
Matching purchase orders (what was ordered),
inventory receipts (what arrived), and costing (what
the vendor invoiced)

ERP systems centralize business data, bringing the following


benefits
They eliminate the need to synchronize changes between

multiple systemsconsolidation of finance, marketing and


sales, human resource, and manufacturing applications
They bring legitimacy and transparency in each bit of
statistical data.
They enable standard product naming/coding.
They provide a comprehensive enterprise view (no "islands of
information"). They make realtime information available to
management anywhere, any time to make proper decisions.
They protect sensitive data by consolidating multiple security
systems into a single structure.

ERP Benefits

ERP Disadvantages
Customization is problematic.
Reengineering business processes to fit the ERP system

may damage competitiveness and/or divert focus from


other critical activities
ERP can cost more than less integrated and/or less
comprehensive solutions.
High switching costs associated with ERP can increase
the ERP vendor's negotiating power which can result in
higher support, maintenance, and upgrade expenses.
Overcoming resistance to sharing sensitive information
between departments can divert management attention.

Integration of truly independent businesses can create


unnecessary dependencies.
Extensive training requirements take resources from daily
operations.
Due to ERP's architecture (OLTP, On-Line Transaction
Processing) ERP systems are not well suited for production
planning and supply chain management (SCM).
Harmonization of ERP systems can be a mammoth task
(especially for big companies) and requires a lot of time,
planning and money.

ERP Risks

ERP & SCM


SUPPLY CHAIN MANAGEMENT
A supply chain is a dynamic process and involves the constant
flow of information, materials, and funds across multiple
functional areas both within and between chain members.
Supply chain management as the integration of key
business processes among a network of interdependent
suppliers, manufacturers, distribution centres, and retailers
in order to improve the flow of goods, services, and
information from original suppliers to final customers,
With the objectives of reducing system-wide costs while
maintaining required service levels. Such a holistic approach

ERP is the battering ram that integrates all that

information together in a single application, and


SCM applications benefit from having a single major
source to go to for up-to-date information.

Integrating corporate finance, human resources,

manufacturing and distribution, supply chain


management and logistics execution, enabling
organizations make more accurate management
decisions.
It helps to identify, quantify and assist in planning
an ERP and SCM implementation process and
scalable transformation

Provides strategies for implementing new

technologies in warehousing, transportation and


reverse logistics that can result in cost reduction and
improved customer service
Improve procurement operations to achieve better
prices, greater efficiency, tighter spend control and
improved service levels

Integrated solutions will help to

Improve business responsiveness and

communications
Lower costs (operational and IT infrastructure)
Employ state-of-the-art supply chain planning

methods
Improve logistics planning

Improve decision-making and strategy


Achieve strategic procurement solutions
Achieve transformation and operations expertise
Integrate all enterprise solutions

Conclusion
25

A global market requires manufacturers and distributors to


stay on top of the many demands throughout the entire supply
chain. High productivity, operational efficiency, and reduced
costs are all necessary components to stay competitive. This
can only be accomplished by connecting partners, suppliers
and customers into an integrated system providing control and
agility to continuously innovate and grow your organization.
ERP and SCM solutions help organizations track and analyze
key information, improve productivity, and drive accurate
decisions.
.

Growth of the organization


Connecting partners, suppliers and
customers into an integrated system

Stay competitive
High productivity, operational efficiency,
and reduced costs

Organizations are now changing the way they

conduct business by innovating new process and


customer service practices. BI,CRM, SCM and ERP
solutions are attaining a greater significance. It
provides solutions that help integrate corporate
finance, human resources, manufacturing and
distribution, supply chain management and logistics
execution, enabling organizations make more
accurate management decisions.

Reference
logisticsmanagementandsupplychainmanagement.w

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ng
en.wikipedia.org/wiki/Supply_Chain_management

en.wikipedia.org/wiki/Supply_Chain_management
supplychain.ittoolbox.com
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%20ERP%20and%20supply%20chain%20management
f
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.pdf

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and-scm-making-the-marriage-work/
John J. Coyle, Edward J. Bardi, C. John Langley Jr.,

Thank You