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SCM & ERP

Submitted by: Vandana.M S3 MBA TT Sms,cusat

ERP & SCM
• Many SCM applications are reliant upon the kind of information that is stored in the most quantity inside ERP software • ERP is the battering ram that integrates all information together in a single application, and SCM applications benefit from having a single major source to go to for up-to-date information • Applications that simply automate the logistics aspects of SCM are less dependent upon gathering information from around the company, so they tend to be independent of the ERP decision

PRIMARY USERS

PRIMARY BENEFITS

Enterprise Resource Planning (ERP)
• ERP is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. • Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

• ERP systems are often incorrectly called back office systems, indicating that customers and the general public are not directly involved. • This is contrasted with front office systems like customer relationship management (CRM) systems that deal directly with the customers, or the eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems

REASONS FOR THE GROWTH OF ERP
1. To enable improved business performance     Cycle time reduction Increased business agility Inventory reduction Order fulfillment improvement

2. To support business growth requirements  New products/product line, new customers  Global requirements including multiple languages and currencies 3. To provide flexible ,integrated, real time decision support  Improve responsiveness across the organisation 4.To eliminate the limitation in legacy systems  century dating issues  Fragmentation of data and processing  Inflexibility to change  Insupportable technologies

• 5. to take the advantages of untapped midmarket Increased functionalities at a reasonable cost Client server /open systems technologies Vertical market solutions

SCM
• Supply chain management is an integrated management of various functions in the areas of materials, operations, distributions, marketing, and services after sales with a customer focus in perspective so as to synergize various process in the organization with a view of optimizing the total cost. • Supply chain management’s performance is depend upon the inventory, warehouse, transportation, facilities and information. For a company to improve it’s supply chain performance in terms of responsiveness and efficiency, they must examine these factors and it’s functioning.

Key elements of scm
Supply Chain Planning: • The determination of a set of policies and procedures that govern the operation of supply chain. • Planning includes the determination of marketing channels, promotions, respective quantities and timing, stock and replenishment policies and production policies. • Planning establishes the parameters within which the supply chain will operate.

• Supply Chain Execution: • Execution-oriented software applications for effective procurement and supply of goods and services across a supply chain. • It includes manufacturing warehouse and transportation execution systems, and systems providing visibility across the supply chain.

• Supply Chain Monitoring: • The ability to review supply chain activities in realtime, whether to identify the current status of individual activities or review overall performance

• . Supply Chain Measurement: • Measurement is comparison of the actual activity against targets. • This is often used with scorecards of benchmarks so that unusual or undesirable variances can be identified and investigated.

Parameters for Successful SCM Implementations
• 1. A clearly defined process-flow chart of the organization specifying who the owners in each functional area. • 2. Commitment to the project from management to ensure the rest of the organization, and especially users, will make this happen. • 3. An understanding of the financial aspect and expected return on investment for the project. • 4. A good understanding of what resources are required, in terms of infrastructure, to see the project

SCM-ERP integration
• Total ERP and supply chain management (SCM) integration is a goal for most manufacturers, but companies take different paths to achieve that integration. • Some manufacturers buy a complete packaged ERP system that includes all the SCM tools they might need. Other companies choose a third-party SCM package with best-of-breed functionality to plug into their existing ERP system. • Still other businesses have performed some system integration, but are transferring data between ERP, SCM and other systems.

Methods of integration
1. Notion of conformity It requires all of the members of the supply chain to embrace the same system. In a large supply chain this form of integration should be viewed as impractical. Issues of trust and security further complicate any chance of success with this method

2. Middleware

This method, though very practical, is very expensive. Programmers are required to establish links between various systems. The benefits are strong, but the cost must be weighed

• 3.use specialized integration technologies or software (SIS) to extend ERP functionality • The mapping of different packages is already done in these technologies. The software is preprogrammed to integrate SCM software with ERP system packages. • By doing this, the ERP system will become a business-services framework, a central information repository, and a data-distribution facility.In other words, this integration solution depends upon how data are kept consistent between ERP and SCM systems

ERP IN SCM
ERP & Supply Chain Management extends beyond the four walls of the factory to include a company’s trading partners – suppliers and customers. • Develop better customer insight and interaction • Achieve global visibility in a demand-driven supply chain • Lean manufacturing, global sourcing, and supplier integration.

CONTD..
 Helps in coordinating the resources.  Managing for higher performance.  ERP facilitates coordination and connectivity  Identifies mistakes.  Manages change  Maximization of profits.

CONTD..
• Ensures that the errors are minimal. • ERP has also enabled companies to rectify the flaws. • The various tools and techniques help ERP to forecast the positives and negatives and thereby make the concerned alterations in the supply chain process. • ERP has helped in adding value to the whole process of SCM.

ERP vs. SCM
Point of comparison Comprehensive Complexity Handling of constraints ERP Yes, covers many more areas than SCM Highly complex In a ERP system, all the demand, capacity and material constrains are considered in isolation of each other Relatively less dynamic as they are mainly concerned with transaction processing and have more number of jobs to do SCM Relatively less Relatively less complex Simultaneous handling of the constraints Can perform simulations of adjustments with regard to the constraints dynamically in real-time

Functionality

Speed of processing requests

Relatively slower

Faster

Issues concerning ERP for supply chain management
• Identify mistakes Errors are a part of human life. Organizations which don't identify them will find that they will never fulfill their objectives even if means managing their supply chain flawlessly. The simple reason is that their supply chain is itself not devoid of any errors and hence the results will only be negative even because it is nothing better than rightly managing a wrong process. There was no solution to this till ERP and supply chain management came together.

• Set metrics The organizations will be able to visualize and introduce some parameters. These parameters will become effective means for measuring ERP, its impact and the level of change, if it is compatible or in tune with the quantity desired and so on.

Issues concerning ERP for supply chain management • Assistance and results ERP helps these organizations to deliver the necessary results. It also helps in the functioning of the supply chain process. The supply chain process will continue uninterrupted whether or not ERP exists in the organization. ERP helps to increase the results, productivity and helps to ease the supply chain process.

SCM solutions
• Providing proactive solutions Perhaps the principal problem ERP system solutions face is their inability to process data real time .The packages are often overburdened with information and are forced to process information in cycles, rather than in real time. This forces ERP systems to be reactive instead of proactive. It is this reactive processing that makes it difficult for demand and factory planning.

• These functions rely heavily on the constant evaluation of information regarding processing, materials, and constraints within the process. Without real-time processing, the data for these functions become obsolete and relatively useless for planning. • SCM offers a more proactive solution to the ERP system These software packages do not conduct nearly the number of transactions at one time as ERP systems do, thus giving them the ability to process in real time. • SCM systems can consider all evaluation of information regarding processing, materials, and constraints within the process. Without real-time processing, the data for these functions become obsolete and relatively useless for planning.

• SCM offers a more proactive solution to the ERP system . These software packages do not conduct nearly the number of transactions at one time as ERP systems do, thus giving them the ability to process in real time. SCM systems can consider all relevant constraints in the process simultaneously and order the necessary raw materials at the same time. This is an essential function for the supply chain of any large corporation.

CONCLUSION
• ERP and SCM together form a great role in the success
of any firm. • ERP supply chain software market is encouraging • Many SCM applications are reliant upon the kind of information that is stored inside enterprise resource planning (ERP) software. It provides up-to-date information. • ERP has helped to reduce their inaccuracies and increased the performance of "the chain /plan of action".

REFERENCE
• Anonymous, 2009 features of ERP http://www.erppandit.com/erpfeatures.html downloaded on, August 24 2012 • ,Shery George & Vijay Kumar, Inatech Solutions Limited Oracle Customer Relationship Management for Tourism Industry downloaded on August 24, 2012 • , Abdullah S. Al-Mudimigh, B. Farrukh Saleem, C. Zahid Ullah International journalof Education and information technology Issue 2, Volume 3, 2009 • ,Dimitris N. Chorafas www.auerbach-publications.com CRM downloaded on August 24, 2012 • Anonymous, 2009 www.hills.com ERP downloaded on August 24, 2012 • Anonymous 2009 www..wikipedia.org/wiki/Enterprise_resource_planning ERP introduction downloaded on August 25 2012 • Anonymous, 2006 www.erp.comERP advantages downloaded on August 25 2012\ • Anonymous, 2006 www.wikipedia.org/wiki/Customer_relationship_management CRM introduction downloaded on August 25 2012 • Anonymous,Casey Gollan http://www.evancarmichael.com/BusinessCoach/163/Advantages-Of-CRM.html advantages downloaded on August 26 2012 • Anonymus 2007 www.customerservicepoint.com/crm-system.html benefits of CRM downloaded on August 26 2012

• anonymous logisticsmanagementandsupplychainmanagement.w ordpress.com, downloaded on 26 august 2012 • Anonymous ,www.epicor.com/.../Epicor-ERPConnecting-the-dots-A... - United States, downloaded on 27 august 2012 • Anonymous,www.esallen.com/professional/papers.../bu siness.../ERP_vs_SCM.pdf, downloaded on 27 august 2012 • anonymous dl.acm.org/citation.cfm?id, downloaded on 27 august 2012 • Anonymous bridgefieldgroup.com/bridgefieldgroup/glos1.htm, downloaded on 28 august 2012 • anonymous, contaduria.itam.mx/htm/alumnos/sicaof_prim03/ERP -SCM.pdf, downloaded on 28 august 2012 • Anonymous,www.insead.edu/facultyresearch/research/ doc.cfm?did=464020p downloaded on 28 august 2012