Both the Enterprise Resource Planning and the Supply Chain Management are critical systems used by organizations while planning and scheduling intensive activities. The Enterprise Resource Planning is a system software that integrates various facets of operation by using a shared database that supports various functions from different business units ("5. ERP - Enterprise Resource Planning," n.d.,). For example, the ERP integrates the human resource, development planning, marketing, manufacturing, and sales thus operating as a single system. On the other hand, the supply chain management boosts the visibility of end-end processes of the supply chain network ("Strategien des Supply Chain Management," n.d.,). The system handles all the processes of the supply chain from the planning stage to the point of delivery. Even though the ERP and the SCM are both useful in the business process, the systems have distinctive characteristics. The distinctions are discussed below:
The most basic difference between the ERP and SCM manifests in data handling process of the two systems. The Supply Chain Management System deals with data concerning the ram materials from the vendors while the ERP focuses on integrating the internal processes of the business. The ERP handles business processes that deal with the administrative perspective of the business by controlling the front and back office of business operations (Sumner, 2007). On the other hand, the SCM may incorporate the handling of internal inventory that is an in-house process but much of its functions focus on external parties. Therefore, the ERP focuses on in-house internal processes whereas the SCM focus on external entities.
Notably, the ERP and SCM handle different processes and transactions. The Supply Chain Management Toolkit not only deals with delivering the products to the destination but also monitor the relationship between the company and other entities. On the other hand, the ERP focuses on specific functions within the business process chain. Therefore, the ERP manages the various business processes in a procedural manner.
The ERP is a complement of the SCM in many ways. A business entity that focuses on achieving efficiency and leverage their competitors must incorporate the two systems in the business process. The success factor of integrating the ERP and the Supply Chain System supersedes the failures of both systems working in tandem (Arik Ragowsky, 2002). In the case where the companies oblige to basic rules like using experts to operate, the systems and delivering on time many benefits arise.
First, when using the ERP and SCM simultaneously, the company will improve efficiency, decrease the operation cost, and improve productivity. This is because of streamlining the commands within the business process using the ERP to organize internal controls while SCM will create favorable conditions with the external entities and supply chain will lead to increase the company`s general output ("Strategien des Supply Chain Management." n.d.,).
Integrating the ERP and SCM achieves the best result in terms of coordinating the internal processes with the external processes. The ERP will focus of converging the various units of the business while the SCM will check on the process from the auditing of the incoming raw materials to the point the final products are released to the market. As the ERP will be maintaining internal workflow, the SCM will engage and optimize the relationship between the vendors and the company. Therefore, the company will not only improve its productivity but also it will improve the quality of output.
Besides, the systems interlink because of their ability to optimize the management of the business resources. Both the ERP and SCM are automated processes that rely on modern technology. As such, the two systems helps the organization to work on maritime information. The information flow within the company is fast and tracking of records is easy because the system experts control the front and back end of the system window. Since the systems leverage information technology, the execution of tasks becomes fast, thus, the quantity of production is likely to increase.
Besides, the availability of this system puts the business in a position to adjust and cope with day-to-day business dynamics. When a business uses the various support systems, it becomes easy to adapt to the changes and regulations, hence the business maintains its competitive edge.
The enterprise resource planning and the SCM offer intra-organizational and inter-organizational functionalities and capabilities (Cruz-Cunha, 2010). However, the company must consider the pertinent process of eliminating processes and activities that do not add value to the business. When the business starts embracing holistic view, the business is able to address enterprise challenges that will gear the business to deliver quality products with ease and speed.
There is a cogent relationship between the ERP and SCM. Many Supply Chain Management applications retrieve most of the information from the ERP software. Theoretically, the SCM can obtain information from the legacy systems like the excel spreadsheet but the process is time-consuming and prone to high risks of error. However, when SCM retrieves information from a centralized database like ERP, the process is fast, convenient, and reliable. Therefore, ERP is a conglomerate that integrates information from the various business unit and SCM depends on the ERP as the primary source of real-time information about the company.
ERP - Enterprise Resource Planning. (n.d.). Enterprise Resource Planning und Supply Chain Management in der Industrie. doi:10.1515/9783110441697-006
Arik Ragowsky, T. M. S. (2002). Enterprise resource planning. Journal of Management Information Systems, 19(1), 11-15.
Cruz-Cunha, M. M. (2010). Enterprise information systems for business integration in SMEs: Technological, organizational, and social dimensions. Hershey, PA: IGI Global.
Strategien des Supply Chain Management. (n.d.). Supply Chain Management, 96-183. doi:10.1007/978-3-8349-9549-0_3
Sumner, M. (2007). Enterprise resource planning. Pearson Education.
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