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ERP advantages
• Reducing organization’s operating costs
• Integrates all parts of the organization
SCM; Manufacturing • Increases the efficiency of the operations
• Integration of information systems
• Seamless flow of information across the organization
• Consolidation of softwares in an organizations
• Better customer service

ERP and SCM SCM Features

ERP ERP ERP ERP ERP • Process platform - Standardized components for data models, business rules, user interfaces and also
data messaging and web services
• Sales and Operation Planning – Process setup, demand and supply planning, what-if analysis, audit of
plan vs. performance
Supplier Manufacturing Distributor Retailer Customer
• I2 developed for automotive industry
Flow of material • Demand Management – Demand planning and forecasting includes segmentation, demand optimization
and analysis, new product planning and what if analysis for demand shaping. Order fulfilment supports
• Individual internal efficiency is necessary allocations based on available-to-promise (ATP) and capable-to- promise (CTP).
• I2 developed it for retail industry
• Emerging market trends; mass customizations; shorter product life cycles – • Supply Management – The network design component models locations, transportation modes and
individual internal efficiency is not sufficient production capacity for planning mid-term and long term sourcing decisions. Optimization features
support allocations and distribution planning.
• Organizations started integrating ERP with SCM (Manugistics, I2 – now JDA)
• Distribution planning - Analyzing Product Mix Constraints, Planning Alternative Sources, Setting
• Web-based technologies assisted in integrating front-end with ERP Demand Priorities and Analyzing Resource Constraints.
• Share data across supply chain
• Real-time information

SCM Features cont. SCM Features cont.

• Replenishment - supports flexible allocation modelling based on manufacturing constraints. Also, • Sourcing - spend analysis (keeping cost down) and providing the tools to evaluate categories,
replenishment has the ability to auto-generate POs from demand, sales orders, and sourcing supplier selection and supplier performance.
• Contract management –
• Vendor Management Inventory - replenishes customer inventories based on stock and sales data
• Procurement management –
sent to the vendor.
• Supplier relationship management –
• Planning – least cost options; multi-modal options; zone routing and multi drops analysis; carrier
selection analysis; cross dock options; merge in transit options • Warehouse management -
• Dispatch – assign carriers to routes; produce shipment documents;
• Freight charges and settlements - automated freight audits, payments and cost allocation.
• Fleet management - optimizing the mix of private assets and common carriers.
• Catalogue management - search capabilities on internal and supplier databases, based on
keywords and attribute values. Also, catalogue management supports the functionality to
categorize search results.


ERP and SCM ERP and SCM cont.

Point of comparison ERP SCM Point of comparison ERP SCM
Competitiveness Cost reduction; higher sales; better Cost reduction; higher sales; Higher Sales Allows better alignment.
inventory within the organization better inventory (customer value & Higher service levels – likelihood of repeat
Lower cost of doing Limited within the organization Organizations can leverage across service levels) customers
business the supply chain Mitigate Risk Within the organization planning and tracking capabilities for
Procurement Add-ons are necessary Warehouse management system Globalization and multimodal, multi-leg shipments, with the
Processing Transactional effectiveness Humongous when compared to other risks ability to coordinate logistics with offshore
effectiveness ERP brokers, SCM partners and 3PLs
Functionality Relatively less dynamic Simulations of adjustments with Standards Moved from legacy to web- Apart from web technologies
regard to the constraints technologies EDI,
dynamically in real-time EPC – Electronic Product Code
UCC – Uniform Commercial Code
Reduce working capital Within organization Across the supply chain VICS -Voluntary Industry Commerce
(inventory & cash-cash Standards

Manufacturing Manufacturing cont.

• Impact of E-Business reverberates throughout the enterprise • Frontend (Customer relationship management) and backend processing systems
• Tremendous marketplace influence creating (data warehouses and systems)
• Tough part is linking both these
• Service, personalization, and responsiveness
• This requires
• Brick-and-mortar companies investing in E-Biz
• Smart supply chain practices that reduce inventories
• Click-and-Brick • E-Business orders becoming more and more customized
• Relate customer orders to • Possible – Speed, flexibility, and visibility in production process
• real-time production information • E-Biz can attract customers, initially, the backend (manufacturing) to meets these
• Visibility to make proactive changes orders
• Reliability
• Amazon started as virtual business, now adding brick-and-mortar warehouses
• Multi-product standardization
• All possible with new manufacturing software “e-manufacturing”

Manufacturing cont. Manufacturing cont.

To address the above challenges
• Manufacturing firms challenges E-Biz • Comprehensive Modeling – plant floor production process and connect with order
• lead-times for customized/configured Supplier customer fulfillment process
products shrinking, Plants
• product line complexity increases • In-process intelligence – insights into manufacturing process and provide useful
D insights
• Even if manufacturing is outsourced (e-
tailers) – manufacturing of outsourced firm Contract i
to scale, flexible, and responsive Supplier s
Customer • Instant notifications – information about people and equipment responsible for
manufacturing. Real-time transmission of data
• Disparate systems – isolated systems t C
• Different data formats, not documented r e • Reliability, robustness, and scalability –
Manufacturing i n • Flexibility to evolve and adapt – technological, organizational, and individual
• Islands of information Supplier
b t customer levels
• Information integration – only for internal
use; not integratable to enterprise or supply u e • Enterprise standard – Standardization is not feasible; integration and
chain systems t r interoperability of information across multiple plants located in diverse locations.
• Customized – custom built applications or • Multi-site management – localized and centralized options; multi-site
modified package o
performance, configuration, consolidation, and status.


Manufacturing cont. ERP in manufacturing

• Manufacturing accounts for the highest IT spending • Discrete manufacturing have more ERP implementations
• Process manufacturing sector spends high on IT • High investment
• Large companies • Involving massive technology upgrades
• Scale of operations
• Legacy systems – latest ERP systems
• Business and IT priorities of both discrete and process manufacturing • Upgrades of ERP systems
are the same
• SAP is the largest vendor
• Both private and public manufacturing organizations spend on IT
• Fluctuations do exist • Financials – Logistics –
• Communications – Usage of Internet-based communications, beyond • Sales & Distribution/Production
email. • Demand driven industries take up sales & distribution

ERP in manufacturing contd. ERP in manufacturing contd.

• Process industry • Transaction-oriented application
• Digital control systems • ERP implementations are not IT Projects
• ERP implementation • Change programs
• Business with plant floor • Re-operationalization of values
• Financials – materials; sales & distribution • Values – safety; privacy; security; confidentiality; efficiency; effectiveness;
• Maintenance function • Values are deeply intertwined
• Economic, professional interests – political and legal also
• Transaction-oriented application

ERP – CAD/CAM ERP – flow time (JIT; TPS; Lean)

• CAD/CAM in India • Increase flexibility • Motorola – short cycle manufacturing
• Graphics capabilities • setup cost vs. carrying cost • IBM – Continuous-flow
• Design, storage, and retrieval • Reduce inventories manufacturing (CFM)
• Automatic evaluation of specifications • Act on market-demand • Demand flow manufacturing (DFM)
• Research capabilities • Satisfy client needs • Toyota Production System (TPS) –
• Automobile and other industries • Elimination of waste • Kanban & JIT
• 1990s – Lean manufacturing
• Heavy engineering • Commit to change
• ERP and Lean started parallel and can
• Trust suppliers be used in the absence of other – not
• Total employee involvement mutually exclusive
• Commit to continuous improvement


ERP – to create lean supply chain ERP – to create lean supply chain cont.
3. Supplier performance measurement
1. Customer relationship forecasting • Use SRM – integrate with supplier’s communication systems to report
• Lean supply chains are customer centric progress
• Value stream mapping –
• ERP has CRM and SRM (supplier)
• How many orders? How many lines? Which delivery targets have been met
• Changes for order patterns and missed? How much time is needed from placing an order to receipt of that
• Integrate ERP with suppliers/customers order management system material ready for your use? What unnecessary processes are you using; are
they using unnecessary processes that add no value?
2. Integrated business intelligence
• Order forecasts using point-of-sale data and other forecasts 4. Supply-chain modelling
• Integrate with your customers data for better forecasts • Just-in-time delivery is only one model of eliminating waste through a lean
supply chain.
• Can you change your supply-chain model to a pull system? What do you and
your supplier need to do to become more responsive?
• Expand ERP to include – user-defined tables and fields to model supply chain
you wish to pursue

Product Data Management
ERP – Kanban
• Data Management
Persistent thing

Focus on WIP & Flow • Store and retrieve data along with its dependencies
• pull-based system
• Process Management
Team not necessarily cross functional • No prescriptions; team
decides • Work management –
• ‘user packets’;
Board owned by everyone • Minimizes waste
• Concurrent engineering
Less prescriptive
• Workflow management
• Changes to work management require re-checking, cross-checking, re-submission,
Experiment & learn
• Status changes
• Work history management
• track the changes – compliance and also for benefit of project