Jun 29

The Integration of the ERP System in the Supply Chain

ERP integration

Today’s trends in the development of ERP systems are related to building better relationships with suppliers and customers, with the strengthening of their co-operation.

ERP works with CRM (Customer Relationship Management) and SCM (Supply Chain Management) tools. ERP is the battering ram that integrates all the information collected into a single application, and SCM applications benefit from having a single major source to go to for up-to-date information. Client information is collected by the CRM system, and the results of the information obtained goes directly into the ERP system. Similarly, in supply chain management: information arising from SCM tools goes directly to the ERP system and on this basis goals are realized e.g. individual production orders associated with changes in market demand. Today’s systems involve the co-operation or integration of all the individual parts in the supply chain.

ERP Integration

The exchange of data between all the parts of the supply chain is a fundamental task for the SCM system. The SCM system will manage the flow of all information, goods and services, and will integrate the entire supply chain. A negative factor in the short term is the high cost of the project and implementation of the SCM system. Thus, the mere implementation of an SCM system is not the way to generate savings in the short term. However, by having a longer term view, the short term negative is turned into a positive, as having a properly implemented SCM system, with properly trained staff will save the organization money and generate an ROI by improving the quality of the processes and reducing the problems of maintaining inventories at the appropriate level.

Another benefit of an SCM system is to simplify and streamline the complex processes of the logistics supply chain, improving the quality of customer service, as well as more efficient use of working time by employees. It should also be noted that the appropriate use of an SCM system will prevent situations arising where a customer could order a product that is not yet produced or redesigned as needed. SCM systems are very advanced technologically. They provide tools to manage the entire chain – from design, to identifying the source of supply of materials, to demand planning and distribution, to delivery to the consumer of the finished product.

Benefits of a fully functioning SCM system include:

  • Obtaining detailed information (thanks to system the manufacturer is able to schedule the size and duration of the production cycle and to shorten the cycle of the contract).
  • Speed of response – depending on the increase or decrease in demand, the ordering system detects changes early enough to ensure that appropriate action is taken (increase or decrease the production as necessary).
  • Reduce costs and increase savings resulting from synchronization throughout the supply chain and to optimize the implementation needs of the market place.
  • Reduce inventory.

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