“ERP- A BOON TO SUPPLY CHAIN

MANAGEMENT”

BY

A.PRADEESH KUMAR- B.E., (MBA) K.HARISH-B.E.,( MBA)

Mobile -9176084054 Mobile - 9791652276

apjk143@gmail.com vskharish@gmail.com
ABSTRACT:
Supply Chain Management (SCM) in today’s global environment, especially
the ERP is important to create significant competitive advantages to firms and business partners
worldwide. Since the objectives and goals are essential factors in the study of supply chain
management in the E Business.

The purpose of this paper is to emphasize the application and impact of

ERP on supply chain management, it was observed that with ERP - the operational efficiency,
productivity, wealth maximization increased and workload , troubleshooting is easier. Enterprise
Resource Planning Systems as designed to address the problem of fragmentation of information
in business organizations. Erp systems can improve operations by streamlining internal process
into a strong back office functional suite Now a days ERP became part and parcel of the Supply
Chain Management. The comparative study of Pre ERP and present scenario with ERP are also
presented to explore future opportunities in this field and there by supporting the statement
“ERP- A boon to supply chain management”

.
INTRODUCTION:

SUPPLY CHAIN MANAGEMENT:

Supply chain management is the management of network of

interconnected businesses involved in the ultimate provision of product and service packages
required by end customers. Supply chain management spans all movement and storage of raw
materials, work-in-process and finished goods from point of origin to point of consumption.

Supply Chain Management (SCM) is a business system of enterprise

strategies, business processes and information technologies for improving the planning,
execution and collaboration of material flows, information flows, financial flows and workforce
flows in the supply chain. SCM is supported by modular software applications that integrate
activities across organizations, from demand forecasting, product planning, parts purchasing,
inventory control, manufacturing, and product assembly to product distribution

Goals of SCM

 To reduce inventory cost.

 To increase sales.
 To improve the coordination and the collaboration with suppliers, manufacturers and
distributors.

Functions:

Supply chain management is a cross-function approach including managing the

movement of raw materials into an organization, certain aspects of the internal processing of
materials into finished goods, and the movement of finished goods out of the organization and
toward the end-consumer. As organizations strive to focus on core competencies and becoming
more flexible, they reduce their ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other entities that can perform the activities
better or more cost effectively. The effect is to increase the number of organizations involved in
satisfying customer demand, while reducing management control of daily logistics operations.
Less control and more supply chain partners led to the creation of supply chain management
concepts. The purpose of supply chain management is to improve trust and collaboration among
supply chain partners, thus improving inventory visibility and the velocity of inventory
movement.

Advantages :
 One of the most significant advantages of supply chain management is that it offers
sophisticated analytical capabilities.
 The process of supply chain management enables the streamlining of the supply chain,
thus making it easy for the marketers to analyze the demand and supply of their products
or services.
 Customers benefit from supply chain management as they always get the merchandise of
their choice and the merchandise is ready before customer entry.
 Another important advantage of supply chain management is that it results in business
organizations gaining a competitive advantage by earning the loyalty of customers,
shareholders and employees

BEFORE ERP IMPLEMENTATION:

Basically before Enterprise Resource Planning Software (ERP) the
only type of processing was batch processing. In this type of processing the data is accumulated
or stored until it is ready to be periodically processed.
Some of the steps of batch processing include:
 Gathering source documents originated by business transactions, such as sales orders and
invoices, into groups called batches.
 Recording transaction data on some type of input medium, such as magnetic disks or
magnetic tape.
 Sorting the transaction in a transaction file in the same sequence as the records in a
sequential master file.
 Processing transaction data and creating an updated master file and a variety of
documents (such as customer invoices and paychecks) and reports. Capturing and sorting
batches of transaction data at remote sites, and then transmitting them periodically to a
central computer for processing. This is known as remote job entry (RJE).
  The idea around batch processing is that the data could be grouped then periodically
processed. This made a lot of since in the earlier years of computer technology when
mainframe computers were extensively used.
 However there were some real disadvantages with this type of processing. The master
files were frequently out of date between scheduled processing, as were the periodic
scheduled reports that were produced causing employees to wait for the batches to finish
running.
 Then the employees had to so manually update the financial data. This process was very
inefficient since the information was not available on an immediate basis
 These inefficiencies lead to the earliest development of ERP software, real-time
processing.
ERP:
 ERP is an abbreviation for Enterprise Resource Planning which means techniques and
concepts for integrated management of business as a whole from the viewpoint of the effective
use of management resources to improve the efficiency of enterprise management.

Originally ERP packages were targeted at the manufacturing industry and consisted
mainly of functions for general planning and management of core business such as sales
management, production management, accounting and financial affairs, etc. However, in recent
years adaption not only to the manufacturing industry, but also to diverse types of industry has
become possible and the expansion of implementation and use has been progressing on a global
level.
ERP software is a mirror image of the major business processes of an organization
such as customer order fulfillment and manufacturing. Its success depends upon reach – a
circumscribed ERP system is not better than the legacy system it replaces. In many cases, it is
worse because the old code was at least written specifically for the company and the task.

EVOLUTION OF ERP:
ERP (Enterprise Resource Planning) is the evolution of Manufacturing
Requirements Planning (MRP) II. From business perspective, ERP has expanded from
coordination of manufacturing processes to the integration of enterprise-wide backend processes.
From technological aspect, ERP has evolved from legacy implementation to more flexible tiered
client-server architecture

The following table summarizes the evolution of ERP from 1960s to 1990s.
Timeline System Description

1960s Inventory Inventory Management and control is the

Management & combination of information technology and business
Control processes of maintaining the appropriate level of
stock in a warehouse. The activities of inventory
management include identifying inventory
requirements, setting targets, providing
replenishment techniques and options, monitoring
item usages, reconciling the inventory balances, and
reporting inventory status.

1970s Material Materials Requirement Planning (MRP) utilizes

Requirement software applications for scheduling production
Planning (MRP) processes. MRP generates schedules for the
operations and raw material purchases based on the
production requirements of finished goods, the
structure of the production system, the current
inventories levels and the lot sizing procedure for
each operation.

1980s Manufacturing Manufacturing Requirements Planning or MRP

Requirements utilizes software applications for coordinating
Planning (MRP manufacturing processes, from product planning,
II) parts purchasing, inventory control to product
distribution.
 1990s Enterprise Enterprise Resource Planning or ERP uses multi-
Resource module application software for improving the
Planning (ERP) performance of the internal business processes. ERP
systems often integrates business activities across
functional departments, from product planning, parts
purchasing, inventory control, product distribution,
fulfillment, to order tracking. ERP software systems
may include application modules for supporting
marketing, finance, accounting and human resources.

ERP VENDORS:

Some of ERP Vendors are

1)Global Shop Solutions, 15) COA Solutions Ltd

2) MHG Systems, 16) Cincom Systems

3) WorkBook Software A/S, 17)QAD

4) ProfitKey International, 18)Comarch

5) Dolibarr OpenERP 19)SAP

6) Openbravo, 20)Oracle Applications

7) Syspro, 21) Infor Global Solutions

8)Plex Systems, 22)The Sage Group

9) Pronto Software , 23)Microsoft

10)Technology One , 24)Unit 4 Agresso

11)SIV.AG , 25)CDC Software

12)Ramco Systems, 26)Lawson Software

13) ABAS Software , 27) Visma

14)NetSuite, 28)Industrial and Financial Systems

(IFS)

FUNCTIONAL MODULES OF ERP SOFTWARE :

ERP software is made up of many software modules. Each ERP software module mimics a major
functional area of an organization. Common ERP modules include modules for product planning,
parts and material purchasing, inventory control, product distribution, order tracking, finance,
accounting, marketing, and HR. Organizations often selectively implement the ERP modules that
are both economically and technically feasible.

ERP Production Planning Module

In the process of evolution of manufacturing requirements planning (MRP) II into ERP, while
vendors have developed more robust software for production planning, consulting firms have
accumulated vast knowledge of implementing production planning module. Production planning
optimizes the utilization of manufacturing capacity, parts, components and material resources
using historical production data and sales forecasting.

ERP Purchasing Module

Purchase module streamline procurement of required raw materials. It automates the processes of
identifying potential suppliers, negotiating price, awarding purchase order to the supplier, and
billing processes. Purchase module is tightly integrated with the inventory control and
production planning modules. Purchasing module is often integrated with supply chain
management software.
ERP Inventory Control Module

Inventory module facilitates processes of maintaining the appropriate level of stock in a

warehouse. The activities of inventory control involves in identifying inventory requirements,
setting targets, providing replenishment techniques and options, monitoring item usages,
reconciling the inventory balances, and reporting inventory status. Integration of inventory
control module with sales, purchase, finance modules allows ERP systems to generate vigilant
executive level reports.

ERP Sales Module

Revenues from sales are live blood for commercial organizations. Sales module implements
functions of order placement, order scheduling, shipping and invoicing. Sales module is closely
integrated with organizations' ecommerce websites. Many ERP vendors offer online storefront as
part of the sales module.

ERP Market in Module

ERP marketing module supports lead generation, direct mailing campaign and more.

ERP Financial Module

Both for-profit organizations and non-profit organizations benefit from the implementation of
ERP financial module. The financial module is the core of many ERP software systems. It can
gather financial data from various functional departments, and generates valuable financial
reports such balance sheet, general ledger, trail balance, and quarterly financial statements.

ERP HR Module

HR (Human Resources) is another widely implemented ERP module. HR module streamlines the
management of human resources and human capitals. HR modules routinely maintain a complete
employee database including contact information, salary details, attendance, performance
evaluation and promotion of all employees. Advanced HR module is integrated with knowledge
management systems to optimally utilize the expertise of all employees
ERP Market Outlook:

General Outlook Through 2002

 1997 worldwide enterprise applications market grew at 20.2% to $14.4 billion
(licenses and maintenance)
 Top 10 ERP vendors growth rate was 32.9% collectively and they have a > 40%
share of the total market
 ERP industry remains healthy and growth rate projections are 30-33% annually
for the next 3-5 years
 This represents a decline from the 60-100% growth rates some vendors have
experienced in the past few years.

ERP Benefits:
As organizational processes fall into three levels - strategic planning,
management control and operational control. Even though much of ERP success has been in
facilitating operational coordination across functional departments, successful implementation of
ERP systems benefit strategic planning and management control one way or other.

Help reduce operating costs

ERP software attempts to integrate business processes across departments onto a single
enterprise-wide information system. The major benefits of ERP are improved coordination
across functinal departments and increased efficiencies of doing business. The immediate benefit
from implementing ERP systems we can expect is reduced operating costs, such as lower
inventory control cost, lower production costs, lower marketing costs and lower help desk
support costs.
Facilitate Day-to-Day Management

The other benefits from implementing ERP systems is facilitation of day-to-day management .
The implementations of ERP systems nurture the establishment of backbone data warehouses.
ERP systems offer better accessibility to data so that management can have up-to-the-minute
access to information for decision making and managerial control. ERP software helps track
actual costs of activities and perform activity based costing.

Support Strategic Planning

Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target
audience and a set of goals and objectives; plan and design coordinated strategies with evidence
of success; logically connect these strategies to needs, assets, and desired outcomes; and measure
and evaluate the process and outcomes.In reality, resource planning has been the weakest link in
ERP practice due to the complexity of strategic planning and lack of adequate integration with
Decision Support Systems (DSS).

FUTURE TRENDS:

Market forecasting:

Formerly ERP was purely restricted to fortune 500 companies, in the sense only they could
afford to invest on them. This put the small and Medium Industries at a large disadvantage. They
were not able to make use of the application to gain the necessary benefits. ERP's future seemed
to be dooming on them.

However this drawback has been removed after the intervention of open source facilities. The
concept of outsourcing has helped in removing the difficulties faced by small and medium
enterprises. Hence a large potential for ERP still exists in the S.M.E. market.

The ERP vendors can target this market effectively. However both the vendor and the companies
in this segment have to remember that there are lot of competition in this sector and one is not
likely to succeed unless he serves the best product.

The international Scenario, employment and Education:

ERP has thrown open opportunities for many companies to trade with foreign counter parts in
the name of outsourcing, implementation and deployment of the existing ones. It has contributed
lot to the economy .Academics also boast its own share of ERP relations.
It has promoted lot of employment and educational opportunities. India happens to be a key
beneficiary in this aspect.

CONCLUSION:
ERP is a boon to supply chain management which ensures the simplication of
business process, enhance productivity, flexibility and operating efficiency is improved.It not
only reduces the cost but also eliminates inefficiencies thus leading to continuous improvement.
Here by title is justified “ERP- THE BOON TO SUPPLY CHAIN MANAGEMENT”.
SOURCES & REFERENCES:
1. http://www.erpwire.com/erp-articles/erp-future.htm
2. Kelly,S.,Holland, C., and Light B., 1999.”Enterprise Resource Planning:A
Business Approach To Systems Development, “In Proceedings of AMICS
3. http://en.wikipedia.org/wiki/Enterprise_resource_planning
4. www.erp.com
5. www.impacterp.com
6. en.wikipedia.org/wiki/Supply_chain_managemen
7. www.supplychainmanagement.in
8. logistics.about.com
9. www.informs.org/About-INFORMS/History.../Martin-K.-Starr
10. openlibrary.org/authors/OL3614399A/Martin_K._Star