SCM Processes and ERP Processes
Introduction
The majority of world-class organizations continuously recognize the multiple benefits of Enterprise Resource Planning (ERP) regarding business information management, integration of supply chain systems and working processes, and ensuring optimal operational efficiency (Kurbel, 2016). In the logistics industry, ERP and supply chain management (SCM) are interchangeably used. Supply chain/logistics industry players such as DHL Supply Chain, UPS Supply Chain Solutions, DSV, and FedEx Logistics continue to thrive for using ERP, which has helped them gain operational efficiency, improve productivity, and achieve profitability. This report will explain to the management of Walmart Inc. the production and SCM processes from an ERP perspective that would help the company to effectively manage business information, achieve efficiency, integrate different disparate systems, and streamline workflows.
Describe the basic functions of the production and supply chain management modules of the ERP system
According to (Hwang & Min, 2015), SCM has been a vital element of ERP solutions adopted by world-class organizations. ERP solutions support multiple modules, such as configure-to-order, make-to-order, engineer-to-order, and offer operations support across multiple departments in real-time. The functions of the production and SCM modules of the ERP solutions include demand and planning, inventory management, production, shipment, and more.
Demand and planning: An ERP system designed for SCM functions automatically to create demand on receipt of orders. Here, ERP modules help streamline SCM by establishing efficiencies in job scheduling. This allows the senior management to decipher in real-time what resources are getting used and those resources being consumed (Su & Yang, 2010). Thus, ERP in production and SCM functions to assist the management plan for product delivery. Besides, the systems function to ensure consistency between production policies and demand, ensure lean inventory and ensure timely replenishment.
Inventory management: For world-class organizations like Walmart, inventory management remains a top concern. A single incorrect calculation disrupts the whole supply chain, causing production bottlenecks, delays, and unhappy customers. On the other hand, there are unnecessary costs and wastage of warehouse space associated with hoarding excessive inventory (Kurbel, 2016). With respect to this, ERP systems function to ensure appropriate inventory management. Through ERP systems, accurate forecasting is enhanced, allowing a company to properly manage demand and supply hence optimize their inventory.
Production and shipment tracking: In production and SCM, ERP systems function to effectively log and track the production and shipment operations within a firm. Here, the ERP functions to maintain and update the machinery and labor records in a real-time manner (Hwang & Min, 2015). Also, shipment documents are recorded and tracked through the ERP modules, helping remove manual errors and making it easy for the management to track deliveries and pending orders.
Express why the ERP is vital to creating overall efficiencies and the supply chain management process
ERP systems are crucial in establishing SCM management process efficiencies, given its unique attributes. According to (Kurbel, 2016), ERP systems are efficient as they create real-time supply chain management processes helping the organization reap its associated benefits. In the supply chain management process, ERP systems contribute to improved supply chain network, minimizes delivery delays, saves costs, and enhances collaboration. For Walmart, ERP systems would be profitable as it allows proper integration of all supply chain management processes and activities. Besides, ERP systems help lower production bottlenecks while improving transparency through the business.
Also, the efficiency of the ERP system in the SCM process is evidenced in the manner it aids effective forecasting and lean inventory, assists in risk management, aids faster decision making, ensures automation and accessibility, and contributes to total control. According to, ERP solutions of SCM raises the accuracy of demand forecasting and minimizes inventory cost during the production process (Su & Yang, 2010). Automation of SCM processes is easily facilitated by ERP solutions, enabling the management to oversee faster decision making, which helps eliminate delays in the supply chain network.
Provide the process for entering and processing production planning data in an ERP system
The process for entering and processing production planning data in an ERP system involves planning, routing, scheduling, dispatching, follow-up, and inspection. At the planning stage, the planning department receives entire information from the top management about the quantity that needs to be produced to ensure reliable deliveries (Kurbel, 2016). The routing step involves the determination of the path that job should follow as well as the key operations to undertake. With ERP systems, routing helps find the cost-effective sequence of operations. At the scheduling stage, production and control data is keyed into the system. Since there is ERP automation, scheduling works to ensure timeliness and completion of production processes as anticipated by the company.
At the dispatch stage, actual production begins. With the help of ERP systems, there is proper authorization of operations in the SCM network. With an ERP system, dispatching of production operations and data is timely done. The follow-up stage is undertaken to evaluate the production process results (Su & Yang, 2010). ERP systems help find and eliminate bottlenecks, delays, loopholes, defects, and limitations in the production process at the expedition. Inspection processes are done for quality control purposes. To ensure that high standards of quality are maintained, ERP systems are integrated into the production planning and control systems.
Explain how information can be shared with suppliers in order to increase supply chain efficiency
Today’s marketplace is highly competitive, leaving little or no room for inefficiency. To increase supply chain efficiency, companies can share information through supply chain integration, coordination amongst the involved supply chain parties, and use of technology communication systems (Hwang & Min, 2015). The concept of integration can help improve supply chain efficiency as it facilitates the smooth flow of information between the company and the suppliers. Using ERP systems, an integrated supply chain can allow an organization to effectively manage all logistics and distribution operations using a centralized system rather than using multiple systems. As a result, an agile and productive production network can be created through supply chain integration.
Also, the concept of collaboration can effectively be applied to increase supply chain efficiency within the organization’s departments. Collaboration allows easy sharing of information between the company and its suppliers (Su & Yang, 2010). If this concept is adopted, this will save time and improve the reliability of the company in products delivery to final consumers, improve the amount of materials and resources the company can deliver, lower cases of material loss in the supply chain network, and ensure product customization for quality control purposes.
Use of technology can also help the company share information with suppliers to increase efficiencies in the supply chain. This can help increase customer satisfaction and retention levels. This is because technology helps communicate real-time and actionable data, helps create visibility across the supply chain network, simplifies the supply chain network, and enhances customer communication (Kurbel, 2016). A good example of technology is ERP systems/modules, which facilitate the seamless flow of data and enhances supply chain processes tracking.
Conclusion
The integration of SCM and ERP provides production and procurement firms the ability to enjoy larger visibility across all operations while improving efficiency, reliability, and overall consumer satisfaction. ERP systems play significant roles in combating inefficiency, lowering waste, and saving costs. Integrating SCM processes and ERP systems contributes to improved efficiency, customer service, workflow automation, and flexibility of supply chain solutions helping improve business performance and productivity.
References
- Hwang, D., & Min, H. (2015). Identifying the drivers of enterprise resource planning and assessing its impacts on supply chain performances. Industrial Management & Data Systems, 4-13.
- Kurbel, K. E. (2016). Enterprise resource planning and supply chain management. Berlin: Springer.
- Su, Y. F., & Yang, C. (2010). Why are enterprise resource planning systems indispensable to supply chain management? European Journal of Operational Research, 203(1), 81-94.