The impact of ERP on supply chain management

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The impact of ERP on supply chain management

• Exploratory findings from a European Delphi study.

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Abstract

• The study was conducted with 23 dutch supply
  chain executives of European multi-nationals.
• The object wasFurther integration of activities
  between suppliers and customers across the entire
  supply chain.
• On-going changes in supply chain needs and
  requiered flexibility from IT
• More mass customization of products and services
  leading increasing assortment while decreasing
  cycle times and inventories
• Locus of the drivers seat of the entire supply
  chain
• Need for worldwide IT systems
• Greater transparency of the marketplace
• Their insufficient extended enterprise
  functionality in crossing organizational
  boundaries

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introduction

• One reason for these initiatives may be the
  substantial cost reductions to be achieved from
  improving logistics performances.
• In Europe, logistics cost range from 6 to 15 of
  total turnover
• In the USA, american companies spent 670 billion
  on logistics and supply cahin-related activities
  in 1993, corresponding to 10.5 of GDF.
• Another reason appears to be the advent of the
  network economy , which is triggering profund
  changes in the scope and impact of supply chain
  management.
• Market are becoming more transparent, customer
  demands are being met in a more customized manner
  and, in general, the rate of change in the
  business world keeps increasing
• All these developments are habing a profound
  impact on the ways im which supply chains of
  enterprises are to be managed.
• The new business models for the internet age is
  growing rapidly, in particular is emphasizing
  that, as the business environment changes, supply
  chain design as opposed to supply chain
  coordination is becoming a core competency.

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MRP Explosion
Routing and Time standards
Manufacturing resources plan Performance reports
Cost and Price data
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supply chain managemet in the network economy

• We view a supply chain as a network consisting of
  suppliers, manufacturers, disrributors,
  retailers, and customers.
• The network, in turn, is supported by three
  pillars

Financial flow
Information flow
Material flow
SuppliersgtManufacturesgtDistributorsgtCustomers
Processes
Organizational Structures
Enabling Technologies

• Fig.1 An integrated model of the supply chain

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• Supply chain design is concerned not only with
  the specification of customer zones, selection of
  manufacturing and distribution facilities, and
  allocation of product families to these sites,
  but also with the prioritization of the
  capabilities to be developed and retained
  internally, and the forging of new partnerships
  with other entities along a supply network.
• This dynamic view is particulary important in a
  fast-evolving world where new products and
  emerging distribution channels necessitate a
  contiunuous review of supply chain design
  decisions.
• This dynamic view may neseccitate different
  perspectives for supply chain design. These
  perspectives include organizational supply
  chain, capability supply chain, and technology
  supply chain.
• The validity of a particular supply chain
  solutions is therefore determined by the
  clockspeed

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Market mediation
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There are different ways of definnig ERP a
business perspective, a technical perspective or
a funtional perspective.One way of looking at
ERP is as a combination of business processes and
information technology.Worldwide sales of ERP
packages together with implemetantion support, on
the other hand, have esceeded 50 billion dollars
at the turn of the century with annual growth
rates of over 30.In spite of the significandt
slowdown in IT spending, ERP is expected to
become a 10 billion dollar industry by 2004.A
recent survey by fortune magazine revealed that
seven out of the top tehn global pharmaceutical
and petroleum companies, and all of the top ten
global chemical companies are SAPs R/3.the
number of local IT system to be replaced by an
intefrated ERP system usually runs into the
dozens up to a hundred or more in multinational
companies.

• ERP System

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How Companies Benefit from Improving ERP System

• As the world economy reaccelerates, Ventana
  Research sees companies investing selectively in
  information technology. Ventana Research advises
  our clients to assess their major IT system to
  determine if there are cost savings that can be
  achieved, and determine how well their
  software/hardware infrastructure supports
  existings strategy and business processes.
• We find that companies that evolve their ERP
  solutions usually do so for any combination of
  the fallowing reasons
• -Increase productivity
• -address performance management needs
• -Implement business process imprvements
• -Leverage technology
• -Address organizational changes
• -Enhance adaptability
• -Avoid absolescence
• -consolidate instances

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Delphi study findings

• This section describes the main empirical
  results from the Delphi workshop.
• Key trends in supply chain management for the
  coming years.
• -Just about every panel expert sees futther
  integration of activites between suppliers and
  customer across the entire chain os one of the
  three biggest trends in SCM
• Expected impacts of ERP on SCM trends.
• SCM limitations of current ERP systems
• -EE funtionality
• -Flexibility in adapting to changing supply
  chain needs
• -beyond transactions- more advanced supporting
  funtionality