Wednesday, February 27, 2013

The NextGen ERP

Relevance of Enterprise Resource Planning( ERP)- 
As per expert, Supply Chain Management  supports –

(1)    Material flow
(2)    Information flow
(3)    Financial flow

 These flows are bolstered by three pillars processes, organizational structures and enabling technologies.Supply Chain Management is not only about specifying customer zone, manufacturer and distribution selection, allocation of products, but also about  the prioritization of capabilities to be developed. With this  effective  supply chain strategies depends on exemplary coordination which can be divided in further 3 parts –

(a)    Information deployment – Point-of-sale(POS) data, Joint forecasting , Schedule sharing
(b)   Channel alignment – Contracts , Vendor-managed inventories (VMI), Collaborative planning forecasting and replenishment (CPFR)
(c)    Operational flexibility – postponement , Assemble-to-order (ATO) , Make-to-order (MTO)

Emergence of IT and SCM transformation collided and created a requirement for solution which can be critical enabler of superior supply chain. Enterprise resource planning (ERP) can be seen as combination of business processes and information technology. ERP converts functional orientated organization into a process oriented one. Hence require change management , cross functional initiatives and may lead to complex structures. ERP is an umbrella term for integrated business software that controls information structure, controlling a broad range of activities from supplier on floor to accounting.  ERP can provide for following functionality:

Transaction processing engine:  integrates management of data throughout the enterprise
Work flow management : controls numerous process flows that exist in enterprise
Decision support: assists in creation of plans or deciding in creation of specific customer orders

Limitation of current ERP -
(1)    Lack of extended enterprise functionality
(2)    Lack of flexibility  in adapting to ever-changing supply chain needs
(3)    Lack of more advanced supporting functionality beyond transaction management
(4)    Lack of open, modular, Internet-like system architecture
(5)    Information exchange

Need of the hour
ERP is going the problem of “ too much information”( TMI)and “too much software” (TMS). The jumble of ERP, CRM , Supply Chain and BI is spread all over the globe. A research suggest that CIO and exec accept that only 64% of enterprise system’s core functions are utilized. Due to company growth, business line change , new facility, consolidation operations, acquisition a lot of changes and upgrades are needed in ERP which makes it hard implement and be successful.

Improving current ERP -
ERP does not have a one-size-fits-all approach. It requires a lot of customization or requires organization to change the business processes. Different ERP products offers different degree of specialization towards different verticals. Another emerging trend is SaaS (Software-as-a-Service) or web-based software, which can change the integration and implementation trend. The adoption is still evolving and varies between enterprise application markets and applicability. But this approach is viable option for small/mid-market enterprise and it also provide modular way to expand existing business. This 4th generation computing model represents both an opportunity and challenge. The opportunity is to optimize computing infrastructure, enterprises while evaluating the challenges/perceptions around the security of data on the cloud.

Another trend is social computing, which is helpful in analyzing customer’s proactive and reactive behavior for a firm or product. Social computing technologies  provide easy way to provide consumer feedback. Till this point, social media is limited to business-to-customer(B2C) but leaders are leveraging social networks for better collaboration with customers, suppliers and outsourced manufacturers and  other partners.  This initiative can also provide platform to  improve internal communication and collaboration between co-workers and across functional groups and departments.

Mobile device integration can be utilized in the wake of outstanding network, storage capacity and broadband speed of new handheld devices. The usage of mobile devices can result in improved data
accuracy and increased mobility and convenience, thereby streamlining movement and reducing human errors. This will also improve data validation and reduce latency while dealing with orders.

These factors can bring huge saving, benefits and usability factors. They are significant reasons to revolutionize the ERP with its relevance to supply chain.

 Reference - 
 Paper by INSEAD Business school on  - Impact of ERP on supply chain - a study on European Delphi  



  1. Great post. You know we all think about this very topic. Eresource provides manufacturing solutions to midsize Manufacturing Companies with unformed, integrated, on-demand ERP solution generate new revenue streams. erp for manufacturing helps you also cut down production bottlenecks.
    Thanks for sharing such a nice post...

  2. I like the way you start and then conclude your thoughts. Thanks for this nice information.

    Order Management Software System


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