The basic elements of ERP supply chain management (SCM) modules typically include components for forecasting, demand management, procurement and planning, followed by delivery modules such as logistics, and after-market issues like returns, installations and contracts.
ERP SCM systems typically start with creating an order and shipment, putting the transportation together, booking the delivery and beginning the billing cycle.
"It's a very straightforward chain of logistics in a sales scenario," said Holger Kisker, an analyst at Forrester Research. "The functionality might include some planning aspects and demand planning. It can track the customer demand and generate a forecast. Based on that [data] you can streamline the supply chain on the delivery side."
Typical modules of an ERP supply chain management suite include:
- Demand forecasting and planning
- Supply chain network planning to match demand with the supply side
- Production planning that reflects the demand
- Detailed scheduling that directs production for the demand side
- Event management to collect and analyze distributed data sources
- Alert monitors for event management
- Pricing optimization across the lifecycle of a product
- Supply chain network design and optimization, to evaluate complex supplier networks and determine the most profitable configurations
When evaluating ERP SCM products, software buyers should be aware that different industries have different requirements for ERP and SCM. "Although there are some core modules and requirements, the specifics of which (modules or) products to use can be very different from industry to industry," Kisker said.
In retail, for example, demand planning is strongly linked to assortment planning and forecast systems. If you're in charge of moving petroleum products, you'll want your ERP SCM system to have capabilities to analyze specific elements of the tank system or of the types of trucks required.
One benefit that companies gain from an ERP SCM deployment is reduced carrying costs for warehouse stock. SCM can also reduce transportation costs by optimizing the balance between supply and demand and by reducing the time between when the product is shipped and payment is received.
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About the author: Catherine LaCroix is a freelance writer based in Portland, Ore. She covers technology used in business, education and healthcare.