A growing number of manufacturers are turning to ERP supply chain management (SCM) integration. Integrating best-of-breed SCM applications with ERP, as opposed to relying on the innate SCM functionality in some ERP systems, provides a manufacturer with specialized SCM features, according to Holger Kisker, senior analyst at Forrester Research.
This two-way information exchange enables manufacturing companies to optimize processes across the product lifecycle. For example, they can forecast supply and demand based on algorithms for specific industries or on factors like seasonal variations.
When beginning an ERP SCM project, the first step is an initial upload of basic ERP customer and product information that the SCM system doesn't typically have, said Kisker. For maximum effectiveness, it's important to keep data consistent and key fields, like customer ID, continually synchronized between the two systems.
For example, the ERP system can provide the SCM application with inventory information such as current availability of materials or parts coming out of the production system or warehouse. The SCM application, in turn, would provide ERP with information about planned and actual movements of materials, parts and products, so that inventory stays up to date.
ERP platforms' growing support of service-oriented architecture (SOA) is also making it easier to set up dynamic collaboration between SCM and other manufacturing applications. "When the supply chain application wants to update an order because of a schedule change, it calls up the SOA service from the ERP system, brings up the object in the CRM system, and changes it," Kisker said.
This broader SCM integration with ERP delivers greater efficiency and responsiveness to the entire manufacturing process. If, for example, a company is scheduled to deliver an order to ten clients tomorrow but the SCM solution calculates it can only deliver to five, ERP can pull data from the CRM system to determine which orders should be fulfilled.
"The SCM application puts the five in one bucket and sends it on to the ERP system for next day," said Kisker. "So not only is there movement of information, but order triggering between the two systems."
About the author: Elisabeth Horwitt is a freelance journalist who has covered business IT trends, issues and technologies for over twenty-five years. She is based in Waban, MA.