The costs of implementing and maintaining EDI, however, are high, due mainly to the necessity for Value Added Networks (VANS) and can therefore alienate smaller companies. The Internet, or EDI communications on the Internet, provides a cheaper alternative. Tracking Systems – used to monitor the progress of orders throughout the supply chain, e.g. assembly, and dispatch. Recent developments include hand-held tracking for monitoring goods in transit and communicating proof of delivery.
Role of Internet and ERP in Supply Chain Management If you don’t think e-Commerce is that big of a deal, think again. Consider that e-Supply Chain Management is digitally connecting the entire world into one big (very big) network of supply chains. Trillions of dollars a year of business-to-business commerce is being conducted on the Internet, which is many times the amount of business-to-consumer transactions. The growth estimates for the next few years for business-to-business e-commerce are astounding.
Web-based marketing and catalog sites have become very familiar communication mechanisms between prospects, customers and suppliers. But the fastest growing and highest volume by far is business-to-business transactions in supply chains. Internet capabilities already have, and will continue, to fundamentally change business-to-business supply chain models.
Effectively integrating the information and material flows within the demand and supply process is what Supply Chain Management is all about. In most companies, however, two major and very interdependent issues must be simultaneously addressed. The first deals with delivering products with customer-acceptable quality, with very short lead times, at a customer-acceptable cost – while keeping inventories throughout the supply chain at a minimum.
The second issue, which tends to be less understood and accepted, is the need for high quality, relevant and timely information that is provided when it needs to be known. For many customers and manufacturers, business processes and support systems will not measure up to the task of quickly providing planning and execution information from the marketplace to production and onto vendors so that the customer’s objectives are consistently met. The fact is, most information supplied is excessive, often late and frequently inaccurate.
The e-Supply Chain
High speed, low cost, communication and collaboration with your customers and suppliers are critical success factors to more effectively manage your supply chain. Then, the e-Supply Chain is very likely in your future. The very essence of Supply Chain Management is effective information and material flow throughout a network of customers and suppliers. The potential for improved productivity, cost reduction and customer service are enormous. Of course, the benefits are based on effectively employing the right processes and supporting information technology. This is a higher priority than ever before. Providing the right amount of relevant information to those who need to know it, when they need to know it is, in fact, effective Supply Chain management from an information point of view.
Good supply chain practitioners know that information should be passed on only to those who need to know it, in the form they need to have it. Demand information, inventory positions, order-fulfillment, supply management and a whole host of other information exchange activities will change how we sell products, supply products and make and receive payments for goods and services. The e-Supply Chain will have customers and suppliers seamlessly linked together, throughout the world, exchanging information almost instantly. The velocity of relevant information flow will be so fast that, as a result, responding to the inevitable changes in expected vs. actual customer demand will mandate demand-driven manufacturing and supporting processes that provide for faster changes in the actual material flow to match demand.
Fast access to relevant supply chain information can pay-off handsomely in lower costs, less inventory, higher quality decision-making, shorter cycle times and better customer service. One of the biggest cost savings is in the overhead activity associated with lots of paperwork and its inherent redundancies. The non-value added time of manual transaction processing could instead be focused on higher revenue creation activities without proportional increases in expense.
The result in cycle time compression, lower inventories, decision-making quality, reduced overhead costs, among other benefits makes e-Supply Chain Management a highly desirable strategy. Supply chain processes can be more streamlined and efficient than could have been imagined just a few years ago. For many companies, more effective Supply Chain Management is where the profit and competitive advantages will emerge and be sustained.
Role of ERP
To make e-Supply Chain Management work seamlessly, we need the software to integrate every aspect of our supply chain. Right from procuring the raw material, manufacturing, packaging, storing, distributing, selling, all these departments need to talk to each other in an integrated fashion. The possible way of implementing this sort of integration in through deploying an ERP solution.
Definition of ERP
ERP is defined as: “a packaged business software system that enables a company to manage the efficient and effective use of resources (materials, human resources, finance, etc.) by providing a total, integrated solution for the organization’s information-processing needs”.
How will ERP help in Supply Chain Management?
By deploying an ERP solution, which is integrated to the overall business activities, the manufacturer no longer needs to speculate about the demands of the customer. It no longer needs to store excessive inventories. The ERP software records every transaction that takes place right from procuring the raw material to selling it to the consumer. But for this to function the ERP package must be properly installed.
Whenever a package is sold or is taken out of the premise, the transaction will be feed in to the ERP software. Software will record all such transactions. As soon as the stock levels are below the prescribed limit, the software will pass an order to the raw material procuring department about the requirement of fresh stock. Thus the raw materials required for manufacturing are procured before the stock is over.
The software will also direct the amount of stock to produce, what to produce and when and where to dispatch the fresh stock. This will considerably reduce the inventory levels and maintain optimum level of efficiency. Thus even before the stock is over and without any human intervention, fresh stock is sent to the store. This is how an ERP solution gives an advantage in Supply Chain Management.