Chapter 9 ERP and Supply Chains Supply Chains

Chapter 9: ERP and Supply Chains

Supply Chains • Collections of organizations working together – Raw materials – products – retail – Old manufacturing: vertical integration – Military logistics – Now appropriate for e-business

Supply Chain Advantages • Competitive advantage – Cost • Production efficiencies – Value • Logistic efficiencies • Coordinated advertising • Large scale service

Advanced Planning Systems • Computer technology makes supply chain capable of dealing with demand uncertainty – Forecasting – Inventory reduction – Optimized transportation costs • Advanced planning systems use operational data to analyze material flows in supply chain – Use historical demand forecasts – Easy to collect data – Dynamic nature makes long-range forecasting difficult

Advanced Planning System Providers i 2 Manugistics Numetrix CAPS logistics BAAN J. D. Edwards Oracle People. Soft SAP SCM components 11 i Enterprise Performance Management SAP APO

ERP Vendor Response • my. SAP. com an open, collaborative system – Integrates SAP & non-SAP software • SAP APO – supports forecasting, scheduling, other logistics activities • People. Soft: Enterprise Performance Management • JDEdwards – products for planning & execution • Oracle’s 11 i Advanced Planning & Scheduling

On-Line Marketplaces Manetti [2001] TARGET MARKET Vertical Deep & narrow product access Multivertical Multiple vertical sites Horizontal Broader, more extensive linkage TRANSACTION METHOD Auction based Exchange for simultaneous bids Future contract variants For risk reduction Pure auction systems To establish prices for buyers Reverse auctions To establish prices for sellers Metacatalogs Reduce search costs Mall-based Access multiple suppliers at single site

Lean Manufacturing • Toyota bundle of techniques from 1950 s • Common supply chain philosophy – Cut waste by eliminating activities that don’t add value • Continuous product flows without bottlenecks – Produce to order • (demand pull, not supply push) – Emphasize quality

ERP & Lean Manufacturing • Initial ERP applications did little for efficiency – Complex bills of material – Inefficient workflows – Unnecessary data collection • Efforts by ERP vendors to support lean manufacturing – Not all manufacturers were convinced • Lean manufacturing features – Demand smoothing – Kanban replenishment calculation – Exception reporting

Resources • Operational Excellence Through People and Processes. Retrieved March 29, 2005 from http: //www. mlg. uk. com/index. htm • Olson, David L. (2004). Managerial Issues of Enterprise Resource Planning Systems. New York: Mc. Graw. Hill/Irwin. • Enterprise Resource Planning and Supply Chain Optimization. Retrieved March 29, 2005 from http: //www. fcg. com/healthcare/ERP-and-supply-chainoptimization. asp