A large enterprise will find in ERP an essential management tool
that can reveal where a business is failing.
While ERP seems to have fallen from the limelight in recent times,
it is still an important element of information systems and can
have profound effects on a business's cost base.
Basically it is the software that runs the business. Many industry
experts argue that ERP is dead. But it seems less that ERP is dead
and more that the acronyms have changed, as seems to happen so
often in IT. Supply chain, as it now seems to be called in most
circles, is an integral part of e-business. It streamlines the
entire delivery process and ensures that the business is adequately
prepared for demand.
The integration with the Internet has enforced the name change. As
business information systems become integrated across the
enterprise, thanks to Internet technology, the traditional
information systems models are redefined to include the new
technology.
Another area of confusion on the name issue is that supply chain is
just part of the evolution of ERP, with virtual marketplaces and
e-procurement taking a major part of the new stage.
Supply chain management systems and their associate components are
only as strong as their weakest link. Supply chains are, as they
imply, business units linked together on a common platform. They
are highly dependent on each other.
Technology issues
The Internet is the main issue for
ERP at the moment, and the possibilities it offers are redefining
the way systems are designed and managed.
The technology change is simple but radical and concerns the
overall interconnectedness of operations. In the past, ERP ran the
supply chain from one end of the business to mid-way through the
other.
When you introduce Internet technology into the equation the
problems begin. How do you take your streamlined ERP platform (with
its collection of bells and whistles) and integrate it with the
rest of the business, particularly when it runs with its own
proprietary languages and protocols?
Virtual marketplaces are the big story among the major vendors
right now, and are essentially supply 'hubs', were goods can be
traded, prices compared and so on. The enterprise is rewarded with
traditional e-procurement benefits, while also lowering purchase
costs and distribution costs of both supplier and enterprise.
Connecting everyone up is one of the major challenges when supply
chain technology is used in conjunction with virtual marketplaces
and e-procurement. Most vendors seem to prefer a 'thin' client
deployment model involving few or no client installations, so in
theory all a client needs to do is plug into the network and have a
Web browser ready and waiting.
This slimming of the client role is a major factor in reducing the
cost of the technology, as no proprietary applications are needed
and infrastructure is limited to hardware changes.
Business issues
The difference between a good,
integrated, streamlined supply chain management platform and a bad
one makes the difference between a business that is highly
competitive and one that is uncompetitive. At base, ERP is all
about minimising the cost of running an enterprise. Business is
generally organised as silos of information. It is this structure
that ERP has mirrored. But with the growth of the Internet, the
main suppliers are pushing e-collaboration - technology designed to
share information among employees, customers and business partners.
Well-planned and executed supply chain strategies can streamline
the business considerably. Business processes can become faster,
with a dramatic increase in automation across the chain.
Management issues
With so many different systems
involved, there are a number of management challenges to be
addressed. With the portal approach (typified by the SAP Enterprise
Portal), a company must manage applications and connections with
suppliers, partners, customers and staff, but with centralised,
browser-based applications the impact of this is minimised.
Any company must weigh up the cost benefits of increased automation
through e-procurement and supply chain systems against the
management impact involved. While costs may be relatively high on
the management side, the new operations will create large swathes
of valuable business information.
Supply chain management systems are reliant on the underlying
systems that hold the chain together. If one link goes down, the
whole chain is disrupted, but the Web-based approach does remove
the need for lengthy installation at client locations.
Expert advice
ERP is a complex implementation, often
taking several years and involving a major business process
re-engineering exercise. Enterprises must identify their business
processes and examine how to make them more efficient.
Here is some advice from Giga Group:
- Build a hierarchical view of processes and component activities
and create a functional hierarchy to organise and index the
processes to be studied.
- The most important insight about business rules can be acquired
from assessing current business processes.
- When documenting processes, it is useful to create process flow
diagrams using a software tool, such as workflow tools or
general-purpose diagramming tools.
Major vendors
- SAP - This behemoth of the ERP industry has endless
implementations in the world's largest companies. The mySAP.com
product line is the new 'e-business' range from SAP, integrating a
range of products with Internet technology. Several modules form
the supply chain management system.
- JD Edwards - JD Edwards has a range of solutions for each
aspect of the supply chain, from procurement through asset
management and marketplaces to financials. Each element forms part
of an overall JD Edwards solution. It is Web-based to minimise
deployment and management costs, and uses software from JD Edwards,
IBM and Ariba.
- PeopleSoft - PeopleSoft now produces Supply Chain Planning,
offering 'collaboration' with customers, partners and suppliers. It
even offers collaboration for field staff, integrating with other
applications to provide real-time resources for all parties.
- Oracle - 'E-business at Internet speed'. Hopefully Oracle is
not talking about the constant wait that modem users endure. The
Oracle ERP offering is centred on linking customers, employees and
suppliers, to reduce costs and boost efficiency. While the theory
isn't inherently different, the fact that it runs under standard
Oracle Database systems is a big bonus for some.
- Baan/Invensys - Collaborative commerce: the buzzword seems to
be everywhere these days, and Baan's products are centred around
linking suppliers, partners and customers together to automate and
streamline business processes as far as is currently possible. Baan
has over 15,000 customer implementations worldwide and is very much
one of the big boys.
Useful links
http://www.sapfans.com/http://www.plant-wide.com/http://www.erpassist.com/http://www.erpcentral.com/
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