The impact of ERP on supply chain management

1. The impact of ERP on supply chain management • Exploratory findings from a European Delphi study.

2. Abstract • The study was conducted with 23 dutch supply chain executives of European multi-nationals. • The object was:Further integration of activities between suppliers and customers across the entire supply chain. • On-going changes in supply chain needs and requiered flexibility from IT • More mass customization of products and services leading increasing assortment while decreasing cycle times and inventories • Locus of the drivers seat of the entire supply chain • Need for worldwide IT systems • Greater transparency of the marketplace • Their insufficient extended enterprise functionality in crossing organizational boundaries

3. introduction • One reason for these initiatives may be the substantial cost reductions to be achieved from improving logistics performances. • In Europe, logistics cost range from 6% to 15% of total turnover • In the USA, american companies spent $670 billion on logistics and supply cahin-related activities in 1993, corresponding to 10.5% of GDF. • Another reason appears to be the advent of the network economy , which is triggering profund changes in the scope and impact of supply chain management. • Market are becoming more transparent, customer demands are being met in a more customized manner and, in general, the rate of change in the business world keeps increasing • All these developments are habing a profound impact on the ways im which supply chains of enterprises are to be managed. • The new business models for the internet age is growing rapidly, in particular is emphasizing that, as the business environment changes, supply chain design as opposed to supply chain coordination is becoming a core competency.

4. MRP Explosion Routing and Time standards Manufacturing resources plan Performance reports Cost and Price data

5. supply chain managemet in the network economy • We view a supply chain as a network consisting of suppliers, manufacturers, disrributors, retailers, and customers. • The network, in turn, is supported by three pillars: Financial flow Information flow Material flow Suppliers=>Manufactures=>Distributors=>Customers Processes Organizational Structures Enabling Technologies • Fig.1 An integrated model of the supply chain

6. Supply chain design is concerned not only with the specification of customer zones, selection of manufacturing and distribution facilities, and allocation of product families to these sites, but also with the prioritization of the capabilities to be developed and retained internally, and the forging of new partnerships with other entities along a supply network. • This dynamic view is particulary important in a fast-evolving world where new products and emerging distribution channels necessitate a contiunuous review of supply chain design decisions. • This dynamic view may neseccitate different perspectives for supply chain design. These perspectives include: organizational supply chain, capability supply chain, and technology supply chain. • The validity of a particular supply chain solutions is therefore determined by the clockspeed

7. Market mediation

8. There are different ways of definnig ERP: a business perspective, a technical perspective or a funtional perspective.One way of looking at ERP is as a combination of business processes and information technology.Worldwide sales of ERP packages together with implemetantion support, on the other hand, have esceeded 50 billion dollars at the turn of the century with annual growth rates of over 30%.In spite of the significandt slowdown in IT spending, ERP is expected to become a 10 billion dollar industry by 2004.A recent survey by fortune magazine revealed that seven out of the top tehn global pharmaceutical and petroleum companies, and all of the top ten global chemical companies are SAP´s R/3.the number of local IT system to be replaced by an intefrated ERP system usually runs into the dozens up to a hundred or more in multinational companies. ERP System

9. How Companies Benefit from Improving ERP System • As the world economy reaccelerates, Ventana Research sees companies investing selectively in information technology. Ventana Research advises our clients to assess their major IT system to determine if there are cost savings that can be achieved, and determine how well their software/hardware infrastructure supports existings strategy and business processes. • We find that companies that evolve their ERP solutions usually do so for any combination of the fallowing reasons: -Increase productivity -address performance management needs -Implement business process imprvements -Leverage technology -Address organizational changes -Enhance adaptability -Avoid absolescence -consolidate instances

10. Delphi study findings This section describes the main empirical results from the Delphi workshop. • Key trends in supply chain management for the coming years. -Just about every panel expert sees futther integration of activites between suppliers and customer across the entire chain os one of the three biggest trends in SCM • Expected impacts of ERP on SCM trends. • SCM limitations of current ERP systems -EE funtionality -Flexibility in adapting to changing supply chain needs -beyond transactions- more advanced supporting funtionality