ERP implementation in Supply Chain Management

ERP implementation in Supply Chain Management

Supply chain management (SCM) requires reliable information, communication and technology (ICT) systems. This is driven by the complexity and demands of managers in decision making and controlling SCM. The development of ICT application systems in recent years shows increasingly rapid progress, one of which is the enterprise resource planning (ERP) system.

Integrated enterprise resource planning (ERP) system that is now commonly used by large companies to support the planning and control of supply and demand. Major software vendors such as JDA Software, Microsoft, Oracle, and SAP offer state-of-the-art systems designed to provide real-time data to support better routine decision making, improve transaction processing efficiency, cross-functional integration, and provide increased insight into how a business should be run (Jacobs & Chase, 2011).

The term ERP has different meanings, depending on the user's perspective. From the manager's point of view in a company, the emphasis is on the word "planning"; Managers interpret ERP as a comprehensive software approach to support business planning and control decisions.

On the other hand, for the information technology community, ERP is a term that describes a software system that integrates application programs in finance, manufacturing, logistics, sales and marketing, human resources, and other functions in a company.

This integration is achieved through a shared database by all data processing functions and applications. ERP systems are usually very efficient in handling many transactions that document the company's activities. ERP systems allow for integrated planning within a company.

The company implements ERP to benefit through the efficiency obtained by integrated supply chain planning and process control. In addition, a better response to customer needs is obtained through real-time information provided by the system.

ERP Qualification

There are four aspects of ERP application systems that determine the quality of an ERP system (Jacobs & Chase, 2011).

1. This application system must be multifunctional within the scope of various company activities with the ability to provide financial information, material procurement activities both in rupiah and volume units, sales in rupiah units and volume of product and service units, and manufacturing or process conversion in units of resources or people .
2. This application system must be integrated. When a transaction or data representing a business activity is entered by one function, data regarding other related functions is immediately updated. This is able to eliminate the need for reposting data to the system.
3. This application system must be modular so that it can be combined into a wider system or connected with software from other applications.
4. This application system must facilitate the planning and control of basic activities, including forecasting, production planning, and inventory management.

An ERP application system can be built with software modules from different vendors, or can be purchased from one vendor. The multivendor approach allows companies to buy "best-in-class" application systems from each module. However this will usually sacrifice the increased costs and greater resources that might be needed to implement and integrate functional modules. On the other hand, a single vendor approach might be easier to implement, but the features and functions of an application system might not be the best application system.

ERP Application System

ERP as a core or backbone in a management information system that integrates all information system applications used in the company. ERP applications include: finance, manufacturing and logistics, sales and marketing, and human resources.

Finance Application System

ERP systems provide a common platform for recording financial data, processing and reconciling data to produce accounting and financial information in the form of general ledgers. From this general ledger, financial statements can then be presented after adjustments have been made in accordance with established accounting policies.

The real benefit of a financial ERP system is the process of recording financial data coming from transaction sources. For example, a transaction regarding an order from a customer, in the financial ERP system this transaction is required for production data and at the same time to update the accounts receivable data when the shipment of goods has been carried out.

Manufacturing and logistics Application Systems

The ERP system that is applied to manufacturing and logistics business processes is the most complex application, because it consists of several modules which include:

• Sales and operational planning
• Raw material management
• Maintenance of factory facilities
• Quality management
• Production planning and control

Sales and marketing

The ERP system used for sales and marketing business processes includes customer management activities, such as:

• Sales order management
• Forecasting
• Order management
• Credit checking
• Distribution
• Export control
• Delivery of goods
• Transportation management
• Billing
• Debating process

Human Resources

ERP applications used to support human resource management activities, which include: payroll, benefit administration, recruitment procedures, personnel development planning, workforce planning, scheduling and shift planning, attendance management, leave, and employee income tax management.

Implement ERP

Many companies have benefited from the implementation of ERP, while on the other hand also found several companies facing problems in implementing ERP.

ERP implementation requires investment and cost is quite expensive, both initial cost and running cost, requires some customized or tailoring to fit the ERP application system with the business processes and supply chain management of the company, requires costs and time for consulting and training activities to ERP implementation.

For companies to succeed in implementing ERP, company management needs to conduct intensive training, starting from the managerial level to the operational level. Cultural changes and ways of working need to be done to adjust and fit into the new ERP-based business process.

APPLYING SUPPLY CHAIN MANAGEMENT IN COMPANIES

Supply Chain Management (SCM) is a way of managing the supply of raw materials, products, information, or services needed by a company from the beginning to the end process that is effective and efficient. The purpose of supply chain management is to control and develop the organization through the principles and processes of management, so that in managing the supply chain process can produce products that are efficient and effective. According to David Jacoby, there are 4 principles that underlie supply chain management, namely:

• Efficiency. What is done by management must be based on the principle of low cost and minimum time.
• Reliability What is produced is always consistent, both in terms of product and service quality.
• Flexibility What management does must be flexibility both in the rules and in the ability to follow the rhythm of customer demand.
• Innovation. The principle of innovation is needed because competition in the market is not fixed and continues to change.

There are three major components in the SCM concept, namely:

• Network structure. Determine who are the main members of the supply chain. Usually selected levels from managers to upper levels or top management who are considered to have the right to make decisions in determining the business.
• Business process. Determine what processes must be associated with each member of the supply chain. It contains a mapping of what processes are carried out from beginning to end, namely:
  
  Order process: the total time spent from the customer placing an order until the customer receives the item.
  
  Customer service process: all customer service from before, during and after the sales transaction.
  
  Distribution process: services ranging from the procurement of products requested by customers to the delivery and receipt of these products by customers.
  
  Product manufacturing process: to reduce unnecessary or overlapping things or work and speed up the process to be ready to be marketed.
  
  Supply process: the process of selecting suppliers, selecting products, testing the ability of suppliers, building commitments, agreeing together work agendas and ethical standards, and approving supplier development programs.
  
• Management component. Consists of two large groups, namely:
  
  Structure components: organization, planning and control, information distribution process, and production flow.
  
  Components of behavior: management principles, owner philosophy, power structure, payroll structure, and corporate culture.

In implementing supply chain management, there are ten processes that must be managed, namely:

• Information flow and content. Management must be able to manage information from the most upstream party to information from the downstream party or end user of the product.
• Production. Production flow from upstream, in the form of raw materials, to end users.
• Customer Relationship Management (CRM). Forming an emotional bond between all parties involved with the hope of all contributing to action for a common goal with the principle of 'win-win solution'.
• Supplier Relationship Management (SRM). Establish emotional bonds between all suppliers. The concept is almost the same as CRM.
• Customer Service Management (CSM). Able to provide solutions for all parties involved. Become a spokesperson and ambassador of the company in dealing with parties outside the company.
• Demand Management (DM). SCM is able to follow the company's processes and activities in increasing the demand for the company's products.
• Order fulfillment. The process starts from the appearance of orders, processed, until fulfilled orders are the responsibility of SCM. Must meet 6R, right goods, right place, right time, right price, right quality, and right quantity.
• Accountability SCM is responsible for integrating the manufacturing or product formation process or service from the initial design to the end customers' acceptance.
• Product development and innovation. SCM is also responsible for the product development process to the market stage.
• Product return. Product returns due to shipping errors, damaged goods, or refilling processes are also the scope of the SCM proce

3 Advanced Supply Chain Planning Functions that Are Vital to the Company

Advanced supply chain planning is also called advanced supply chain planning. It is not only the supply chain that is important for you to pay attention to, but the continued supply chain is also important. This advanced supply chain planning is used to balance demand, supply and supply. Without this balance, all continued supply chains cannot be carried out because there is an imbalance between demand, supply and also the supply chain itself.

In the midst of increasingly evolving technology as it is today, this advanced supply chain planning is the backbone of the company which is a buffer for the company's business operations. If the company cannot plan and manage the supply chain properly and it is feared that the company's operations will also be disrupted.

Function

There are several functions of advanced supply chain planning that are important for companies to know. With some of the functions possessed by this advanced supply chain planning the company will be able to be more effective in running the advanced supply chain. Check out some of the following functions:

1. Planning a request

Advanced supply chain planning is used in planning and estimating market demand for some of the company's products. Using statistical analysis as well as sophisticated macro techniques it is estimated that it will create a demand history with several causative factors, create an estimate model and also estimate results, and adopt a consensus based approach to the reconciliation of demand plans by various departments. Promotion is also used to increase marketing intelligence and management adjustments.

2. Planning a supply network

This advanced supply chain planning serves to integrate into purchasing, production and distribution, which at any time requires tactical planning and decision making to be simulated or implemented consistently. This supply network planning using sophisticated optimization techniques based on constraints and also penalties, planning product flow along the supply chain. The result is that purchasing, production and distribution decisions are more optimal so that customer service will improve.

Advanced supply chain planning is also used to calculate the amount that will be sent to the location to be adjusted to the demands of customers and also to maintain the level of service as they wish. This is an optimization done mathematically to ensure if demand can be met, production, and also warehousing resources are able to operate at a specified capacity.

3. Production plan and scheduling

The last function is planning production and scheduling. By planning all of this will make production time more effective and efficient, besides reducing waiting time, increasing delivery on time, increasing yields because management and better resource planning can even save inventory costs.

Advantages

There will be some advantages that you can get by using advanced supply chain planning. The first advantage is that you will get a clear picture of your supply chain management and advanced supply chain. Especially for retail and wholesale businesses, knowing accurate merchandise is very important because with this information it is possible for you to sell an item before it arrives at your warehouse. This can only be done with the help of advanced supply chain management because there is tracking information on shipping goods.

The next advantage is to increase productivity. Advanced supply chain management software makes business productivity increase from smooth communication, cooperation, coordination that can be established between vendors, shipping companies, and several other related parties. With this software the company is also able to develop better and more efficient goods distribution strategies so as to save time.

Thus some advanced supply chain planning functions that are important for you to know, hopefully this information is useful.

6 Unknown Benefits of Mobile Supply Chain

Using a mobile supply chain is the best solution so that companies become more competitive. With this mobile base the company will know the visibility from the starting point to the end point. Mobile-based supply chains become the right integrated solutions which will help you meet specific business needs. An increasingly complex supply chain that continues to fluctuate makes your company need a mobile-based supply chain that is claimed to operate faster than before.

The company can perform several functions at once such as warehouse management, orders, assets, labor, customer involvement, and also order management. Even more amazing is this mobile-based supply chain will be able to collect data automatically with cellular or cloud-based. There will be several benefits that companies can get by implementing a mobile supply chain like this:

Efficient Warehouse Management

As previously discussed or explained, the warehouse management system or WMS is part of the supply chain. Therefore, if the WMS is smooth, the supply chain will run smoothly and vice versa. By using this mobile-based supply chain you can easily do warehouse management. This warehouse is a place where companies store all their inventory before sending it to customers. With this mobile supply chain, it is possible for companies to be able to store inventory data in a database. This data will be divided into several categories according to the type of product.

Sending Orders Easier

This mobile-based supply chain can help your company speed up order processing and increase revenue by reducing the mileage driven by shipping personnel. Later this software will be integrated with the route management device so that it helps the driver to be able to calculate the optimal route.

Real Time Information

This mobile-based supply chain will be able to help drivers get more real time information. Besides this one software will be able to provide information if and delays, increased shipping operations, record keeping, inventory management, inspection, tracking of goods, and so forth. Improving all these processes will result in better and optimal operations in your supply chain.

Flexible delivery

In the supply chain, flexible shipping plays an important role in improving customer experience. After placing an order, the customer will be able to ask the sender to leave the product to a close neighbor. Mobile based software is able to help you and companies manage a variety of actions smoothly. In addition the company will be able to improve supply chain control so as to produce better opportunities to increase cooperation between shippers and customers.

Accurate Tracking

With the rapid development of technology as it is now allowing you and the company to track the driver along with his vehicle. This mobile-based supply chain solution will help managers in the field of shipping optimize the transportation process to make it possible for them to get real time updates on each vehicle that transits. Software that supports GPS will also help drivers to find out the location of each other that allows collaboration in a better way.

Performance Monitoring

The last benefit of using a mobile supply chain is performance monitoring. This software will help managers to monitor the performance of various operations and processes. This is useful for monitoring various functions such as load planning, transport optimization, and so on.

This mobile-based supply chain is very useful for managing human resources more effectively so that they will work more optimally. Therefore, for companies that have not yet applied the mobile supply chain, do it right away because it brings many benefits to your company's supply chain.