As we enter the new millennium, organizations are relentlessly searching for ways to expand their competitive edge. MRP II and ERP implementations have been used as first steps in becoming customer-driven enterprises to achieve this objective. These closed-loop systems are providing the necessary communication, database, and feedback tools to enable companies to run their operations more efficiently. However, the integration of necessary customer information into this network has often proved difficult, if not impossible.
Globalization demands that organizations focus on improving their entire supply chain if they are going to gain or maintain competitive advantage. The objective of this presentation is to discuss the benefits of an integrated system specifically in the area of master planning. Methods for applying JIT principles to become trading partners will be discussed, as well as world-class approaches to improved responsiveness and customer satisfaction. Attendees will learn how both large and small organizations have increased profitability by reducing cycle times throughout the entire supply chain. Steps necessary for implementing and managing successful customer/supplier relationships will be introduced, including practical, inexpensive supply chain techniques, as well as those that are state of the art.
Customer service can no longer be measured by our own standards. It is not the quality of service that is given, but the quality of service the customer perceives that causes them to buy and come back for more. Today's global competition mandates that organizations apply eminent levels of quality to achieve true customer service. The values and requirements of the customer must take precedence, and become the driving force behind the way our business is managed. Using customer data rather than one's own is but one way to ensure the accuracy of realizing customer needs.
This customer-driven attitude is based on an ability to be responsive to customer needs and flexible to constantly changing demands. Sharing valid schedules, reducing each other's costs, and streamlining communications allows suppliers and customers to become true enterprise partners. This provides an essential ingredient in today's, and tomorrow's, business environment—that of selling quality relationships, rather than products. In order to accomplish this, the internal processes of enterprise resource planning (ERP) need to be combined with the external links managed by supply chain management (SCM).
BRIDGING SCM AND ERP: DEFINITIONS AND RELATIONSHIPS
Enterprise resource planning and supply chain management, though having a complementary relationship, actually serve two distinct purposes.
• The ninth edition of the APICS Dictionary defines
ERP as "a method for the effective planning and con
trol of all resources needed to take, make, ship, and
account for customer orders in a manufacturing, dis
tribution or service company."
• SCM is defined by the Council of Logistics Manage
ment as "the process of planning, implementing and
controlling the efficient, effective flow and storage
of goods, services and related information from the
point of origin to point of consumption for the pur
pose of conforming to customer requirements."
Organizations do not have to choose between ERP and
SCM. ERP systems focus within the enterprise, providing a valuable but partial solution, allowing all the major activities of the business to function seamlessly. Without this backbone to manage the internal workings, the organization becomes the weak link in the supply chain.
SCM expands the focus to include the functions around the enterprise. This set of tools is functionally rich in the areas of on-demand requirements planning, balancing multiple demand sources, and partnering with customers to eliminate paperwork, waste, cost, and lead times. This next logical step of the extended chain integrates the set of activities by all participants, including those within ERP, as shown in Figure 1. In most supply chains today this activity takes days or weeks. In the business processes of tomorrow it will take hours or minutes.
The benefit is that when all shareholders behave as if they are part of the same organization—suppliers, manufacturers, distributors, and customers—performance is significantly enhanced throughout the entire chain. For a customer-driven effort, this means allowing actual customer information to replace inventory as the foremost driver of the organization.