The Impact of Erp on Supply Chain Management

In an organization’s operation, the main goal is to produce and deliver products or services that exceed the customer expectation at low cost. Achieving this goal depends on the supply chain execution, especially when it comes to produce a product with custom specification. Moreover, companies are facing challenges to remain competitive which require fast order processing, reliable logistic, and compliance with government regulations. All of these processes depend in how smooth the information flow in the supply chain. Enterprise resource planning (ERP) system is a software application that integrates internal and external management information in an organization which runs on a different variety of computer software and hardware using a database as the information’s repository.

The old ERP system is one software package that fits all of the industries. However, there is nothing in common with business processed between a mom and pop bakery and a company that produce an automobile, which involve more inputs, suppliers, inventory, and so on. Today, the new ERP is not an “out of the box” product anymore but can be custom fit to any organization’s supply chain needs which ensure smooth flow of data across the entire organization. Furthermore, the new ERP system provides real-time inventory management system which help planning and forecasting as well as maintaining inventory levels.

While ERP system provides the best solution for supply chain management in many organizations, implementing ERP system is not only upgrading computer software and hardware, but also transforming the organization process and business model into a whole new level. Detailed planning and proper execution are important in order to achieve the transformation. The following are challenges that must be addresses before implementing the ERP system.

The first challenge is ERP software selection problem. Since there are many ERP systems out there, upper management needs to understand their...