Since their inception, ERP systems have been crucial for accounting, governance, HR, and finance. With time, the functionality of ERP systems extended to supply chain operations in manufacturing concerns as well.
However, the concerns of international trade and logistics are extremely varied, to say the least. To handle international logistics, ERP systems must efficiently manage complex requirements, particularly in global supply chain control and execution. This compromise would ironically be the result of expanding the functionality of ERP systems.
ERP systems: advantages and disadvantages
To keep pace with dedicated SCM software, ERP systems are beset with the twin problems of mobility and integration. ERP systems are great for systemizing the workflow within the warehouses of a single company, but cannot keep up once there is a shift of focus towards other processes that are of greater complexity. One of the processes is the involvement of third or fourth parties across different sites and systems, managing multiple vendors, and increased variability of material handling systems.
The integration of systems for facilitating the exchange of data and collaboration between partners of different enterprises is a necessity in global supply chain management. The problem is that most ERP systems simply do not have all the necessary data to be considered an effective solution. As a result, ERP providers have created more modules to accommodate such requirements. However, for most companies, the ERP system is the core on which the IT infrastructure of the company is based. As a result, it contains sensitive information, which is the reason why businesses wouldn’t want to permit “outsider” access.
The processes of global trade present another dilemma for ERP systems. We can use the example of customs processes to illustrate this. The regulatory requirements for customs change constantly. ERP systems cannot handle constant updating which is a necessity to conform with compliance policies.
SCM software
Dedicated SCM software programs are not designed to be as all-inclusive as ERP software. Their solution focuses on key areas like customs clearance, transport management, and collaborative supply chains. This is the advantage that dedicated solutions like these present. However, there needs to be a platform that facilitates all parts of the supply chain. Solutions dedicated to individual areas become restrictive by the very fact of their specialization, and hence cannot deliver an integrative benefit.
Conclusion
Therefore, deciding between an ERP system or SCM system, or both, depends on a company’s individual requirements and operational processes. A company needs to be especially careful if its requirements are highly complex, and should ideally adopt a solution that incorporates both systems.
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