Effective Logistics and Supply Chain Management with ERP Systems

In today’s increasingly global and turbulent markets, companies need to adjust quickly to new conditions. The ability to flexibly adjust the business processes, operations and information flow along the extended supply chains therefore becomes vital for a company’s survival and success. On the other hand, the burden of resource, process and information management has grown heavier. Most modern companies, especially large and mid-size ones, have complex organisational structures, with many resources to be controlled and many processes to be managed. And they also have to deal with both external partners in a global supply chain and huge amounts of data and information that must be available 24/7.

To meet such challenges, various Enterprise Resource Planning (ERP) software suites have been developed to help manage processes, resources and information across a business. Built on a centralised database and typically a common computing platform, an ERP system consolidates business operations into a uniform and enterprise-wide system environment. As opposed to the software packages specifically used for single functions such as purchasing or planning, ERP systems integrate all aspects of the enterprise, manage both internal and external resources and facilitate efficient information flow between all business functions. An ERP system is a combination of components that integrate people, information and processes comprehensively and flexibly, and allows companies to gain better control of their administrative and operational environment.

The market leader in Enterprise Resource Planning (ERP) systems is the German company SAP AG, which was one of the first companies to introduce standard software that covers all vital business processes within a company. SAP was originally developed for very large manufacturing companies, but is now being implemented by a number of smaller companies in many different industries. They came to believe that competitive advantage could be gained with just the core functionality, which usually comprises finance, production planning, sales and distribution, and materials management. Then, on the second and third phases of their implementations, they would introduce other functionalities such as warehouse management, human resources, plant maintenance and quality management.

An ERP system such as SAP provides multiple functional modules to deal with various business functions, for example:

  • Operations
  1. Materials Management – the foundation for the logistics functions, which includes purchasing functionality, inventory movements, accounts payable and the material master file.
  2. Sales and Distribution – includes the sales functions, pricing, picking, packing and shipping. The component incorporates the processes from customer order to the delivery of the product to the customer.
  3. Production Planning – includes capacity planning, master production scheduling, material requirements planning and shop floor functions. This component manages a company’s production process.
  4. Quality Management – This component is used for planning and execution of quality inspections of purchased and finished products.
  5. Plant Maintenance – This component is used to maintain the equipment and tools used in the production process.
  • Accounting
  1. Financial accounting
  2. Management accounting
  • Human Resources

Despite the strong potential and comprehensive functionality of an Enterprise Resource Planning (ERP) system, successful implementation is not always guaranteed. Appropriate functional specification, selection and configuration are critical to tailor the system to the unique situation of a particular business. With our expertise and experiences in supply chain modelling, logistics strategy and ERP systems, The Logistics Business Ltd will work closely with you to evaluate your specific needs and assist you with the successful implementation of the most suitable ERP product.