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ERP vs SCM | What’s The Difference?

Both Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) can be implemented to assist in streamlining processes to improve overall effectiveness.

ERP Software can be useful for some businesses as it has a wide range of modules to meet a variety of internal needs. This is an example of the ERP interface:

SCM is better suited to companies who perform a lot of international trade because the system can be tailored to meet a specific shipping industry standard and shipping procedure or software package. The end result being a customizable, intelligent shipping process. This is an example of an SCM interface:

When implemented properly, SCM software allows for a seamless shipping process that allows for better data sharing across divisions. SCM uses a set of predefined, automated shipping rules and regulations.

ERP is a process based system that only looks at a set of processes, rather than the shipping procedure. This can be a challenge when companies perform varied shipping procedures across their routes. Although, it should be noted that ERP can be trained to adapt to different processes.

We have often found that ERP software can be tedious when used for SCM as it’s not built to match SCM software. Ineffective use of ERP software can lead to costly mistakes, one of which is the improper bill of lading (BOL).

According to the logistics manager at Semco, “Companies are spending an excessive amount of time, money and effort to execute a multitude of processes manual. This can be easily automated with a system such as SCM software.” This is an example of a BOL that may have taken hours to complete.

ERP software can best be used as a tool to augment the tedious work of SCM software. ERP software is typically very comprehensive in terms of end-to-end processes. For example, if an invoice is received and booked, the system will automatically update the other relevant interfaces such as inventory management & accounts payable. The SCM software can be used to automatically update relevant information for other internal processes.

SCM is flexible in the sense that it can be customized to the specific shipping company. ERP is typically built for a specific industry standard that provides features such as EDI (electronic data interchange) and other documents such as packing slips, invoices, purchase orders.

Another example that demonstrates the differences: with ERP/SCM software an organization may use the same ERP program but apply a different SCM software. ERP/SCM software is either designed for one or the other. You cannot overlay one on the other.

SCM, when correctly implemented, allows for a detailed shipping history which can be used to provide statistical data for internal functions. This is an example of statistical data that can be used to assess current shipping procedures and for product selection.

ERP/SCM software, when used correctly can help your business improve its organization.

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