Some businesses and companies employ enterprise resource planning software to manage their supply chain activities and processes, but it doesn’t satisfy their needs and requirements. That’s why some companies turn to specialized supply chain software to manage their supply chain processes. Today, we’ll discuss the difference between ERP and SCM; their advantages and disadvantages separately.
What is ERP?
ERP (Enterprise Resource Planning) is software that allows businesses and organizations to deal with workflows and data in various departments within the same organization like; order management, finance, and HR. First large-scale organizations started employing the ERP software, and then companies of all sizes and scales started using it. However, the automated integration feature allows businesses and organizations to manage resources effectively like;
- Recording financial data
- Maintaining inventory
- Taking customer orders
Advantages of ERP
Some of the key benefits and advantages of ERP are as follows;
Better Customer Service
The efficiency in the supply chain processes makes it possible for the company to deliver quality products and services to the end consumer on time. It helps businesses to develop better relationships with customers.
The execution of ERP software allows companies to achieve accountability in the following processes;
- Re-evaluation of stock batches
- Recognizing hazards and defects
- Tracking stock
Adapting to the changing environment is the key to the success of businesses and organizations with the requirement of a flexible business model. ERP software allows them to adapt to changing business needs and requirements.
Meets Marketing Requirements
The centralized data system means that the data analysis would be more efficient and effective. It allows companies to quickly respond to market changes and take benefit from market forecasting.
Optimized Supply Chain Processes
The ERP software helps businesses and companies to make effective decisions, and it makes sure that the entire SC processes keep on running effectively and efficiently. It allows them to make the necessary changes when needed and required.
The centralized ERP system amplifies the visibility and transparency of various processes so that you can evaluate different operations in real-time.
The ERP software would decrease operational and administrative costs because it automates various processes. The company would achieve the following;
- More efficiency
- Not wastage
Disadvantages of ERP
Some of the key disadvantages of ERP software or system are as follows;
- Complicated software and it requires an expert to conduct operations
- Requires a lot of configuration when you are streamlining various business operations
- The initial investment cost is very high if you are looking for customized business processes
What is SCM?
SCM (supply chain management) software helps businesses and organization to manage various supply chain tasks and activities like return, shipment, inventory management, receiving, ordering, and demand planning. The SC leaders employ the SCM software more deeply while analyzing the data in various stages of the supply chain processes. However, it helps them to recognize potential future issues, bottlenecks, and savings.
Advantages of SCM
Some of the main benefits and advantages of SCM software are as follows;
Improved SC Network
The effective management of SCM software improves the overall supply chain network.
The supply chain software improves communication, and it would reduce delays and logistical errors. Resultantly, it shuts down many problems and issues in the production and manufacturing line.
The supply chain software would improve the productivity and profitability of an organization by amplifying the following processes;
- Better communication
- Quick system response time
- Adjusting storage space
- Better inventory system
The supply chain software improves the communication line by developing collaboration among various stakeholders of the company;
- Shipping and transport companies
The supply chain amplifies business efficiency by integrating product innovation and logistic strategies. Resultantly, the company would be ready to deal with the changing market conditions and economies.
Disadvantages of SCM
Some of the main disadvantages of SCM software are as follows;
- SCM system covers only one area which is the supply chain processes
- Could only become useful if you integrate it with various other business management software, and the integration is complex and expensive
Difference Between ERP and SCM
The supply chain system focuses only on the supply chain processes; whereas the enterprise software would focus on performing various functions.
The supply chain software is relatively easier to use and implement; where the enterprise resource planning system is difficult and complicated. In fact, companies need to hire ERP software experts to perform various operations.
The supply chain system focuses on the external supply chain processes and stakeholders of the company. The enterprise system only focuses on the internal processes and areas of the company.
The supply chain software has the capability to integrate with various business processes of a single company. But it allows you to connect with other stakeholders and partners involved in the SC processes.
The enterprise system could only integrate with the business processes of a single company.
The supply chain software is dynamic and flexible relevant to the sourcing; whereas the enterprise software is static and inflexible when it comes to sourcing.
Additional Focused Areas
The additional focus of supply chain software is on developing relationships with other 3rd parties of the company. The focus of enterprise software is only on the task activities of the company.
Scale of Organizations
The supply chain software is only for small-scale organizations with limited users. The enterprise system is for large-scale organizations that have got a lot of users.
The processing speed of the supply chain software is speedy; whereas the enterprise software is a bit slower.
Conclusion: Difference Between ERP and SCM
After an in-depth study difference between ERP and SCM; we have realized that both software and system are useful for different types of organizations. If you are learning the type of software to use, then you should keep in mind the above-mentioned differences.
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