How to Extend Your ERP System Into a Supply Chain SystemDavid Inbar
Enterprise Resource Planning had traditionally been considered as the system to be used only behind the four walls of an organization. With the Globalization of manufacturing, Outsourcing and lean manufacturing concepts, ERP can no longer act in isolation.
The information needed for the efficient operation of the Organization is no longer available within the Organization. Most of the information comes from outside from value chain partners like Suppliers, Contract Manufacturers, Third Party Logistics Providers and transporters.
The flow of information is so dynamic and ever changing it is not possible to manually maintain this stream of information through Email, Phone calls and Spreadsheet communication. Companies need an Integrated solution that is available to its extended Trading partners.
Companies that have implemented expensive ERP Systems like SAP and Oracle are achieving this to some extent by opening up their ERP system to its vendors. Vendors use VPN or some other means to get into company’s network log into the ERP as a user and update data directly into the system. Even though this method appears to solve the problem, it poses lot of issues as below
License Compliance Each of the vendor user who logs into the system are considered to be named user and it adds to the license cost. Some of the vendors may use the system hardly once in a month. Also most of the companies of 500+ vendors providing miscellaneous services. Is it worth to have license for each of these vendors.
Security Issue While employees of the Organization are bound by the confidentiality agreement created by Employer Employee relationship, vendor users may not be bound by this confidentiality agreement. Also using VPN (Virtual Private Network) by people outside the Organization compromises the security.
Training & Errors Complex ERP systems like SAP and Oracle are difficult to learn and costs lot of money to train people to learn to use this system correctly. These complex ERP systems are designed for large organizations with good IT training budget. Smaller and Medium sized vendors may not have the expertise and resources to learn these systems.
What is the Solution?
It is still needed to get the information input from outside the firewall of the organization. So what is the solution.
Use an application that is specifically designed for these purpose. These applications are separate applications that may not need VPN connection and also less complex to use.
These systems in turn talk to the ERP using electronic connection and synchronizes data back and forth.
As these systems are specifically designed for this purpose, they are less complex to use and easy to implement.
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