Making the Link between ERP and SCM


Enterprise Resource Planning and Supply Chain Management are two different, yet overlapping activities. An attempt to use an identical approach for ERP and SCM typically leads to a system that is an unsatisfactory mix of both. The solution however can still be a modular, integrated software solution that has been designed to manage both activities, each one in the right way. In this case, ERP and SCM also benefit from being linked within the software to make each one perform even better.

ERP and SCM the odd couple?

What makes ERP and SCM different? ERP deals with forecasting and scheduling resources on a point basis. It gathers information from different locations to give a company a result that allows it to avoid shortfalls and carry out the required operations in each location on a timely basis. However, ERP doesn’t cross organizational borders and is limited to managing individual transactions. On the other hand, SCM looks at the whole, end-to-end flow of operations from the supply of raw materials to the delivery of finished goods or services, for global optimization. ERP helps to contain costs, but it’s SCM that brings an enterprise competitive advantage with its customers. So what then do ERP and SCM have in common?  They both use many of the same building blocks of information. If ERP has already pulled that information together into one place, SCM now benefits from having a single up-to-date source to work with. As long as the software system you choose takes into account the separate objectives of Enterprise Resource Planning as compared to Supply Chain Management, you can use it to handle both.

Microsoft Dynamics NAV for greater efficiency

This is the concept that is built into Microsoft Dynamics NAV. As an integrated business management solution, it includes ERP and SCM. It also has the flexibility and modularity for adding customized functionality for future needs – an important consideration for the moving target of supply chain management. The software allows SCM to extend beyond the boundaries of an enterprise, allowing for connection with trade partners and operations in different countries and different languages. An enterprise has access to functionality to manage procurement, inventory, warehousing, manufacturing and distribution and more, all in one efficient system. This integration also resolves the potentially thorny issue of which functionality to implement first, ERP or SCM. If ERP is chosen as a priority because it allows a company to build a model of its financials and business workflow, it’s reassuring to know that SCM can then be developed in parallel or as a follow-on project without worries of data flow or compatibility. Other advantages include lower costs of implementation and total lower cost of ownership, when one efficient system and one platform are used instead of multiple platforms.

The best reason for integrated ERP and SCM

However, the best reason for making the link between Enterprise Resource Planning and Supply Chain Management with a solution like Microsoft Dynamics NAV is the positive impact on services provided to customers. With the ability of the system to change to accommodate customer requirements and new rules and regulations in the future, customer retention is increased, and with that comes greater enterprise robustness and profitability. Contact Albrecht Solutions for more information about the integration between ERP and SCM.

Date 21.05.2016 - 06:27


Felix Albrecht

Founder and Partner, specialized in Project Management, Global Rollouts, Supply Chain Management