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planning (ERP) system serves the same purpose. It is a packaged
business software system that allows a company to:
• Automate and integrate the majority of the business
processes,
• Share common data and practices across the entire enterprise,
and
• Produce and access information in a real-time environment.
ERP systems reside at the host or corporate level. Think
of them as the wiring and plumbing of a company: Typically,
the core business processes managed by the ERP involve
the manufacturing, distribution and financial needs of a
company, including cost accounting, inventory, purchasing,
customer orders, invoicing, vendor invoices and payments,
customer receipt processing, general ledger and shop floor
control features.
The data created by those processes is maintained in a
common file and in a common language understood by all
the other systems in an enterprise, whether those systems
are part of an integrated supply chain suite or linked together
through interfaces.
Order management
Filling an order begins with an order management system
(OMS). These systems capture order information from customers
by phone, fax, EDI (electronic data interchange) or
the Web. OMS systems were once a function of an ERP system:
They checked credit, passed an order on to a supply
chain execution system, and tracked the status of an order in
batch mode. A company with multiple divisions—and multiple
ERP systems—might have multiple order management
systems.
Contemporary systems, also known as multi-enterprise
OMS, sit above the ERP and present one face to the customer:
Place an order and the OMS will parse out the different
line items of an order to the right division, the right
manufacturing plant, the right third-party distributor or the
right warehouse. The OMS then passes that information on
to the other systems and partners in the supply chain to fill
the order.
SUPPLY CHAIN PLANNING
Supply chain planning
Supply chain planning (SCP) software is an umbrella technology
that enables you to do advanced supply chain planning
and scheduling including decision support, optimization
and cross-functional decision making.
An SCP system usually resides at a corporate level, where
it looks at the orders to be manufactured, picked and shipped
as well as the constraints, or limitations, on the availability of
capacity, materials, equipment and human resources. With
that information, the system determines the best way to
Manufacturing execution systems (MES) synchronize
manufacturing processes across a facility or supply chain.
schedule an order and plan for the future. Planning software
may even determine that an order can’t be profitably filled
under any circumstances and shouldn’t be scheduled. While
there are many planning components, most attack a problem
from one of three angles:
• Strategic planning looks at capital asset allocation as well
as market and sourcing decisions, like where to locate a
warehouse or DC to serve a particular market.
• Tactical planning asks the questions: Given my customers’
demand and my resources, what can I make that will
produce the most profit for my company?
• Operational planning takes the supply chain plan developed
by the strategic and tactical planning programs and
develops an operational path to execute those plans.
First, it may develop weekly production and stocking
schedules. Then, it might break the weekly plans into
smaller units of time, right down to the day, hour, minute
and even second.
Multi-echelon planning
This is an emerging application used to optimize the amount
and positioning of inventory across the supply chain.
Traditional inventory optimization is a little like playing
checkers: These systems look at inventory in one dimension,
such the inventory levels at a specific warehouse or
parts depot.
A multi-echelon solution is like playing Chinese checkers:
It looks beyond the inventory levels at a single location
and optimizes inventory positions in the equivalent of three
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