Week 10 | Session 4: Information Systems in SCM — ERP Overview, MRP, Use Cases & Implementation
Course: Supply Chain Digitization — Module 4: Digital Infrastructure
Session Agenda
Section titled “Session Agenda”1. Context — From Hardware to Software
Section titled “1. Context — From Hardware to Software”Previous sessions covered hardware (barcodes, QR, RFID, sensors) — the data capture layer. This session shifts to software — the information systems that manage, plan, and act on that data.
Three key information systems in SCM: ERP (this session), WMS, and TMS (next session).
2. Why Information Systems are Needed in SCM
Section titled “2. Why Information Systems are Needed in SCM”A supply chain has many processes, many entities, many simultaneous interactions. Without structured systems, organizations operate in haphazard mode — hard to measure performance or maintain reference points. Information systems bring: transparency + efficiency + structured decision support.
Key principle: IS should be selected based on organizational need — not because a competitor uses it.
3. Five Needs That Drive ERP Implementation
Section titled “3. Five Needs That Drive ERP Implementation”- Planning: Identify tasks for near and distant future across all SC processes. Avoids daily firefighting — enables a longer time horizon.
- Execution: Convert plan into daily actions — who does what, with what resources. Inventory sorting, dispatch, invoicing, billing happen every day.
- Automation: Repetitive tasks (e.g., vendor reminder emails) → automate to free up human capacity for value-adding work.
- Monitoring: Track inventory levels, orders dispatched, workforce attendance, equipment status via dashboards. Identifies issues before they escalate.
- Control: Act on monitoring data — stop a defective line, adjust a schedule, escalate a delay. Can be manual (alert) or automated (system triggers corrective action). Closes the loop: plan → execute → monitor → control → replan.
4. What is ERP — Enterprise Resource Planning?
Section titled “4. What is ERP — Enterprise Resource Planning?”ERP = a software system (or collection of applications) that manages business processes across an organization.
- Enterprise = connection of several entities/processes delivering value to a customer.
- Based on: large amounts of transactional data interconnected via formulas and rules.
How It Can Be Implemented
Section titled “How It Can Be Implemented”| Approach | Examples | Notes |
|---|---|---|
| Off-the-shelf | SAP, Oracle, Tally | Market solutions for specific modules |
| In-house build | Open source tools, spreadsheets | Viable for specific/custom processes |
| Cloud-based ERP | Increasingly popular | Avoids local server dependency; accessible anywhere |
5. Foundation — MRP vs ERP
Section titled “5. Foundation — MRP vs ERP”ERP evolved from MRP — Material Requirements Planning — but extends far beyond it:
| Attribute | MRP | ERP |
|---|---|---|
| Full name | Material Requirements Planning | Enterprise Resource Planning |
| Scope | Narrow — production/manufacturing | Wide — spans all business functions |
| Key inputs | BOM + inventory records + lead times + demand | All MRP inputs + financial + HR + cross-functional data |
| Key outputs | What to produce/buy, when, how much | Integrated plans — scheduling, budgeting, invoicing, reporting |
| Focus | When to make/buy what components | Resources, information and decisions across the whole enterprise |
| Industries | Assembly, manufacturing | All industries — service, manufacturing, retail, SC |
MRP Key Inputs
Section titled “MRP Key Inputs”- Bill of Materials (BOM): hierarchical breakdown of components needed to build the final product.
- Inventory records: current available stock. Lead times: how long each step takes.
- Demand plan: what needs to be produced and when.
6. ERP Application Areas / Modules
Section titled “6. ERP Application Areas / Modules”| ERP Module | What it Handles |
|---|---|
| Accounting & Finance | Budgeting, invoicing, accounts payable/receivable, spend analysis |
| HR & Manpower Planning | Leave management, payroll, overtime calculation, recruitment scheduling |
| Project Management | Activity tracking, cost monitoring, stakeholder visibility |
| Procurement | Vendor onboarding, delivery scheduling, PO generation, payment linkage |
| Materials Management | Inventory tracking, BOM management, stock reconciliation |
| Asset Management | Asset location, utilization tracking, maintenance scheduling |
| Production / Operations | Production scheduling, capacity planning, MRP outputs |
| Sales & Distribution | Order management, dispatch tracking, customer invoicing |
7. ERP Use Cases — How Modules Connect
Section titled “7. ERP Use Cases — How Modules Connect”Use Case 1 — Consultancy Firm
Section titled “Use Case 1 — Consultancy Firm”ERP connects: project pipeline → consultant skill sets → capacity planning → hiring needs → consultant hours logged → client invoicing → salaries + overtime payroll. Frees consultants from admin so they focus on client delivery.
Use Case 2 — Procurement / Vendor Management
Section titled “Use Case 2 — Procurement / Vendor Management”Vendor onboarded onto ERP → receives delivery schedule directly via system → logs dispatch data → company receives confirmation → GRN recorded in ERP → triggers accounts payable → invoice generated at vendor side → spend analysis enabled.
8. ERP in Supply Chain Management — Benefits & Challenges
Section titled “8. ERP in Supply Chain Management — Benefits & Challenges”| ✅ Benefits | ❌ Challenges in SC Context |
|---|---|
| Connects multiple entities on a single digital platform | Onboarding all SC partners is hard — different sizes, ERP systems, digital maturity |
| Reduces need for frequent in-person interactions | Small vendors may have no ERP — cannot afford or lack technical capability |
| Creates transparent, accountable business transactions | Process-software fit problem: assembly ≠ warehousing — same ERP may not handle both |
| Enables long-range planning rather than daily firefighting | Vendor with multiple clients: onboarding onto 3+ different clients’ ERP is very costly |
| Automates repetitive tasks; supports audit trails | ERP in SC is rarely fully end-to-end — gaps remain between partners |
Workarounds for SC ERP Gaps
Section titled “Workarounds for SC ERP Gaps”- Vendor management investment: help small vendors adopt basic digital tools.
- Module-specific adoption: implement ERP only for subsets where it integrates well.
- Delinked modules: use one ERP for specific partners; separate module for others.
Session Summary
Section titled “Session Summary”- 5 ERP needs: Planning, Execution, Automation, Monitoring, Control — each eliminates a different inefficiency.
- ERP definition: software system connecting business processes across the enterprise via transactional data.
- MRP → ERP: MRP is narrow (production/manufacturing). ERP extends to all business functions.
- ERP modules: Accounting, HR, Project mgmt, Procurement, Materials, Assets, Production, Sales.
- ERP types: off-the-shelf (SAP, Oracle, Tally), in-house, or cloud-based — driven by need, not trend.
- SC challenges: partner onboarding, process-software fit, vendor with multiple clients → ERP rarely fully end-to-end.