Supply chain management has always been a critical component of the modern enterprise resource planning (ERP) system. Rapid globalization and competitive pressures during the 1990s and 2000s spurred the development of more and more advanced supply chain application packages included in ERP systems.
While ERP systems were traditionally designed for large corporations, vendors started heavily targeting the small to midsize business (SMB) market in the 2000s—just as more and more SMBs have begun implementing more complex and intricate global supply chains.
We’ve examined some of the most popular ERP platforms to see how their supply chain management (SCM) offerings stack up. The vendors we’re looking at are:
ERP vs. SCM
It’s important to understand the ways this type of software is offered. Supply chain management is a functional area and a subset of an ERP system. However, it is often possible to purchase stand-alone or “best-of-breed” SCM applications and integrate them with an organization’s existing software, such as accounting, sales and other back office systems.
In addition, there are some cases where an ERP platform may have few, if any, SCM modules.
In general, most organizations are understandably hesitant to completely overhaul their ERP system for the sake of implementing a few new applications.
If an organization is simply trying improve one aspect of its supply chain rather than redo its entire IT infrastructure, then implementing a best-of-breed SCM application might make more sense.
On the other hand, if an organization is able to overhaul its ERP system for a new platform or system of applications, it may have more freedom to shop around and find a best-fit ERP platform that includes the SCM applications they need.
As so many SCM applications are built into ERP platforms, businesses have several options: They can opt for a fully featured ERP platform that covers all of the functional SCM areas, or they can opt for a lighter ERP platform and select which best-of-breed SCM applications they want to add-on.
With that in mind, let’s see how these major ERP platforms stack up, when it comes to their SCM offerings.
How ERP Platforms Stack Up With SCM Offerings
Here is a reference chart that shows which vendors offer which core SCM applications with their ERP platforms. Note that individual ERP platforms from a vendor may vary in features and functionality.
Core SCM Applications Offered by Major Vendors
As you can see, most vendors offer the basics: inventory management, warehouse management and order management. However, more advanced supply chain operations necessitate modules for demand planning and supplier management.
What Type of Company Are You?
Organizations looking to deploy new SCM software or invest into a more all-encompassing ERP system generally fall into a few categories:
- Third-party logistics (3PL) and distribution firms. Businesses that provide logistics services to other companies typically do not need applications relating to the manufacturing aspect of supply chain management.
- Manufacturers. Manufacturers can have very complex supply chains. The bigger a manufacturer is, the more advanced its needs will tend to be when it comes to SCM software. That said, smaller or low-volume manufacturers might not need as sophisticated of a system.
- Multinational. Whether it’s a distribution or manufacturing firm that operates internationally, both will need software that can assist with various international regulations and compliance codes.
For example, a 3PL firm would not need a module for product lifecycle management. However, these firms might also have deeper needs in the WMS/TMS and fleet management categories, especially if they work with many different clients.
Keep in mind that no platform will be 100 percent perfect for your needs. Most organizations will need some amount of customization with a new system.
If a particular platform does not have a required application or module, it is often possible to implement a customization or build an integration with another third-party application. Often a business will work with an independent software vendor (ISV) to build out their required customizations.
For example, Microsoft Dynamics is a widely popular ERP platform for SMBs. Out of the box, the Microsoft Dynamics line offers the general ERP applications, but Microsoft also partners with a number of ISVs who develop customized industry solutions and integrations for particular niches.
- Be sure to evaluate each system’s SCM application offerings. Understand which ones your company needs and which ones it can do without.
- Each of the major platforms has its own unique advantages and disadvantages—consider the overall costs and functionality of a platform compared to the best-of-breed SCM applications that can cover any functional gaps you have with your current system.
- When selecting a new system, be sure to verify that the vendor has clients similar to your business in terms of size and industry niche.