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Surviving Supply Chain Integration: Strategies for Small Manufacturers
functions are often scattered across the enterprise. Customer orders may be received through a sales force, while finished goods, inventory levels, purchase orders, manufacturing orders, and bills of material may be processed by multiple enterprise resource planning (ERP) systems. Hence, providing information in a timely manner throughout the supply chain can be difficult.
Fundamental decisions based on incomplete information may be less than optimal or even incorrect. Additional materials may have to be purchased at last-minute premium rates, incorrect bills of material may be created, erratic inventory levels may lead to stockpiling and production errors, and delivery dates may be missed. These consequences can have a negative effect on the profitability of all participants and place them at competitive risk. To avoid these problems, many companies are buying expensive enterprise integration software.
The objectives of ERP should include more than enterprise-wide interoperability and consistency. They should also include standardization of functional modules, enhanced reliability, and less need for customization. These objectives are not always achieved, however. Many implementations of ERP require a high degree of customization and extensive changes in business processes. Full implementations in large corporations can take years, and sometimes are not completed or are abandoned entirely.
SMEs may want to defer acquiring even MRP systems. These decisions should be based on assessments that include more than initial system and installation costs. The burden of keeping systems operational, plus the costs of periodic updates, may outweigh system benefits to small manufacturers.
There are many degrees of demand planning integration, ranging from manual sharing of information to integrated reporting of demand and electronic forecasting. As improved supply chain integration software and ERP solutions are introduced, the pressure on participants to embrace technological integration will increase. Implementing supply chain management systems is becoming more difficult because of the rapid growth of ERP systems, which are intended for use by single companies. Supply chains include multiple companies and, therefore, multiple (often incompatible) ERP systems. Thus, SMEs in multiple supply chains are being faced with conflicting demands to use expensive systems that may be incompatible with each other. Communications between incompatible systems can usually be accomplished by use of hypertext markup language (HTML), electronic data interchange (EDI), and extensible markup language (XML), but these bridges tend to be awkward, as well as costly to install and operate. Furthermore, XML tends to be field-specific. Substantial progress has been made in the financial and medical