Supply
Chain Management Process:
Supply chain management
means the influx and depletion of goods and services which include some actions
like storage and lobby of raw material from supply to company, work in process
of inventory and finish goods from the point of company to consumer that will
satisfy the need of customer with at minimum cost. It will be very difficult
for the big companies to deal with their supply and demand without supply chain
management department and if the work manually in companies that will engage
more time so for that they can use some software to make their work easy like
MRP, MRP2 and ERP.
Advantages
of Software:
- Software can avoids the error which can be not rectifying by human eye easily.
- Software can help business to go on real time business.
- Software can help to integrate all business in one screen.Software can reduce more paper work.
Material
Requirement Planning (MRP) :
Material requirement
planning is the computer based management system to control inventory outflow
and inflow of the organization. MRP is the first system of inventory control
management in 1950’s and 1960’s. This systems help organization to minimize the
inventory level and minimize the other cost also like warehousing and logistics
cost. This also helps customer service officer who are able to give the answer
to their supplier and buyer about the remaining stock or inventory. Material
requirement planning is the computer software that help to assist manager to
know enough products are available for the delivery to customer and material is
available for production and minimize the stock of warehouse and it also help
to identify locating order for items. There is some contingent item which means
the components of finish goods like motorcar dependent items are wheels;
engine, seats and steal etc. for the first time in 1960’s TOYOTA Manufacturing
give the concept of MRP. They use mainframe computer to develop this software
from purchase of raw material to finish goods all the purchasing plan and
production plans. MRP work to develop requirement for raw material and finish
goods, from production plan to finish good. MRP is basically designed to give
the answer of three questions, what is needed? When it is need and in what
quantity it is needed? These are three questions for which MRP was designed so
with the help of this software manager can allocate and forecast the production
time and how much item they will need in supply or demand of consumer. So after
using this software by company some of benefit what company can get is they
will know the exact figure of numbers and inventory they will need. MRP is the
systems which have exact lead time estimation and currently how much inventory
they have to work effectively function of organizations. Those persons who
converted their business at that era on MRP gets better result after installing
the MRP in there organization.
Advantages
of MRP:
MRP helps to minimize
the level of inventory and boost the level of inventory turnover. Easy to identify the number of material
require for production. Help to track raw material, work in process and finish
goods.
Disadvantages
of MRP:
MRP only give exact
number of output and if we needed exact number of input to it any business has
not maintain the exact record of inventory input so encounter from this problem
can face missing parts of raw material , schedule suspensions, unnecessary
order quantities and missed delivery dates.
Another disadvantage of
MRP is costly time consuming and difficult of understand my employees so many
businesses when try to implement MRP in their business they face their
employees in difficult situation to understand MRP because employees are
habitually doing manual work so that’s why it become difficult for them to do
work efficiently and effectively.
Manufacturing
Resource Planning (MRP2):
In 1980s the new technology
in the field of supply chain management introduces which was the expended form
of Material Requirement Planning (MRP). So this software proves that better
controlling and planning with valid schedules. In the book of production
planning and controlling written by Gordon Minty noted that “By the improvement
in cash flow projections, personal management projections and customer delivery
commitments the main areas affected were marketing, personnel and finance” MRP2
make possible more improvement in the production detail schedules and workers
capacity provide for the cost of production. MRP2 also provide final production
numbers to finance department. MRP2 is also come up with different tools like
employee attendance, contribution margin. MRP2 control some more function of
the entire organizations like Product specification, product design, quality
control, inventory, purchasing, cost reporting, tax calculation, cash flow tax
payment.
The standardized way of
business is now work through MRP2 for different areas of the business.
Standardization provides easily repeated process which helps to improve those
processes. Adopting MRP2 first time in the business generally having problems
to controlling the increasing transactions in manufacturing, purchasing and
finish well. MRP2 enable workforce to do more in those business area have
better visibility of the information for their job. This software also engages
a good competition in the market with their competitors.
Advantages
of Manufacturing Resource Planning (MRP2):
Through this software
companies are in better situation to control their inventories also with the
better quality and very well improvement in the product design. Improvement in
the delivery of goods with accurate inventory record and on correct time.
Disadvantages
of Manufacturing Resource Planning (MRP2):
Once in the company
MRP2 installed it will require accurate information for the production planning
and error will result in automated planning process if the information is used
in poor quality. The lead time is main problems for the manufacture or
purchaser to plan average length of time on purchase order and manufactured
qualities. There is lack of understanding and poor information of them impact
on average lead times and lot sizes can cause execution failure and costly re implementation.
Conclusion
on MRP2:
MRP2 is basically use
for long time only for industries and for understanding the full system for
workforce should be fully trained for it. MRP2 are implementing on ERP to gain
maximum positive results.
Enterprise
Resource Planning (ERP):
ERP is the new
technology for the company this software integrate all the departments of
business together on one screen so this software make the information flow
easier and more flexible. An ERP solution provide to control all the functions
at the same time like inventory, management , planning, manufacturing,
purchasing, accounting, HR, finance sale, marketing and customer service etc.
the flow of information from internal business and manager outsider
stakeholders is the basic purpose of ERP. Basically ERP use as a database to
hold information from the different functions of the business so that can be
easily available in the same form to another user in an organization.
Advantages
of Enterprise Resource Planning (ERP):
The operational cost of
manual tracking which incurred by ERP system and it reduce the cost and time as
well. It make easy to track every department of organization and the using of
duplicating data in other departments of organization ERP system reduced that
work too. After implementing the ERP system following are the some advantage.
- The information flow from one department to another department within the organization is automatic.
- All the important process of different departments of organization makes it visible.
- The maintaining and buying different their own software systems so ERP integrate single software in all the departments.
- The real time analyzing from the single system across the entire department.
- Web based order tracking and processing integrate with e-commerce provided by ERP system.
- Business intelligence function is provided by ERP system.
- There are various modules like account, finance, human resource, management, marketing, sales, warehouse management, supply chain management etc.
- ERP track systems are centralized.
- Collaboration around all the department become faster and better after enable of ERP system.
- After globalization ERP system helps a lot to managing companies.
How
to select ERP System:
- Check all the functions of business are covered.
- Check all the latest technology installed.
- Check all the departments integrated fully.
- Check the customizing availability.
- Check the investment capability.
ERP
Systems Involves:
- Business operations and project planning.Installation and configuration.
- Custom documentation
- Data renovation
- Conference room
- Production
- Acceptance assessing
- Audit backing
Disadvantages
of Enterprises Resource Planning (ERP):
- The very big drawback of this system is the cost of ERP software it’s planning, configuration, customization and testing etc.
- It almost takes 1-3 years to implement in the business fully and start function completely.
- The return on investment after implementing ERP may not be realized.
- There are many indirect cost of upgrading.
- It is very difficult to learn ERP system for users.
- It is very difficult for those organizations to implement ERP which are decentralized.
Conclusion
on ERP:
The only benefit of ERP
system to lead in the increase of competition is not true; it is more than in
the case of managerial, strategic and operational benefits as well. It’s
believed that 80% companies who install ERP system before developing SCM System
are receiving more positive results.
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