Manufacturing Software and Supply Chain Management
A characteristic of ERP software is that is has a central core, with modules for related activities. These modules may include purchasing, manufacturing, supply chain management, finance and accounting, and human resources. In the past, departments within the company had to use stand alone applications for their specific tasks and had to communicate their progress to others on a people to people level. This is something that goes away on many levels with implementation of an ERP system. In an ERP system all of the modules are physically or virtually connected to the ERP core, which gives everyone access to common data. All access from one end to the other, is now directly to the core and back. There is no live feedback, no active interchange.
The supply chain management function was once a cooperative effort of purchasing and quality. This function was logically driven by purchasing, but with input and assistance from quality and engineering. The goal of this function was to manage the resources and logistics required to meet the needs of an enterprise. While the general data of the supply chain is in the central core of the ERP system, several peripheral activities are taking place.
With increased globalization, it is important to rate suppliers to maintain the desired level of the organizations quality. The most logical way is to use Manufacturing software that either is or contains a supplier rating system. Contained within that system would be the supplier profile, the amount and date of receipts, and incident reporting.
This attribute improves the overall quality of an organization by providing central control, and preventing a poor supplier from selling to the “other end” of a business. It does this with significantly reduced labor as well.
The down side to this is that the data becomes just statistics. The vendor is evaluated to a predetermined set of conditions. There is no preparing reports or running numbers. As data from material receipts or real time line usage is entered in, the system immediately "runs the numbers" in the background. The output is usually expressed in Parts per million (PPM).
Supplying the vendor scorecard to the person administering the MRP system would then occur. This person would then remove the vendor for the preferred supplier list in the MRP software or it may remove them as a vendor altogether. This will not only flag a particular rejected product, but also raises flags within the MRP software, preventing purchases of other materials or goods from the same vendor. The
MRP software can also cross reference open orders of non-similar products, and ensure the materials get extra scrutiny upon, or before arrival.
Software can be helpful in solving these problems, though. To take corrective actions, a vendor with a problem such as excessive PPM or even on a shipment-by-shipment basis, the vendor (supplier) will be given a login, giving access control for a corrective action module. The manufacturing software can populate the corrective action request from the central core with information such as what day the PO the materials was received on as well as other pertinent core data, and send it to the supplier.
The supplier will then complete corrective actions into the application and through the ERP software, these details can be available at any management level.
Upon acceptance, the supplier rating system administrator would inform purchasing, who would then reactivate the vendor in the MRP software, allowing them to come up as a selection for goods and services. While this vendor corrective action function is just a small part of the supply chain management, it does require resources to support it. This
need for a supplier rating system with the MRP software paradigm is often reason for an organization to evaluate ERP software as an option or upgrade.
Questions and Answers
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