SCM vs ERP: Which One Does Your Business Need?

 

When choosing systems to manage their supply chain, businesses need to decide whether they want an ERP or a Supply Chain Management solution. Which solution you choose depends on how broad your supply chain is and whether you are mainly a distributor or a manufacturer. Although ERP systems often contain an SCM component, businesses have the option of purchasing an SCM solution that is more specialized. SCM solutions are more nuanced and specifically focused on managing your supply chain from end to end.

However, ERP systems often have enough functionality for most SMBs to be able to manage their supply chain. If you decide to go with an SCM solution, you must ask yourself how you plan to manage your Accounting, eCommerce, Sales, and other aspects of your business. Having an SCM solution and a separate solution for other aspects of your business has the potential to be expensive.

Who is a good fit for SCM Solutions?

Manufacturers that prioritize logistics and end-to-end supply chain management could consider SCM software. Although ERP Software does include lot tracking and logistics management integrations, end-to-end supply chain management is more important for manufacturers who are converting raw materials to finished goods. They need to be able to reduce complexities and simplify the process of getting goods from the raw materials stage to the point where they are ready to be sold in retail stores. Every stakeholder needs to have visibility to ensure that their manufactured goods end up in the hands of customers.

Also, companies that have robust international operations could benefit from an SCM system. Companies that simply have a few distribution centers and multiple retail stores within North America don’t have as large a flow of goods. On the other hand, a company might source materials in Europe, have a manufacturing plant in Asia, and ship goods to their distribution centers in North America. For such a company that needs to ensure the flow of goods and materials is smooth and undisruptive, an SCM solution might be a good choice.

Who is a good fit for ERP Solutions?

On the other hand, most SMB wholesalers and distributors simply need to ensure suppliers deliver goods to their distribution centers on time. Then, they need to ensure those goods either reach retail stores or their customers directly. Their supply chain is not as complex and doesn’t require sourcing raw materials and owning manufacturing plants. They need to be more focused on warehouse management, inventory management, shipping/receiving, lot tracking (etc). They are also focused on ensuring their systems are integrated with their sales channels including their online and retail stores. ERP software typically has the necessary functionality for SMB wholesalers to manage their supply chain and comply with industry-specific regulations while enabling them to manage the rest of their business as well. This makes ERP solutions a great fit for managing the supply chain of an SMB distributor!

 SCM vs ERP: Which One Does Your Business Need?


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