ERP/SCM INTEGRATION

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ERP/SCM INTEGRATION
N. R. Srinivasa Raghavan Assistant
Professor Department of Management
Studies IISc raghavan_at_mgmt.iisc.ernet.in
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The E-Quations
E-SRM E-SCM E-ERP E-CRM
E-SEM E-LOGISTICS
E-PDM

• E-SCM E-PROCUREMENT
• E-MANUFACTURING
  E-PLANNING
• E-DISTRIBUTION

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Information Systems in SCM
Stgc Alliance formulation Devp of Core
Competence
Strategic Planing
VRP Schg
Invy.Control NPD SCN
Design FMS
Virtual/Vertical Integration
Decision OPT Analysis Tools
Fin. Mgmt.
Cust.Serv. Mmt. Cost/Asset Mgmt.
Productivity Mmt. Vendor Mgmt.
Quality Mmt.
Mgmt Control
ERP
ODP
Shipping CRM Inventory
Assignment Pricing Inventory
Payrolls etc.
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Integration _at_ what levels?

• Transaction level
• Management control level
• Decision analysis level
• Strategic planning level

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Need for Integration Strategic motivation
I
-

Quality costs
Quality issues
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Need for Integration Operational motivation
Customers
Sudden 20 raise in retail demand
B/D of logistics operations
Distribution Centers
M/C 2010 is down. Will be up again in 3 days
Factory
Lockout forces prodn. to be shut
Supplier
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Solutions due to ERP are myopic

• An ERP System would react by-
• Adapting the schedule of machine 2010 and
  reschedule other manufacturing orders.
• Send orders through EDI to the distribution
  centre
• Arrange for alternate fleet to route finished
  goods.
• Impact on total supply chain is ignored

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S/W Modules covering the SCP
Long term
STRATEGIC NETWORK PLANNING
Medium term
Short term
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Global SCN Formulation

• Maximize Sum of the global after tax discounted
  yearly profits (,Rs,etc)
• S.t., for every planning period
• Supplier's capacity
• Production capacity at plants and DC's
• Transportation capacity of channels
• Customer demand constraints, BOM
• Minimum profit for SBU's on a country basis
• Solution MILP Use ILOG/CPLEX/NEOS etc.

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Global SCN Formulation Data requirements

• Average capacities available at various entities
  (at any granularity desired eg.
  Machine-Shopfloor-Factory)
• Availability and utilization of logistics fleet
• Estimates/Forecasts of customer demand by region,
  product etc
• Average per unit costs incurred for various
  resources
• BOM
• All obtainable from OLTP systems

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ATP Computations

• Provide promised dates for customers
• - influences leadtime on time delivery
• Generate fast reliable order promises (esp.
  in E- business environment)
• Helps in retaining customers increasing
  market share
• Complexity increases as
• of parts increase PLC decr. of
  customers increaseflexible pricing
  policiesdemand gets uncertain.
• Should be based on status of ALL SCN facilities

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Scheduling

• Generate detailed prodn./procurement/tptn
  schedules for all
• facilities over a rlatively short interval
  of time.
• Specify start end time of various
  activities
• Identify bottlenecks provide efficient
  means of prompt
• delivery of customer desired products
  right place time
• objectives

makespan. sum of
lateness/tardiness sum of flow times
sum of set up times
max.lateness/tardiness
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Phases in Scheduling

• 1. Model building-ILP, queueing model, NLP
• 2. Extracting required data from ERP system- (set
  up time,cycle time
• m/c breakdown data, resource
  requirements)
• 3. Generating scenarios (input cases)
• 4. Iterative creation/adjustment of schedules
• 5. Approve a scenario
• 6. Executing the schedule via ERP system.

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SCM Solutions i2 RHYTHM

• Source Make
  Deliver Sales

Long term
Mid term
Short term
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SCM Solutions J. D. Edward's

• Source Make
  Deliver Sales

Long term
Mid term
Short term
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SCM Solutions SAP's APO

• Source Make
  Deliver Sales

Long term
Mid term
Short term
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Integration Issues

• SCM solutions need to be integrated in existing
  IT Systems

SCM cannot replace ERP.On the contrary, they
extend planning tasks
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Integration with ERP

• ERP has transactional data
• SCM solution regularly has to talk to several
  ERP/OLTP
• systems of various SC entities.
• Two models required
• A. Integration model-(what)
• Defines - Which objects are exchanged
  (eg.BOMs, routings,
• inventory levels,
  Customer Order, PO, etc)
• - Their origin
• - Which planning tasks
  performed on which system.

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Integration with ERP (contd)
B. Data exhange model (how)
Specifies how the flow of data info between
systems is organized. Most
solutions provide a macro language to define
these models
An SCM solution should
Match data items from ERP system structure it
Provide Import/Export formats (eg.ASCII format
with fixed field size or csv files)
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Data exchange model
Two types - Initial transfer
Incremental transfer
Master data (Long term changes, new facility, new
shifts, new suppliers, etc.)
Transactional data (for implementation of plans)
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Data exchange model (contd.)

• ERP
  SCM

BOM, Inv.levels, routing,..
Initial tranfer
Model building
Model adjustment
Incremental tranfer
Master data
Transactional data
Planning data
Incremental tranfer

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Integration with D/W

• ERP
  D/W

Historical snap shots Decision support
purposes KDD/Data mining/OLAP
Real time data Transactional purposes
D/W are mainly used in demand planning Finding
patterns in demand using stats OLAP tools help
in fast and powerful reporting on data
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Data warehouses and SCM

• Collect data from various companies
• Ensure consistency of data from disparate
  transactional
• systems

SCM
D/W
Model building
OLAP tools
Historical data
KDD data mining tools
Time series analysis
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Classification of SCM integration techniches
Standard middleware pdt eg.CORBA
Standard Technology
Internal interfaces eg.SAP R/3, APO
Vendor specific middleware eg.i2 RhythmLink
Vendor specific technology
Open only for pdts of vendor
Open for other systems
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SCM Solution Providers A Glance