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How ERP, CRM and SCM Fit Together

lean modelWe have recently looked at various Supply Chain models including “Lean” Supply Chain and virtual manufacturing. There are others too; for instance, distributors who purchase everything they sell. We have looked at what kind of software constitutes a Supply Chain system.

Some of our conclusions to date are:

1.  Very few Supply Chain models are identical.

2.  Yes, a company MIGHT be able to purchase a single system to cover the entire Supply Chain. Some ERP (Enterprise Resource Planning software) vendors furnish enough modules to do everything, but a lot of companies need extensive modifications to complete their mission.

3.  A lot of companies use their ERP as the “engine” to power their other applications like CRM (Customer Relationship Management software).

4.  Sharing data with partners has become a necessity to remain competitive. EDI is the enabler to wrap in supply partners, customer, logistics partners, etc.

5.  Many of the existing ERPs are not suited for all Supply Chain models (example: virtual manufacturers).

Lots of Supply Chain systems depend on data stored inside enterprise resource planning (ERP) software and/or alternately in  customer relationship management (CRM) packages. Yes, you could get the data for your Supply Chain systems from legacy systems (bet that  means spreadsheets!). Seems like you should install ERP before anything else. Most ERP vendors offer SCM modules, so you will need ERP first. There is a lot to be said for enterprise-wide software packages but maybe you need a more specialized system.

What kind of systems do distributors use? We used to think that because wholesale distributors did not manufacture anything that they did not use ERP systems. However, many ERP vendors offer modules for distributors. There is a whole group of software companies that market warehouse management systems, or WMS. They are a key part of the supply chain and control the movement and storage of materials within a warehouse. They process the logistical transactions, including shipping, receiving, putaway and picking.

A WMS also directs and optimizes stock putaway based on real-time information about the status of bin utilization. This is sometimes referred to as wholesale distribution software. Well, aren't distributors a candidate for CRM too? Yes, we have seen systems that wrap in ERP, WMS and CRM. I started by searching for software that was advertised as addressing “Wholesale Distribution Software”. I found about 50 companies on and built a spreadsheet comparing them. My spreadsheet can be viewed as either a .pdf file or an Excel SpreadSheet

Supply Chain applications that automate logistics projects might be less dependent on  ERP (as an example, warehouse control systems). However they will need some interface. The Internet will require integrated information. As an example, a private website for communicating with customers and suppliers providing information about orders, payments, manufacturing status and delivery.

Before the Internet, Supply Chain software was all about predicting demand from customers and making internal supply chains run more efficiently. Now, companies connect their supply chain with the supply chains of their suppliers and customers. This is a must to optimize costs and compete.

The goal is greater supply chain visibility. Suppliers don't have to guess how many raw materials to order, and manufacturers don't have to over order from suppliers to make sure they don't run out. Retailers have fewer empty shelves when they share sales data with the manufacturer or distributor. This science is called “Just In Time”.

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