Essentials of Enterprise Systems and Supply Chains

Enterprise systems or enterprisewide systems are systems or processes that involve the entire enterprise or major portions of it. A variety of enterprise systems can be utilized by organizations. The two most important types of enterprise systems are enterprise resource planning (ERP), which supports supply chains, and customer relationship management (CRM). Other common examples include:

• partner relationship management (PRM)
• business process management (BPM)
• product life cycle management (PLM)
• decision support systems (DSSs)
• knowledge management (KM)
• intelligent systems
• business intelligence

A supply chain can be described as "a set of relationships among suppliers, manufacturers, distributors, and retailers that facilitate the transformation of raw materials into final products." Supply chains involve the flow of materials, information, money, and services from raw materials suppliers to final end users. There are three major types of flows in the supply chain: material flows, information flows, and financial flows. Material flows are all physical products, raw materials, supplies, etc. that flow along the supply chain. Information flows include all data related to demand, shipments, orders, returns, and schedules, as well as changes in the data. Financial flows are all transfers of money, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

Supply chain management (SCM) is the "efficient management of the end-to-end processes that start with the design of the product or service and end when it is sold, consumed, or used by the end-consumer." By effectively managing its supply chain, an organization can reduce costs while increasing operating efficiencies. SCM strives to reduce uncertainty and risk along the supply chain so that lower inventory levels and cycle time, improved business processes, and enhanced customer service can be achieved. Information technology (IT) can help firms reach these goals by improving the exchange of information among supply chain members.

SCM software supports specific segments of the supply chain and concentrates on improving decision making, optimization, and analysis. When a supply chain is managed electronically, typically with Web-based software, it is referred to as an e-supply chain. Given an e-supply chain's advantage of automated information flow, many traditional supply chains are moving toward Web-based systems.

Source: Information Technology for Management: Transforming Organizations in the Digital Economy 6th Edition (2008) by Efraim Turban, Dorothy Leidner, Ephraim McLean, & James Wetherbe