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Supply Chain
Management
and
MRP & ERP
Submitted To,
Md. Asraful Islam Chowdhury
Lecturer
Department of
Business Administration
LEADING UNIVERSITY
Ehsan Ahmed Chy.
1201010230
Mahmudul Karim Newaz
1201010205
Masum Hussain
1201010202
Abdul Motin
1201010219
Abu Ahmed Shahib
1201010247
What is supply chain?
Supply chain consists of all parties involved,
directly or indirectly, in fulfilling a customer
request. Supply chain includes manufacturer
and suppliers, plus transporters, warehouses,
retailers, and customers themselves.
Principles of SCM (contd.)
1. Segment customers based on the service needs of distinct
groups and adapt the supply chain to serve these segments
profitably.
2. Customize the logistics network to the service
requirements and profitability of customer segments.
3. Listen to market signals and align demand planning
accordingly across the supply chain, ensuring consistent
forecasts and optimal resource allocation.
4. Differentiate product closer to the customer and speed
conversion across the supply chain.
Principles of SCM
5. Manage sources of supply strategically to reduce the total
cost of owning materials and services.
6. Develop a supply chain-wide technology strategy that
supports multiple levels of decision making and gives a clear
view of the flow of products, services, and information.
7. Adopt channel-spanning performance measures to gauge
collective success in reaching the end-user effectively and
efficiently.
Importance of Supply Chain Management
• SCM is Globally Necessary
• Reasons for SCM in Society
– Cyclone Sedor,2007
– Foundation for Economic Growth
• Reasons for SCM in Business
– Boosts Customer Service
– Improves Bottom Line
Growing Interest in SCM – Why?
• As manufacturing becomes more efficient (or is
outsourced), companies look for ways to reduce costs
• Several significant success stories:
– Efficient SCM at Wal-Mart, HP, Dell Computer
• SCM considers the broad, integrated, view of materials
management from purchasing through distribution
• The huge growth of interest in the web has spawned
web-based models for supply chains: from “dot com”
retailers to B-2-B business models
Focusing on the Distribution Problem
• The Goal is to reduce total transportation costs
throughout the supply chain
• Usually solved with some approach to the
“Transportation Problem”
Trends in Supply Chain Management
• Outsourcing of the logistics function (example: Saturn
outsourced their logistics to Ryder Trucks. Outsourcing
of manufacturing is a major trend these days)
• Moving towards more web based transactions systems
• Improving the information flows along the entire chain
Global Concerns in SCM
• Moving manufacturing offshore to save direct costs
complicates and adds expense to supply chain
operations, due to:
– increased inventory in the pipeline
– Infrastructure problems
– Political problems
– Fluctuating exchange rates
SOCIAL MEDIA:
Now, people can use technology to do it at a scale without
boundaries
Material resource planning (MRP)
MRP is a production planning and inventory control
system used to manage manufacturing processes.
Most MRP systems are software-based, while it is
possible to conduct MRP by hand as well.
Objectives of MRP
An MRP system is intended to simultaneously meet
three objectives:
Ensure materials are available
for production and products are available for delivery to
customers.
Maintain the lowest possible material and product levels
in store
Plan manufacturing activities, delivery schedules and
purchasing activities.
History of MRP
• Prior to MRP, and before computers dominated industry,
reorder-point/reorder-quantity (ROP/ROQ) type methods
like EOQ (Economic Order Quantity) had been used in
manufacturing and inventory management. In 1964, as a
response to the TOYOTA Manufacturing Program, Joseph
Orlicky developed Material Resource Planning (MRP). The
first company to use MRP was Black & Decker in 1964, with
Dick Alban as project leader.
The scope of MRP in manufacturing
The basic functions of an MRP system include: inventory
control, bill of material processing, and elementary
scheduling. MRP helps organizations to maintain low
inventory levels. It is used to plan manufacturing,
purchasing and delivering activities.
Making a bad decision in any of these areas will make the
company lose money. A few examples are given below:
Purchases insufficient quantities of an item.
Purchases excessive quantities of an item.
Beginning production of an order at the wrong time.
Problems with MRP systems
• First problem - If there are any errors in the
inventory data then the output data will also be
incorrect ("GIGO": Garbage In, Garbage Out).
• Second problem - systems is the requirement that
the user specify how long it will take for a factory to
make a product from its component parts that’s
mean ‘’lead time’’.
Solutions to data integrity issues (contd.)
• Bill of material :- The best practice is to physically
verify the bill of material either at the production
site or by un-assembling the product.
• Cycle count - The best practice is to determine
why a cycle count that increases or decreases
inventory has occurred.
• Scrap reporting - Start with isolating the scrap by
providing scrap bins at the production site and then
record the scrap from the bins on a daily basis.
Solutions to data integrity issues
• Receiving errors - The best practice is to
implement the system of receiving by ASN
(Advanced Shipping Notification).
• Shipping Errors - The container labels are printed
from the shipper. The labels are affixed to the
containers in a staging area or when they are
loaded on the transport.
Enterprise resource planning (ERP)
• ERP provides an integrated view of core business
processes, often in real-time, using common
databases maintained by a database management
system. ERP systems track business resources—
cash, raw materials, production capacity—and the
status of business commitments: orders, purchase
orders, and payroll.
Enterprise resource planning (ERP)
Enterprise resource planning (ERP) is a business
management software—usually a suite of
integrated applications—that a company can use to
collect, store, manage and interpret data from
many business activities, including:-
• Product planning, cost and development
• Manufacturing or service delivery
• Marketing and sales
• Inventory management
• Shipping and payment
Origin of "ERP"
• In 1990, Gartner Group first used the acronym ERP as
an extension of material requirements planning (MRP),
later manufacturing resource planning and computer-
integrated manufacturing. Without replacing these
terms, ERP came to represent a larger whole that
reflects the evolution of application integration beyond
manufacturing.
• Not all ERP packages developed from a manufacturing
core. Vendors variously began with accounting,
maintenance, and human resources. By the mid–1990s
ERP systems addressed all core enterprise functions.
Governments and non–profit organizations also began
to use ERP systems.
Characteristics of ERP
ERP systems typically include the following
characteristics:
An integrated system that operates in (or near)
real time without relying on periodic updates
A common database that supports all applications
A consistent look and feel across modules
Installation of the system with elaborate
application/data integration by the Information
Technology (IT) department, provided the
implementation is not done in small steps.
Advantages of ERP (contd.)
The fundamental advantage of ERP is that
integrating myriad businesses processes saves time
and expense. Management can make decisions
faster and with fewer errors. Data becomes visible
across the organization. Tasks that benefit from this
integration include:
Sales forecasting, which allows inventory
optimization.
Advantages of ERP
Chronological history of every transaction through
relevant data compilation in every area of
operation.
Order tracking, from acceptance through fulfillment
Revenue tracking, from invoice through cash receipt
Matching purchase orders (what was ordered),
inventory receipts (what arrived), and costing (what
the vendor invoiced)
Disadvantages of ERP Systems (contd.)
Customization is problematic. Compared to the
best-of-breed approach, ERP can be seen as
meeting an organization’s lowest common
denominator needs, forcing the organization to find
work arounds to meet unique demands.
Overcoming resistance to sharing sensitive
information between departments can divert
management attention.
Integration of truly independent businesses can
create unnecessary dependencies.
Disadvantages of ERP Systems
Re-engineering business processes to fit the ERP
system may damage competitiveness or divert focus
from other critical activities.
High ERP switching costs can increase the ERP
vendor's negotiating power, which can increase
support, maintenance, and upgrade expenses.
Harmonization of ERP systems can be a mammoth
task (especially for big companies) and requires a
lot of time, planning, and money.
Thanks for patient hearing
Supply Chain Management and MRP & ERP

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Supply Chain Management and MRP & ERP

  • 2. Submitted To, Md. Asraful Islam Chowdhury Lecturer Department of Business Administration LEADING UNIVERSITY
  • 3. Ehsan Ahmed Chy. 1201010230 Mahmudul Karim Newaz 1201010205 Masum Hussain 1201010202 Abdul Motin 1201010219 Abu Ahmed Shahib 1201010247
  • 4. What is supply chain? Supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. Supply chain includes manufacturer and suppliers, plus transporters, warehouses, retailers, and customers themselves.
  • 5.
  • 6. Principles of SCM (contd.) 1. Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably. 2. Customize the logistics network to the service requirements and profitability of customer segments. 3. Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation. 4. Differentiate product closer to the customer and speed conversion across the supply chain.
  • 7. Principles of SCM 5. Manage sources of supply strategically to reduce the total cost of owning materials and services. 6. Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information. 7. Adopt channel-spanning performance measures to gauge collective success in reaching the end-user effectively and efficiently.
  • 8. Importance of Supply Chain Management • SCM is Globally Necessary • Reasons for SCM in Society – Cyclone Sedor,2007 – Foundation for Economic Growth • Reasons for SCM in Business – Boosts Customer Service – Improves Bottom Line
  • 9. Growing Interest in SCM – Why? • As manufacturing becomes more efficient (or is outsourced), companies look for ways to reduce costs • Several significant success stories: – Efficient SCM at Wal-Mart, HP, Dell Computer • SCM considers the broad, integrated, view of materials management from purchasing through distribution • The huge growth of interest in the web has spawned web-based models for supply chains: from “dot com” retailers to B-2-B business models
  • 10. Focusing on the Distribution Problem • The Goal is to reduce total transportation costs throughout the supply chain • Usually solved with some approach to the “Transportation Problem”
  • 11. Trends in Supply Chain Management • Outsourcing of the logistics function (example: Saturn outsourced their logistics to Ryder Trucks. Outsourcing of manufacturing is a major trend these days) • Moving towards more web based transactions systems • Improving the information flows along the entire chain
  • 12. Global Concerns in SCM • Moving manufacturing offshore to save direct costs complicates and adds expense to supply chain operations, due to: – increased inventory in the pipeline – Infrastructure problems – Political problems – Fluctuating exchange rates
  • 13. SOCIAL MEDIA: Now, people can use technology to do it at a scale without boundaries
  • 14. Material resource planning (MRP) MRP is a production planning and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, while it is possible to conduct MRP by hand as well.
  • 15. Objectives of MRP An MRP system is intended to simultaneously meet three objectives: Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities.
  • 16. History of MRP • Prior to MRP, and before computers dominated industry, reorder-point/reorder-quantity (ROP/ROQ) type methods like EOQ (Economic Order Quantity) had been used in manufacturing and inventory management. In 1964, as a response to the TOYOTA Manufacturing Program, Joseph Orlicky developed Material Resource Planning (MRP). The first company to use MRP was Black & Decker in 1964, with Dick Alban as project leader.
  • 17. The scope of MRP in manufacturing The basic functions of an MRP system include: inventory control, bill of material processing, and elementary scheduling. MRP helps organizations to maintain low inventory levels. It is used to plan manufacturing, purchasing and delivering activities. Making a bad decision in any of these areas will make the company lose money. A few examples are given below: Purchases insufficient quantities of an item. Purchases excessive quantities of an item. Beginning production of an order at the wrong time.
  • 18. Problems with MRP systems • First problem - If there are any errors in the inventory data then the output data will also be incorrect ("GIGO": Garbage In, Garbage Out). • Second problem - systems is the requirement that the user specify how long it will take for a factory to make a product from its component parts that’s mean ‘’lead time’’.
  • 19. Solutions to data integrity issues (contd.) • Bill of material :- The best practice is to physically verify the bill of material either at the production site or by un-assembling the product. • Cycle count - The best practice is to determine why a cycle count that increases or decreases inventory has occurred. • Scrap reporting - Start with isolating the scrap by providing scrap bins at the production site and then record the scrap from the bins on a daily basis.
  • 20. Solutions to data integrity issues • Receiving errors - The best practice is to implement the system of receiving by ASN (Advanced Shipping Notification). • Shipping Errors - The container labels are printed from the shipper. The labels are affixed to the containers in a staging area or when they are loaded on the transport.
  • 21. Enterprise resource planning (ERP) • ERP provides an integrated view of core business processes, often in real-time, using common databases maintained by a database management system. ERP systems track business resources— cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll.
  • 22. Enterprise resource planning (ERP) Enterprise resource planning (ERP) is a business management software—usually a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities, including:- • Product planning, cost and development • Manufacturing or service delivery • Marketing and sales • Inventory management • Shipping and payment
  • 23. Origin of "ERP" • In 1990, Gartner Group first used the acronym ERP as an extension of material requirements planning (MRP), later manufacturing resource planning and computer- integrated manufacturing. Without replacing these terms, ERP came to represent a larger whole that reflects the evolution of application integration beyond manufacturing. • Not all ERP packages developed from a manufacturing core. Vendors variously began with accounting, maintenance, and human resources. By the mid–1990s ERP systems addressed all core enterprise functions. Governments and non–profit organizations also began to use ERP systems.
  • 24. Characteristics of ERP ERP systems typically include the following characteristics: An integrated system that operates in (or near) real time without relying on periodic updates A common database that supports all applications A consistent look and feel across modules Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps.
  • 25. Advantages of ERP (contd.) The fundamental advantage of ERP is that integrating myriad businesses processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include: Sales forecasting, which allows inventory optimization.
  • 26. Advantages of ERP Chronological history of every transaction through relevant data compilation in every area of operation. Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
  • 27. Disadvantages of ERP Systems (contd.) Customization is problematic. Compared to the best-of-breed approach, ERP can be seen as meeting an organization’s lowest common denominator needs, forcing the organization to find work arounds to meet unique demands. Overcoming resistance to sharing sensitive information between departments can divert management attention. Integration of truly independent businesses can create unnecessary dependencies.
  • 28. Disadvantages of ERP Systems Re-engineering business processes to fit the ERP system may damage competitiveness or divert focus from other critical activities. High ERP switching costs can increase the ERP vendor's negotiating power, which can increase support, maintenance, and upgrade expenses. Harmonization of ERP systems can be a mammoth task (especially for big companies) and requires a lot of time, planning, and money.