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The agile supply chain
Remko I. van Hoek
Introduction
Managing a supply chain (SC) includes activities such as material sourcing, production scheduling, and the physical distribution system, backed up by the necessary information flows ([4] Bovet and Martha, 2003). Successful management of the SC for competitive advantage has resulted in development of the supply chain management (SCM) philosophy and associated practices such as enterprise resource planning (ERP) systems. In the twenty-first century, a company locks in a SC complexity with its marketing decisions - from product portfolio and customer base to distribution channels. To succeed in the twenty-first century, managing complexity, relationships and change in a SC become fundamental critical success factors ([9] Kearney, 2003). Hence, a SC that is agile and responsive to these challenges is a pre-requsite.
Competition today is forcing companies to integrate tightly with their suppliers and customers, in order to reduce the time available to flex the SC. Before any company can be linked effectively into an agile SC, their own internal process must be reengineered. Many companies are attempting to link with suppliers and customers only to find that the relationship unravels due to the lack of basic controls in their own business. However, without adequate control of the internal processes, an integrated SC is only as strong as its weakest link. ERP is a way to effectively plan and manage all resources of an enterprise. It is envisaged that this enterprise-wide information system will play a significant role in managing a SC.
Information system is the key technology required for the coordination of the divisions and companies cooperating in the SC ([10] Knolmayer et al. , 2002). Only through a tight integration - from the customer's customer to the supplier's supplier - can a company hope to compete successfully. To this end, this research is carried out to investigate the integration of SCM and ERP systems for achieving a successful SC in the twenty-first century. The application of ERP for SCM will be explained and their integration will then be discussed.
Integration of SCM and ERP
The traditional material requirements planning (MRP) and manufacturing resource planning (MRPII) systems may not be up to the challenge presented by manufacturers seeking to capitalise on the competitive advantage offered by an...