Operations Management: An Integrated Approach, 5th Edition

ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) is software designed for organizing and managing business processes (core and administrative) by sharing information across functional areas. Core processes include production planning and control, inventory management, purchasing, and distribution; administrative processes include accounting (cost control, accounts payable and receivable, etc.) and human resource management. Figure 14-1 shows an overview of enterprise resource planning.

Enterprise resource planning (ERP)

An information system designed to integrate internal and external members of the supply chain.

The number of finished goods sold to final customers is a good example of the type of useful information shared throughout the supply chain. Knowing actual sales figures allows improved decision making by members of the supply chain and can help eliminate the bullwhip effect (discussed in Chapter 4). For example, using the information about actual sales to the customer, manufacturing can determine more accurately the quantity and timing for product replenishments. Warehouse management then can plan for the receipt and subsequent distribution of the replenishments. Suppliers can determine the materials and components needed by manufacturing to meet the manufacturing schedule. All members of the supply chain are aware of what is happening and can plan accordingly. ...