From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy
Evolution of ERP
The increasing competition among manufacturing companies has led to enhanced product service delivery, as opposed to the traditional production based economies. Nowadays, companies have differentiated such that there is a global network comprising manufacturing firms, suppliers, and distributors. There is an improvement in efficiency, as well as standardized price and quality in all products due to stiff competition. This has resulted to companies outsourcing production from other low-wage countries in order to minimize costs and sustain their survival within the industry.
Manufacturing environment is facing various challenges, since many products are made and supplied from different regions across the globe. In supply chain manufacturing, there are components that need to be availed to various manufacturers and distributors, as well as third party logistics providers. Most manufacturers are experiencing a big challenge on how to track supply chain expenses and get their products manufactured as the lowest price possible. Such challenges are being addressed by software vendors, who have been developing apps to help manufacturers. However, a notable outcome due to the shift in the manufacturing industry is that supply chain management (SCM) is becoming the solution to manufacturing within the developed countries.
Considering manufacturers from developed countries, they have redesigned their operations through adapting distribution and logistics service provision due to high competition. The labour skills have also changed drastically to reflect the ongoing transition. The shift has also seen many developing countries allowing other manufacturers from developed countries to enter their market and produce goods at a reduced labour costs. This is because manufacturers in the developing countries have changed their manufacturing production to avoid stiff competition from the foreign industries. In other words, labour and capital in the manufacturing industry is decreasing at a faster rate in several developed countries. However, hiring firms consider outsourcing production in countries with low labour costs.
In addition, manufactures feel that they can choose to produce products in low-wage countries.
Today, locations of productions have changed and industrialized nations are engaging in assembling parts into the final product. The assembled products are then redistributed to consumers all over the world. However, supply chain management (SCM) is playing a vital role to ensure that every essential need is met during the assembling process. SCM methods have been created to handle economic and logistical business certainties, since offshore products and suppliers are constantly increasing. The software industry is now coming up with new apps focusing to manage the changes occurring in both industrialized and developing economies. Vendors, both supply chain management (SCM) and enterprise resource planning (ERP), are very keen on the economic shift, and that is why ERP-distribution software has been created to cater for the changing manufacturing and distribution needs and demands in the industry. First ERP solutions incorporated some bit of SCM functionality that was used in distributing manufactured products, as well as allowing components and parts to be imported for assembling purposes. However, recent market expansion and offshore manufacturing has created need to include full SCM functionality in the ERP app. Over the years, various ERP vendors have obtained different companies so that the changing demands can be met. The logistics and distribution industry involving SCM and ERP software vendors has improved in service delivery and quality over the years due to stiff competition between the two – SCM software& ERP software vendors.
The SCM software provide solutions by linking suppliers and manufacturers, while ERP software has combined SCM functionalities together with retail software solutions (point-of-sale & e-commerce). This has made ERP software very reliable because it can help in tracking goods and the manufacturing process. The two mentioned software solutions are some of the complexities in the manufacturing stated earlier. However, the complexities have forced trading partners to come together and try to get rid of such challenges. This unification is not only geared towards improving business processes across the global network, but also enhancing efficiency in distribution of goods.