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318 Chapter 11 • Supply Chain Management

TABLE 11-1 ERP Versus SCM
Point of Comparison ERP SCM
Comprehensiveness Covers a wide range of functionality Limited to specific supply
chain functionality
Complexity Highly complex Relatively less complex
Sourcing Tables Relatively static Relatively dynamic
Constraints Handling All the demand, capacity, and material Simultaneous handling of
constraints are considered in isolation the constraints
of each other
Functionality Relatively less dynamic because they Relatively more dynamic
are mainly concerned with transaction because it performs
processing speed and capacity simulations of transaction
adjustments with regard to
the constraints in real time
Processing Speed Relatively slower Faster

The differences between ERP systems (e.g., SAP, Infor, Oracle) and SCM systems (e.g., i2,
Manugistics) has been subject to intense debate. One of reasons for the heated debate is that the
ERP vendors are adding more SCM functionality to their products, whereas SCM vendors are also
expanding their functionality, encroaching on the area handled by the ERP vendors. With the
vendors of ERP systems and SCM systems adding more and more functionality, the differences
between these two have been blurring. For example, major ERP vendors are introducing advanced
planning and optimization as an integrated component (also a component in SCM) of their
systems. Along with the current trend, it is legitimate to predict that the differences between the
two solutions will be diminishing. Table 11-1 highlights the key differences between ERP and
SCM systems presently available.

INTEGRATION
Integration is a broad concept that was discussed in Chapter 2. In this section, we will discuss the
integration issues involved in supply chain, supply chain and ERP system, and integration of
enterprise application. All of these are crucial to the success of the supply chain.

Supply Chain Integration
Over the past decade a combination of economic, technological, and market forces have
compelled companies to examine and reinvent their supply chain strategies. Some of these
forces include the globalization of businesses, the proliferation of product variety, increasing
complexity of supply networks, and the shortening of the product life cycles. To stay competi-
tive, enlightened companies have strived to achieve greater coordination and collaboration
among supply chain partners in an approach called “supply chain integration.” There are four
key dimensions in which the impact of the integration of supply chain can be found. The major
elements and benefits of these dimensions can be found in Table 11-2.