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Difference between ERP and SCM

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1. Enterprise Resource Planning (ERP) :
ERP stands for Enterprise Resource Planning. Many businesses are opening up day by day and business environment is growing so faster. So in current market strategy it is important to be in business race by providing customer satisfaction and proper functioning of organization to be best in current competitive business environment.

So mainly to manage to the business activities like accounting, inventory, human resources, supply chain, Enterprise Resource Planning (ERP) software has been developed. The main motto of Enterprise Resource Planning is to manage business and to improve efficiency of business process. ERP aims to reduce overhead and cut costs and increasing visibility of the business.

2. Supply Chain Management (SCM) :
SCM stands for Supply Chain Management. Supply Chain refers to a connected network of individuals, organisations, resources, activities, and technologies, all of which are involved in process of manufacturing to supply of product or service. Supply Chain Management refers to management of flow of all processes and goods and services starting from supply of raw materials to delivery of final product.

Supply Chain Management is the active management of supply chain activities which includes required integrated planning and execution of processes for optimizing flow of material, information and capital in functions. It is inter organizational system which allows companies to efficiently handle the entire production flow of a good or service.

Difference between ERP and SCM :

01. Enterprise Resource Planning covers a wide range of functionalities. Supply Chain Management covers limited supply chain functionalities
02. Enterprise Resource Planning is highly complex. Supply Chain Management is relatively less complex.
03. ERP focuses on business’s internal work processes. SCM focuses on supply chain activities of involved external parties.
04. It integrates and optimizes business processes limited to boundary of single organization. It integrates and optimizes business processes of single organization as well as interacts with other business partners involved in supply chain.
05. Enterprise Resource Planning is relatively static in terms of sourcing. Supply Chain Management is relatively dynamic in terms of sourcing.
06. Along with focusing core activities of business it is centrally more focused on task based activities. Along with focusing supply chain activities of business it is centrally more focused on relationship based activities as it is more involved with other third parties.
07. ERP has a larger user base with in an organization. SCM has a smaller user base with key individuals with in an organization.
08. Processing speed of Enterprise Resource Planning is relatively slower. Processing speed of Supply Chain Management is relatively faster.
09. Main functions of ERP are manufacturing management, financial management, human resource management. Main functions of SCM are manufacturing management, inventory management, logistics management, supply management.
10. ERP is non-constrained based tools which provides business plans without based on availability of the required key resources. SCM is constrained based tools which provides reasonable and feasible business plans based on availability of required key resources.

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Last Updated : 03 Sep, 2020
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