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ERPs vs. SCMs – The Best Option for Your Supply Chain

03.26.2018 | By Chris Pickett | min. read


Choosing the right supply chain management software is critical to your business success. However, trying to determine what type of software is best can be challenging. Should you use an Enterprise Resource Planning (ERP) software or a Supply Chain Management (SCM) solution? This post will examine both to help you determine the right fit.

The Basics

An ERP system is a robust, all-inclusive business management platform that handles management for all internal business processes. To contrast, most SCMs focus exclusively on tracking product flow from order to final delivery.

Who Uses What

ERPs were originally designed for larger enterprises, while SCMs focused on small and medium businesses (SMB). Over time, SMBs have started to use more complex international supply chains, and the line between ERPs and SCMs has gotten blurry.

Most ERP systems have always had an SCM tool built in, but in recent years, standalone SCM applications have become available. The idea is, smaller organizations can purchase an SCM add-on that’s compatible with existing accounting, sales, and back-office programs. Doing so provides better product lifecycle transparency and allows you to automate manual tasks. This gives employees the freedom to decrease busy-work and increase productivity.

Ask Yourself… Some or All

If your business needs help improving one part of your supply chain – specifically, tracking product flow – an SCM application may be a great option. If, on the other hand, you want to replace your entire system with a suite of applications that are designed to work together, an ERP may be your best bet.

Making the Call

To determine which solution is best for your business, you’ll need to take a thorough inventory of your needs. For example, do you need to manage product lifecycles? If you’re a 3PL shipper, the answer is probably not… but if you’re a fleet manager? You absolutely do.

The more tools and data you need, the more likely you are to need a robust ERP. But even the most advanced ERP won’t work perfectly right out of the box. You’ll need to work with installation specialists to incorporate any neccessary customizations.

Another big factor that can help you make a decision is cost. Once you’ve determined what kind of functionality you need and have narrowed your options down to three or less, consider your budget and evaluate which tool offers the best value.

Understanding the difference between an ERP and SCM, summarizing your must-haves, and evaluating the costs and benefits of various applications will help you determine the best fit for your supply chain management needs.