If you were tasked with procuring the best supply chain IT system, what would you look for? As if the plethora of point applications such as WMS, TMS, route optimisation, or yard management software isn’t enough to get your head around, there are the relative merits of ERP (enterprise resource planning), SCM (supply chain management), and APS (advanced planning and scheduling) platforms to further complicate your quest.
ERP, APS, SCM Systems Explained
Organisations often use these systems together because each serves a distinct but complementary purpose. Let me explain the typical integration:
ERP serves as your foundation — it handles all your basic business transactions and maintains your master data. Think of it managing things like purchase orders, invoices, and inventory records.
On top of this, APS uses the data from your ERP to create optimised plans. For example, it takes your inventory levels and customer orders from the ERP, then calculates the best production schedule or the most efficient way to distribute your products.
SCM then takes these plans and helps execute them across your entire supply chain network. It manages the real-time flow of information between you and your partners, tracks shipments, monitors performance, and helps everyone stay coordinated.
Are ERP Systems the Answer?
The first thing to understand about ERP systems is that, with some exceptions, they are not designed specifically with supply chains in mind. An ERP is a transactional business management system, designed to manage enterprise-wide resources, from HR to finance and marketing to manufacture.
Essentially, an ERP can only understand and work with the constraints that exist within a single functional module. For a supply chain organisation, this limits the usefulness of ERP for managing the dynamic end-to-end flow of materials, goods and services.
Add APS and SCM: A Step in the Right Direction
Both APS and SCM solutions cover some of the gaps which limit ERP as a solution for managing complex supply chains.
If ERP provides the “how to” by supplying data and business rules for supply chain functions, APS covers the “when, where, what, and who” by using algorithms to calculate optimal plans for purchasing, production, transportation and distribution.
Meanwhile, the strength of SCM is in providing visibility and managing real-time information flows on an end-to-end basis. SCM software enables communication and integration between suppliers, purchasers, manufacturers, warehouse facilities and transport operations.
Data within an SCM system is updated in real time, meaning the impact of any change (such as a customer changing a requested delivery date) is immediately calculated for all supply chain components, taking into account all functional constraints and triggering the necessary notifications.
The New Technology Stack: Beyond ERP, APS, and SCM
Today’s supply chain technology landscape has moved far beyond the old ERP–APS–SCM triangle. We now have:
- Cloud-Native Solutions — Today’s cloud-native supply chain solutions offer more flexibility and scalability than ever, so sophisticated capabilities are available to all companies.
- AI and Machine Learning — Supply chain systems now leverage AI for predictive analytics, demand forecasting and real-time optimisation — things we couldn’t have even dreamed of 10 years ago.
- Digital Twin Technology — We’ve gone beyond planning and execution to creating digital replicas of entire supply chains, enabling scenario planning and risk management at a level we never could before.
Conclusion
When you’re building your supply chain technology stack you’ll soon realise there’s no one “silver bullet” solution. Instead, success lies in building an integrated ecosystem where ERP is your foundation, APS is the brain, and SCM keeps everyone connected and in sync.
