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ERP merely achieves the maximization of a single enterprise’s value

2020-05-22 View Original

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ERP merely achieves the maximization of a single enterprise’s value. It is designed for internal enterprise management and can only manage its internal resources. However, the benefits obtained from business improvements within a company alone have become increasingly limited. With economic globalization and intensifying market competition, there has been a trend toward customized product production and shorter delivery times. Faced with an increasingly complex and volatile business environment, companies have gradually shifted their focus of management to supply chain management beyond the company’s own boundaries as well as to collaboration with upstream and downstream partners, in order to adapt to these changes. ERP lacks the capability to coordinate resources across multiple enterprises in terms of its scope of management and functions, and it is unable to enable information sharing within the supply chain. However, SCM can meet the requirements of horizontal integration within the supply chain. It helps businesses to compete more effectively in new environments; by taking into account resource constraints and relying on technical support for optimization and decision-making, it enables the effective utilization and integration of external resources. It also facilitates the establishment of partnerships with upstream and downstream companies to achieve information sharing and business integration, as well as the joint development of plans that take into account the interests of all parties, thereby enabling coordinated operations and maximizing the overall value of the supply chain. Another advantage of SCM over ERP is its ability to simulate and improve financial metrics, particularly those related to revenue, costs, and asset utilization. It is not merely about simply reducing costs; rather, it involves using various methods to meet the needs of the market and customers, thereby maximizing profits for the enterprise and the entire supply chain. It achieves maximum shareholder value by improving key elements in the income statement and balance sheet. The above are the differences between ERP management software and supply chains; thus, ERP merely aims to maximize the value of an individual enterprise, while SCM seeks to maximize the value of the entire supply chain and even society as a whole.

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