The Powerful Technology Behind Extended ERP

A key goal of manufacturers has been to reduce the time and the cost of making products. Thus, a core part of any business strategy is an optimum system architecture that enables you to reduce time. The move from batch processing where updates were processed overnight or weekly to online processing was the first step. These early online systems were implemented using a single central computer system with "dumb" terminals connected. Costs were high, however, and implementations slow.

In the mid 1980's, the widespread availability of cheaper computing platforms ushered in the client-server. The client-server approach allowed more and more of business to be computerized, which improved productivity department by department. When organizations naturally wanted to connect these various systems, they realized that client-server architecture was not the right paradigm. They needed a new way of thinking about the problem of interconnecting various systems within an organization and to their customers and partners.

The Internet provided several elements that enabled the revolution to begin:

• Ended the debate over networking protocols, with TCP/IP the winner
• Large footprint mandated enterprises as well as their partners and customers would use it
• Established the browser as baseline for client-side functionality

The extensive spread of information systems, particularly application servers, has meant that not only is a phenomenal variety of information available through the Internet, an environment exists that allows a range of information systems to be used at any time and from any place. When sales staff receive an order from a customer, there is no longer any need for anyone to contact the production management department operator by telephone or facsimile to check inventory information. Instead, one simply opens a web browser and connects to the inventory management system of the company to obtain inventory data.

All Together Now: Extended ERP Collaboration
Increasing customer demands and continuing pressure to accelerate and streamline business processes have pushed the boundaries of both traditional ERP and supply chain integration and automation. More and more manufacturers have turned to the Internet as a cost-effective tool to integrate internal operations as well as to collaborate with customers and trading partners.

Still, some manufacturers have yet to realize that ERP benefits increase beyond the initial implementation. With the convergence of e-business and ERP technology, extended ERP systems are a most critical success factor. To compete, manufacturers must take advantage of web-based and collaborative business processes and develop automated, self-service applications to minimize error and give a new sense of anytime/anywhere control to employees, customers and partners.

Customer needs continue to change in a dramatic fashion. Suitable products must be provided rapidly. To improve only the efficiency of the operations of your own company is not enough. For example, if emphasis is placed on stocking up of components so that you can immediately provide the parts needed for making a product, you run the risk a high inventory burden. Inevitably you must undertake an overall optimization process that includes partner companies, and for this reason support for collaborative solutions is vital.

The question is not if you need real time visibility into your operations, but how much. If your company is a closed system and you want to confirm a delivery date upon receipt of an order, it will be sufficient to construct an information system that can quickly verify the status of production lines in locations around the world.

However, the next step, real-time monitoring of the status of the entire production system, including the factories of partner companies, has been difficult with previous technologies. To develop a system for conducting transactions with an unspecified large number of companies was viewed as virtually impossible.

Now, through the use of web services based on technologies such as SOAP and WSDL, it is easy for different types of systems to link up via the Internet. In business-to-business commerce systems based on transaction standards technologies such as RosettaNet, ebXML and UDDI, you can carry out global electronic commerce via the Internet with non-specific partners.

The fact that it is now truly simpler to achieve real business on the Internet is highly significant.

All For One and One For All: Extended ERP Integration
Manufacturers must be sure that their customers, employees, suppliers, distributors and other stakeholders have the information they need, when they need it. Both business systems and processes can no longer be in separate silos. Yet, sometimes a mix of ERP and various other solutions makes for the best strategy at a given time. IT departments are often tasked to deploy best-of-breed applications and integrate them to homegrown and legacy systems. These systems must adhere to industry-accepted standards and nonproprietary application programming interfaces and maintain data integrity to avoid costly mistakes and inefficiencies, if not out and out disasters.

To compete and be successful now requires truly seamless application integration. Systems must share information internally with other applications and externally with customers and partners on an anytime, anywhere, real-time basis. You must also be prepared to make secure transactions and in all cases maintain data integrity.

Integration and the business process automation that follows from it breeds efficiencies and opportunities. For instance, when your applications have the capacity to locate and interact with each other, there is a greatly reduced requirement for human involvement, which means your valuable resources can focus on other, usually more pressing issues.

Collaborate and Integrate: The Winning IT Strategy
In the manufacturing industry, new business models that make use of the Internet have been appearing for some time. Open procurement and competitive bidding via the Internet have replaced the old distribution systems in which manufacturers only procured parts from affiliated component manufacturers, and products passed from wholesaler to retailer before reaching the customer. New systems have made it possible to purchase parts at the best prices from manufacturers around the world, as well as enabled products to be delivered directly to customers without passing through wholesalers and retailers.

Most of us have gotten used to operating in an economy where any winning business strategy cannot exist without a winning IT strategy. Now these strategies must include a powerful collaboration and integration component. These technologies enable manufacturers to choose ERP vendors that will help them to leverage existing systems and IT investments while they expand their operations, efficiencies, and customer relations with a minimized amount of cost and disruption.

While the essential aspects of business development such as using your own wisdom and strengths will never change, the future of business will surely see a continued development of new models generated by the IT revolution.