Converting raw materials into finished goods seems straightforward, but it can be deceptively complex if you aren’t using the right software to get the job done. Manufacturers hoping to streamline processes often consider Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) software.

What Is Enterprise Resource Planning Software?

Enterprise Resource Planning solutions take a holistic approach to business process automation. By offering features to handle every area of your business, ERP software streamlines workflows and improves collaboration across teams.

ERP software manages day-to-day accounting, inventory, supply chain, and human resources operations. Its broad features handle essential areas of every business.

ERP capabilities include:

• Automating routine tasks and workflows across departments
• Managing human resources, sales, marketing, and manufacturing data
• Consolidating financial data like invoices, general ledgers, AP and AR, and fixed assets

What Is a Supply Chain Management System?

Supply Chain Management software connects manufacturing teams with the resources they use and the responsibilities they fulfill. SCM solutions can even connect teams with third-party entities involved in production and distribution that are not part of the company.

SCM solutions are narrow in scope, focusing on manufacturing, logistics, and inventory. This deep functionality means the software can improve supply chain efficiency and cost-savings while promoting flexibility.

SCM capabilities include:

• Collaborating in real-time with manufacturing process stakeholders
• Monitoring, planning, and forecasting to reduce stockouts and delays
• Sourcing to find the best suppliers

How Are Enterprise Resource Planning and Supply Chain Management Systems Similar?

Enterprise Resource Planning and Supply Chain Management software are similar in philosophy but not execution. Both solution types manage processes by determining new efficiencies and automating redundancies. ERP and SCM software also focus on collaboration, ensuring everyone has equal access to vital business data.

How Are Enterprise Resource Planning and Supply Chain Management Systems Different?

While ERP software manages broad processes across a company, SCM software manages a specific category of processes, from receiving raw materials to delivering a complete product.

ERP software focuses on improving collaboration between internal teams and streamlining internal processes. Its broad features are applicable across business units, but companies seeking additional depth will need specialized add-ons or more specific software. An ERP serves as a system of truth, or centralized data hub, for teams across companies.

SCM software is built specifically for teams and processes centered around the supply chain. A unique characteristic of an SCM system is its direct connection between a company’s manufacturing team and third-party distributors, resellers, and other stakeholders. While most management software prioritizes in-house collaboration, SCM solutions are built for vertical alignment.

Is Enterprise Resource Planning or a Supply Chain Management System Better for My Business?

If you want the broad benefits of ERP software and the specialized features of SCM systems, you can invest in both. However, not every company has the budget or flexibility to purchase multiple solutions.

Companies searching for comprehensive workflow automation and improved internal collaboration are better off investing in an ERP. On the other hand, companies that want to prioritize manufacturing and distribution process refinement should opt for SCM software.

Still not sure what’s right for you? Consider the following table to get a general idea of which management solution might be a good fit for your company.