Devising Of Optimization Models And Modelling Systems For Supply Chain Planning And Management

1847 words - 7 pages

Any software tool that claims to analyze or optimize a supply chain uses this process. The questions we must stay focused on are, "What does the software really do in each step?" and, "What does it expect me to do?" If we keep asking these questions, we can find out the exact value the tool in question adds to the data.We must stay on this message because the supply chain software industry is confusing. Nearly every vendor uses words like "supply chain," "optimize," and "simulate" in their marketing literature. Clearly, not everyone is doing the same thing--in fact, almost no two vendors are doing the same thing. (Frayer 1997, 433-441; Arntzen 1995, 69-93) Perhaps the first step available in tackling this wild frontier of computing cowboys is to dish up a little industry history to understand where the supply chain vendors have come from. To decipher and understand a vendor's particular language, you must understand which particular part of the "country" he is from.There are essentially four tribes that until fairly recently, have coexisted more or less peacefully in the supply chain software village. They are the ERPers, the SCMers, the OPTers, and the ANALers.ERP softwareThe ERPers hail from ERP land, formerly known as MRP land. ERP (Enterprise Resource Planning) software tools took the concepts of MRP and attempted to integrate other departments and functions that were outside of the manufacturing-planning arena, but still were related. (Chapman 1996, 1-7) Essentially, ERP systems are the software infrastructure that facilitates the flow of information between all functions in a company (manufacturing, logistics, finance, human resources, etc.)At their core, you can visualize ERP systems as huge database applications for storing transaction data. When your sales department receives an order, they have to enter the order into a computer. This order should generate an order in the shipping department (if it's on hand) or the manufacturing department (if it's not) so it can be produced. However, you may need to reorder some specific parts from your supplier. Additionally, each step has accounting implications (debit the accounts receivable account, purchase supplies, etc.)ERP deals with the toughest problem of all--organizing and executing the millions of transactions that operating a complex business entails. Notice that I haven't said anything about problem solving yet. (Breitman 1987, 94-106; Hicks 1996, 5-9) That's because, for the ERPers, just getting a handle on the transactions that accompany business operations is more than half the battle. ERPers aren't operations researchers, they're good old-fashioned data processing people. To totally over generalize, they often tend to see the supply chain as a database management problem, not as a mathematical modelling and optimisation problem.The ERPers are very well known. The industry is led by two of the world's largest software companies--SAP AG and Oracle--and also includes Baan, PeopleSoft,...

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