Extended ERP for inventory management: The case of a multi-national manufacturing company

Abstract

Enterprise Resource Planning (ERP) is an enterprise management system that integrates and streamlines business processes and functions, including supply chain management (SCM), across entire organization according to the organization's needs. The function of SCM in an ERP is to maintain manufacturing supply chain, which starts from input of data such as bill of material (BOM), planning, and procurement, right up to manufacturing management. BOM is an important input for supply chain management including Material Requirement Planning (MRP), which is one of ERP modules. This study is done at a multi-national company that has implemented ERP but having problems in inventory management on thousands of raw material and parts in production shop floor. Poor inventory management in production floor will cause excess or shortages of raw material which indirectly impact business performance of the company. Thus an additional module similar to MRP module is proposed to be implemented in the ERP to assist manufacturing department in inventory management to eliminate manual inventory management. This extended module is expected to increase the effectiveness and efficiency of manufacturing productions in managing inventory.