Exploring the rationales for ERP and SCM integration

Abstract Enterprise resource planning (ERP) and supply‐chain management (SCM) have been growing in popularity across various industries. New initiatives in resources planning, electronic commerce and extended supply chain drive the trend among corporations towards integrating strategic business applications. ERP systems assist enterprises in automating and integrating corporate cross‐functions such as inventory control, procurement, distribution, finance and project management. Through information sharing, SCM enables supply‐chain partners to work in close coordination to facilitate supplier‐customer interactions and minimize transaction cost. This research examines these two important concepts in terms of their evolution, functions and current development and further explores the rationales for their integration by analyzing the problems of ERP and presenting the solutions of SCM. This study is concluded with the imminent development of SCM and EPR systems and the industrial trend toward their integration.