Question

Identify two quantifiable benefits and two non-quantifiable benefits that an organisation could achieve by installing an ERP system. Select one of your suggested benefits and debate the feasibility of achieving it.

Answer 1

Installing an ERP SYstme can offer several benefits to an organization Let us look at some of the key ones and their nature

Total Visibility

As the ERP system integrates all functions of a business (Sales, Production, FInance, HR etc.) it ensures that all of the data is in a single place and can be accessed as required by business decision makers at the highest level who may need summary information across the entire company. This makes it a very powerfool business intelligence tool and is one of the key non-quantifiable benefits.

Better Reporting and Planning

With a central system being used to control all operations it means that there will be ease of reporting across various functions. Multiple reports and dashboards can be put together for inputs to better decision making. This is also an unquantifiable benefit.

Better Inventory Control

In manufacturing organizations Inventory management and production planning is a critical task and with these tasks being managed within the ERP system it is possible to optimize costs and output . These benefits can be clearly quantified in terms of efficiency metrics like order fulfilment, inventory value, inventory age ordering costs etc.

Improved Customer Service

With Sales also coming under the purview of the ERP software it is possible to include customer information and integrate customer interction within the system. This will allow for faster reaction to customer requirements and improve customer satisfaction. Customer satisfaction can also be quantified through various metrics captured during any interaction with the company staff

As we marked, total visibility is a key benefit of ERP systems depending on the degree to which the system is implemented across departments. Too often the implementation is left at higher levels of the organization which doesn't then give us the full visibility of the business we desire. Sometimes there could be differences across departments in the rigour of implementation and the data from one department may be inconsistent with the data from another and create issues for decision makers.