Question

Technology and Enterprise Resource Planning

As an IT manager, discuss how your company will use Enterprise Resource Planning (ERP) to integrate the various functions of an entity. What are the advantages of using ERP? In your discussion, please be sure to provide substantive explanation of what ERP is and give example(s) of ERP. Use APA throughout.

Answer 1

The Enterprise Resource Planning systems include various IT applications that serve key corporate functions, and involve centralized information shared by many users that includes one or more databases programs to add, delete, change, analyze, or otherwise act upon data elements in those databases. The ERP model may look as under:

Diagram:

The characteristics of ERP is that is that integrates many software applications and business functions using a common database with the following potential benefits-

• Cycle time reduction
• Faster information transactions
• Better financial management
• Laying the groundwork for electronic commerce
• Encourages organizations to manage processes more explicitly

However, it also suffers from certain potential risks which are as under:

• Potential risks-
  • Difficult to implement
    • Often easier to adapt business processes to the software than vice versa
  • Inflexible

• Overly hierarchical

Certain examples of ERP package would include the ERP package for Customer Relationship Management and that for the Supply Chain management.

In case of the web selling of CRM model, it shall help in the following ways:

• On-line sales-
  • product catalogues
  • shopping carts
  • credit cards
  • shopping lists
  • product configuration for complex products
• On-line service-
  • help
  • track on-line activities
    • on-line marketing analysis

In case of SCM, ERP can help in the following ways:

• Managing interrelated activities “from your suppliers’ suppliers to your customers’ customers.”
• May involve-
  • changing information flows and decision-making within a firm
  • changing information flows and decision-making between firms
  • using new software tools to enable these changes
    • ERP systems » Cross-organizational planning, scheduling, and optimization tools
• Increase responsiveness to supply and demand fluctuations without sacrificing margins
  • linking with suppliers, customers, and transportation providers
• Reduce inventory
• Improve reliability of delivery commitments
  • ATP (Available To Promise)
• Manage changes in product mix
  • including new product introductions

However, various other examples of ERP packages could include:

• EAI – Enterprise Application Integration
• Enterprise portals
• ERM – Employee Relationship Management
• Product Lifecycle Management (PLM)

For a general overview, let us take an example of an ERP information system, SAP which is a highly efficient ERP package under the Information System that can help to resolve the problems found in Organization that works into Projects Planning, to undertake various civil engineering architectural projects. Hence, in a centralized control system of an Organization with the application of the SAP Information system, following could be briefed:

Encountering with Control systems at work in a Company:

Supposing an Organization is a conglomerate with Shipping and Logistics being its primary activities and expansion and diversification thereupon gradually. Here the name of the control system in the ERP would be SAP i.e. Systems Applications and Products in Data Processing which is an ERP package aimed to cover all the functional aspects of a Business. SAP is now one of the leading ERP (Enterprise by Resource Planning) available in the market that serves the purpose of Control systems at work very efficiently.

It is indeed a very structured Control System, that would be undertaken in the Organization and it would help in the following ways:

• It a complete integrated package covering all aspects of business such as the modules of Financial Accounting (FI), Controlling (CO), Asset Accounting (AA), Sales & Distribution (SD), Material Management (MM), Product Planning (PP), Quality Management (QM), Project System (PS), Plant Maintenance (PM), Human Resources (HR). The main purpose of this Control system is to combine data for the MIS.
• The structure, as accepted by our Organization, is believed to be very constructive and matches all the general purposes of our Organization.
• The learning curve delays could be thus minimized in our Functional lines due to the allowance to structural creation in this control system that allows the analysis of the Organization's design tasks. Such an analysis of the control system is so methodically designed that it can even undertake the non-linear analysis and its direct integration to the functions.
• This control system helps in dropping the cost of inventory because of the effective planning and control mechanisms.
• The relationship of our Organization has become better with the outside world and especially with the vendors and the clients due better management of its customer service modules.
• Further costs of compliance of regulatory bodies are taken care of by predetermining the framework of functional activities of each department.
• This control system has also been successful enough to control the overtime cost by efficiently allocation the labor resource to its various business activities.
• The Production team has also been able to highly reduce its untimely scarcity of its produce due to timely intimation and control of its production process and resources.

Apart from the above advantages, the Organization would also need an Information system in place that could help handling the Management by Information (MIS) issues too.

Handling of MIS issue by Organization:

The Organization, with the implementation of SAP, would thus be able to handle the MIS issue in the following ways:

• SAP BI (Business Intelligence) and SAP BO (Business Objects) modules help to design the structure for MIS in the Organization. These modules undertake the activities of data collection and its analysis to further generate a report that could be essential to deal with MIS concerns.
• SAP also helps to design the queries which could be the first step in handling with the MIS issue.
• The user interface of SAP is so customized in nature that all the factors pertaining to the user's specifications to create an MIS could easily designed in to the system.
• One of the MIS error is reiteration and redundancy. This could also be addressed well by this control system.
• Overall controlling of employees performances through an effective MIS could be well undertaken by SAP.

Therefore, this is how an Organization could adapt to SAP in the efforts to resolve various Organizational issues and ensure more efficiency in the system.

In general, in the Supply Chain Management discipline ERP also has played an important role. The purpose of Supply Chain Management is to enable a linkage of the flow of goods from the raw materials to its end-users thereby including a broad network of Company’s various parties such as the suppliers, the intermediaries and finally the customers. When this network is managed with Enterprise Resource Planning (ERP) systems, then the flow of goods as well as money from one end to the other alongside flow of information in a unified way becomes more feasible. Now, with the advent of Globalization, as internet has made its way well with the ERP systems, and also with such activities in the designing of a firm’s Supply Chain network, there is higher efficiency established in the Global distribution channels that in turn gives rise to the income generation power of the firm and adds value to the end product that reaches to the customer.