Enterprise Resource Planning
Enterprise Resource Planning refers to systems and software packages employed by organizations in the management of daily business processes, including such activities as manufacturing, finance, accounting, procurement, and project management (Monk and Wagner 19). Engaging ERP systems in an organization is of critical importance since they not only aid in the collection of data from multiple sources, but also help to eliminate chances of duplication of data, thus providing data integrity. In the modern society, the industrial needs require using ERP systems so as to effectively manage the immense numbers of businesses at all levels. The paper will discuss the possible opportunities for ERP improvement as a process and as a tool, look into the most important aspects of a successful ERP, and provide advice for a mid-size company willing to automate their planning through implementing an ERP system. Finally, the paper will address the items that an organization can use to measure the success of the organized planning processes.<\/p>
Opportunities for ERP Improvement
The goal pursued by every organization while employing ERP use is to have an effective system that meets all the intended goals. However, such result is not always the case as some systems fail to accomplish the anticipated benefits (Shen and Wang 134). Therefore, it is advisable to address the aspects that could make the system work effectively rather than live with the shortcomings. To address this situation, the paper has identified some opportunities that aid in improving ERP systems.<\/p>
System Audit
The establishment of a new ERP system requires introducing different new ways of carrying out various tasks. Thus, one of the best opportunities to improve ERP systems is undertaking system audit that facilitates investigation of the aspects of system functionality, hindrances to performance, and procedural shortcomings that need some training to rectify (Shen and Wang 134). Consequently, the process of auditing makes it possible to identify whether there are some old methods in use that could be compromising the performance of the new system.<\/p>
Alignment of Business Processes
Correspondingly, effective use of ERP systems goes handily with efficient business processes. Thus, the system has a chance of not performing well if the alignment of the business processes with the systems is not intact (Shen and Wang 134). Using an effective and IT skilled team may offer magnificent support in streamlining the working practices and processes, integrating them with the system for optimal performance.<\/p>
Timely Updating
Furthermore, ERP systems require timely updating to improve performance. Some organizations take not updating the systems as a precautionary measure in the fear that they may end up losing the important data. However, any failure to keep the systems up-to-date can potentially cost a fortune in the long run.<\/p>
Successful ERP Implementation
Enterprise resource planning (ERP) implementation is normally a complex process whose rate of failure still remains high (Sun, Ni, and Lam 48). For ERP to be successfully implemented, there are some important aspects that the organization needs to critically observe.<\/p>
EPR Strategy and Strategic Goals
First, the entity should have a clear understanding of the EPR strategy and the strategic goals, which will act as a roadmap of what the ERP system is intended to achieve by defining the rules and components that are essentially important in the deployment of ERP and its implementation (Sun, Ni, and Lam 48). Either, the approach has to comply with the overall IT strategy as well as the portfolio of application. Both the IT and ERP strategies should be inclusive of an architectural view detailing how the enterprise's resource planning systems fit into the structure and tools of the organization. It is also critical to ensure that the ERP approach not only supports the existing business strategy, but is also flexible to accommodate the necessary changes in business needs and technology.<\/p>
Top Management Commitment
Secondly, the top management should be fully committed to enhancing the success of ERP implementation by familiarizing with the ERP and passing the knowledge to the junior employees. Likewise, they should also invest in the IT team that is well conversant with the systems and tools either through recruitment of skilled personnel or by retraining the existing workforce (Sun, Ni, and Lam 51). The top management of the organization should also encourage cross-functional cooperation among all employees to enhance healthy interdepartmental relationships in implementing ERP.<\/p>
Building a Great Implementation Team
Thirdly, the organization should invest in building a great implementation team, whose primary objective will be to coordinate ERP and make reviews and decisions related to the system processes. Further, the core team, which forms part of the implementation group, is obligated to be tactically responsible for the implementation on daily basis.<\/p>
Change Management
Fourth, successful ERP implementation should be carried out with respect to change management. All the employees within the organization should be familiarized with the new processes and respective job roles so as to clearly understand and embrace the developments. Either, any failure to act in such manner at the onset or waiting until it is very late can actually lead to overall resistance to adopting the new system (Sun, Ni, and Lam 51). To realize effectiveness, it is necessary to ensure appropriate concentration on the job workflows.<\/p>
Data Accuracy
Finally, for ERP implementation to attain meaningful success, high level of data accuracy should be maintained to enhance effective and timely verifiability. Ensuring the accuracy of information contributes to reducing the time spent on reconciling data, creates more confidence in analytical systems, and enhances the overall customer satisfaction. Successful ERP implementation is therefore of immense importance to the organization when the appropriate measures enhancing its success are observed.<\/p>
Benefits of ERP System to a Mid-Sized Company
It is vital for a mid-sized company willing to embrace ERP system to enhance awareness that such move is one of the best decisions for any entity. Such ideology can be best explained by discussing the benefits of ERP systems (Seethamraju 480).
Cost Reduction
First, successful implementation of ERP system in a mid-sized company significantly lowers the cost of operation. The system is integrated in such a manner that it becomes less costly for the business to operate since all the processes within the organization are more harmonized than in the previous system (Seethamraju 480). Secondly, ERP systems eliminate wastage within an organization, resulting in improved inventory management and better communication, thus covering the lope holes that facilitate waste. When the employees are provided with the required tools for communication, they tend to perform more effectively and are generally more satisfied with their jobs. Other systems have features that support wireless scanning and printing, which equally enhance efficiency.<\/p>
Improved Inventory Management
Thirdly, one of the key goals of any business is to maintain a moving inventory. By engaging ERP systems, the company is able to meet such objective since they play a critical role in the management of the inventory, which not only reduces costs, but also contributes to receiving increased profit margins (Seethamraju 480). ERP solutions provide collaborative communication between the company and the suppliers, thus building better-negotiated supply terms and ensuring the effective use of the inventory space. In addition, the application of ERP systems would bring considerable benefits to the company by increasing customer satisfaction due to better product quality, reduced delays, and shortened delivery time (Seethamraju 480). Customer satisfaction is an important tool for any business since it gauges client's loyalty, increases revenue, and aids in the attraction of new customers, thus giving the business a competitive advantage over the rivals.<\/p>
Better Planning and Tracking
Fifth, better planning and tracking resulting from ERP systems lower the costs of inventory in a company, allowing to price the products or services in a more competitive manner, especially in case the business has close competitors. Although pricing may seem less significant, in the long run, it wins more contacts for the business, hence ensuring more exposure and recognition as a leader in the respective industry within the area of operation (Seethamraju 480). Finally, the mid-sized company will enjoy fewer billing and delivery errors since the system is based on the most accurate data, thus enjoying more trust from the stakeholders and prolonged mutual business relationships.<\/p>
Measuring Success of Organized Planning Processes
Most organizations do not pay much attention to the tangible results arising from ERP systems. Measurement of the results is often ignored by organizations after having gained more profit upon the implementation of ERP (Yung-Yun and Handfield 18). However, a number of items have to be measured against the system to gauge effectiveness, including employee engagement, strategic benefits, tangible benefits, key performance indicators (KPIs), and measuring hard numbers.<\/p>
Employee Engagement
Employee engagement is a perfect measure to gauge the usefulness of a system, which can be analyzed by examining how quickly they adopt the system, whether there are some employees still using old systems, and if yes, how often. Greater adoption normally translates to the establishment of a better working system (Yung-Yun and Handfield 18).<\/p>
Tangible Benefits
The measure of tangible benefits can best be estimated through analyzing customer satisfaction, identifying whether ERP systems are enhancing better customer management relationships, and detecting whether there is an increase in sales, reduction in errors, and whether the outcome can be attributed to the systems' role (Yung-Yun and Handfield 18). A positive result is an indication that greater effectiveness has been attained.<\/p>
Strategic Benefits
Measuring strategic benefits can gauge the success of an organization's planning process. Most ERP systems have excellent management tools that give a broader understanding of operation and management when used appropriately to facilitate decision-making (Yung-Yun and Handfield 18). The business owner can put some markers in place, against which an individual can gauge whether ERP is improving the business strategy.<\/p>
Key Performance Indicators
Moreover, every organization has key performance indicators (KPIs), against which the success of planning processes can also be measured. For example, a retailer may use customer satisfaction as the appropriate metric, while a manufacturer may gauge the success based on the time taken to produce or deliver a particular item (Yung-Yun and Handfield 18). If the KPIs trends are positive, it is a good indication of the overall business success through the implemented systems.<\/p>
Measuring Hard Numbers
Finally, the measure of hard numbers possibly provides the easiest way to evaluate whether the ERP systems are producing positive effects. The evaluation can be done through the metrics of cost savings and revenue increase. If the business presently enjoys more revenues and reduced costs than before, it is a positive sign of successful planning processes.<\/p>
Works Cited
Monk, Ellen, and Bret Wagner. Concepts in Enterprise Resource Planning. Cengage Learning, 2012.
Nour, Mohamed A. and Samar Mouakket. "A Classification Framework of Critical Success Factors for ERP Systems Implementation: A Multi-Stakeholder Perspective." International Journal of Enterprise Information Systems, vol.7, no.1, 2001, pp.56-71.
Seethamraju, Ravi. "Adoption of Software as a Service (SaaS) Enterprise Resource Planning (ERP) Systems in Small and Medium-Sized Enterprises (SMEs)." Information Systems Frontiers, 17 March 2015, pp.475-492.
Shen, Yung-Chi, Pih-Shuw Chen, and Chun-Hsien Wang. "A Study of Enterprise Resource Planning (ERP) System Performance Measurement Using the Quantitative Balanced Scorecard Approach." Computers in Industry, no.75, 2016, pp.127-139.
Sun, Hongyi, Wenbin Ni, and Rocky Lam. "A Step-by-Step Performance Assessment and Improvement Method for ERP Implementation: Action Case Studies in Chinese Companies." Computers in Industry, no.68, 2015, pp.40-52.
Yung-Yun, and Robert B. Handfield. "Measuring the Benefits of ERP on Supply Management Maturity Model Huang: A “big data” Method." International Journal of Operations " Production Management, 35 Jan 2015, pp. 2-25.
