Enterprise resource planning - Essay Example

Enterprise Resource Planning (ERP) is a managerial information system that integrates the different business functions of a company which includefinance, accounting, marketing, production, etc. The use of an ERP can help manager make better decisions in their day to day operations. The ERP utilizes both internal and external information. When the broadband age started at the turn of the century the utilization of information became a critical success factor for companies. Large corporation benefit from the use of ERP because they system can help managers coordinate work among different divisions and business units. I have a brother that works in the fast food industry. The company he works for utilizes the ERP to determine when to purchase more food, to coordinate the schedules of the employees, and to determine if the prices of the food items are adequate to cover all overhead costs and achieve an adequate level of earnings for the owners. 2. Aggregate planning is concerned with determining the quantity and scheduling of production for the intermediate future, usually 3 to 18 months ahead (Heizer & Render, 1996). Operation managers determine the best way to forecast demand by adjusting production rates, labor rates, inventory levels, overtime work, subcontracting rates, and other controllable variables (Heizer, et al., 1996). About five years ago I worked at a start-up company. The operating manager utilized aggregate planning to determine the production levels of the company for the first year of operations. The company realized that the production level stipulate was barely enough to break even. The firm was working under the assumption that after the first year the company would be able to pick up additional work contracts that were going to generate additional income streams. The purchases of raw materials were made based on the forecasted sales numbers. Heizer, J., Render, B. (1996). Production & Operations Management (4th ed.). New Jersey: Prentice Hall. 3. A few years ago I was involved in a start up business project with a few colleagues. I was part of the original team that founded the enterprise. The company developed a new product which it wanted to bring to the marketplace. Since the company was new there production strategies to create the product did not exist. The first step in the production planning process was to develop a facility layout for the plant. Once the layout was in place the firm had to determine the best machinery in the marketplace to produce the product. Once the machinery was purchased the engineer had to test it and determine the production process. The floor employees had to be hired and trained by the manager. During the first month of production the output of the workers was below the expectations. It took three months before the employees mastered the learning curve. Out of the three production strategies (stable, chase, level) the company utilized a level strategy. 4. The chase strategy treats employees as if they did not matter. It is very impersonal due to the fact that the firm is looking out for their best interest instead of the interest of the employees. There is no job security under a chase strategy scenario since the company changes its workforce composition based on the amount of production it generates. Managers have to be careful because this strategy may lead to high employee turnover rates. 5. The scenario you described of the company hiring temporary employees is a trend that has caught a lot of popularity in the 21st century. Companies are looking for ways to reduce labor costs. The problem with temporary employees is that they are not able to produce the same output as experienced workers. It takes a few months sometimes longer for an employee to master the learning curve at a job. On many instances the savings that are achieved by not paying benefits to temporary employees are offset by the lower production. 6. In the healthcare industry information is extremely important. ERP systems help hospitals and healthcare providers achieve a better level of service to the patients. Doctors utilize these systems to connect to different servers to obtain information regarding whether a medical plan covers the cost of the patient care. In a hospital setting there are a lot of people working different shifts. An ERP can help hospital administrators coordinate the schedules of the workers. 7. Production managers utilized ERP systems to determine how much and when to purchase inventory. The larger the organization the greater the use a firm has for an ERP. One of the benefits of an ERP is that the system helps manager processed vast amounts of information. In today’s business world it is very important to have the capabilities to process information in order to make good business decisions. A well implemented ERP can help increase the productivity of an enterprise. 8. The use of ERP has become a critical success factor in the business world. These systems can be adapted to fit the needs of a particular business. Companies that do not use ERP in their operations are at a competitive disadvantage. The implementation of an ERP can be visualized as an investment. If the system is implemented correctly its use will provide lots of benefits and the original investment will be recovered very fast. 9. All business organizations should utilize aggregate planning in order to determine the optimum production scenario for the company. Five questions operations managers should ask themselves when making an aggregate plan are: Should inventories be used to absorb change in demand during the planning period? Should changes in demand be accommodated by varying the size of the workforce? Should part-timers be used or should overtime and idle time absorb changing demand? Should subcontractors be used during increased demand so that a stable workforce can be maintained? Should prices or other factors be changed to influence demand? (Heizer & Render, 1996) Heizer, J., Render, B. (1996). Production & Operations Management (4th ed.). New Jersey: Prentice Hall. 10. Aggregate planning is always important, but when companies are starting out from scratch it becomes even more important. When an entrepreneur establishes a new business they must have a solid business plan. Aggregate planning helps managers predict the future outcome of the business. Businesses that do not implement aggregate planning have a higher chance of failing. I few years ago I worked at a company that did not seem to implement any type of planning. The operation was a bit chaotic due to the fact that the managerial staff was completely incompetent. Read More