Enterprise Resource Planning Implementation Methodologies - Coursework Example

Enterprise Resource Planning Enterprise Resource Planning Enterprise resource planning is the process by which a company (often a manufacturer) manages and integrates important parts of its business. An enterprise resource planning management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources; etc.ERP is most frequently used in the context of software. Consequently as the methodology has become more popular, large software applications have as a result been developed with the aim of helping companies easily implement ERP in the organization. Extended ERP Components By definition, Extended ERP components is the entire set of collaborating companies, both up-stream and down-stream, from raw materials to end-use consumption, that work together to bring value to the market- place. The advantages of extended enterprise derive from a firm’s ability to quickly utilize the entire network of suppliers, vendors, buyers, and customers. The flows of information that lie at the core of the coordination and collaboration among network members not only link disparate information sources, they also provide an opportunity to build knowledge based tools. Companies engage in long term partnering relationships built around mutual goals and accompanied by very rich and deep exchange of information. Members view that their element of joint action, value chain partners as still retaining some aspects of self serving behavior. Business intelligence components Business intelligence (BI) is an information technology concept, representing current state of the historical development of information technologies. This development started in the mid 1960s with the first versions of management information systems (MIS).Therefore BI is more than the fashion and needs to be defined, categorized and explained and analyzed. Of course, information systems are an important variable determining the design of organizations and demand in some cases organizational restructuring processes. Thus BI has direct impact on the organizational structure without giving any direct recommendations and prescriptions as to what the organization is supposed to end up like. In order to describe the core of the different BI definitions, there is need to understand brief definitions of key information technology (IT) terms: Data, Information, Knowledge and Data Warehouse. a) Data: Can be defined as the reality recorded by the computer, stored and processed. Hence the use of the computer can be referred to as Data processing. b) Information: This is what a person is able to understand about reality. Information system uses computer to organize data in a way that people can understand the result. c) Knowledge: This is what a business uses to make decisions. After providing these definitions of the soft components, the hard components of BI, which is the data Warehouse must also by necessity be defined. Customer Relations Component CRM uses information technology to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes such as sales, marketing, and services that interact with a company’s customers. CRM systems also create an IT framework of Web-enabled software and databases that integrates these processes with the rest of a company’s business operations. CRM systems include a family of software modules that provides the tools that enable a business and its employees to provide fast, convenient, dependable, and consistent service to its customers. “Siebel Systems, Oracle, People-Soft, SAP AG, and Epiphany,” are some of the leading vendors of CRM software.CRM software helps sales, marketing, and service professionals capture and track relevant data about every past and planned contact with prospects and customers, as well as other business and life cycle events of customers. Information is obtained from all customer meeting points, for instance telephone, fax, e-mail, the company’s Web Site, retail stores, kiosks, and personal contact. CRM systems store the data in a common customer database that integrates all customer account information and makes it available throughout the company via Internet, intranet, or other network links for sales, marketing, service, and other CRM applications. Supply chain management component Supply chain management may be defined as the management of the different flows in a supply chain with a view to improving the long term performance of the individual firms and the supply chain as a whole. As is evident form the definition itself, the flow of information is vital to the functioning of a supply chain. Without information relayed at the right time to the right place, the whole supply chain would come to a standstill. Hence information technology, which enables information flow within a firm, between firms, and across the supply chain, goes a long way towards ensuring effective and efficient supply chain management (Salimi, 2005).  Intrafirm Information Systems  As stated earlier, firms could develop more effective supply chain information systems if they first developed effective intrafirm information systems. Some of the common examples of such systems are “Warehouse management systems (WMS), transportation management systems (TMS), Decision support systems (DSS), Intranet and Enterprise resource planning systems (ERP).”  Intrafirm Applications  Intrafirm applications: These are concepts and techniques which have benefited greatly through the advances in intrafirm information systems and technology. The main applications of Intra-firm information systems are Materials requirement planning (MRP) and Distribution requirements planning (DRP).  Inter-Firm Information Systems    They permit information flow between the focal firm and its suppliers and/or customers. The increasingly uncertain business environment has seen the growth of inter-firm information technology. These systems eliminate stagnant pools of inventory (at the different phases of a supply chain) and duplicate service operations. Some of the important inter-firm systems are EDI, Internet, etc. Inter-Firm Applications  The major applications which benefit from Information systems technology that goes beyond the firm are Just-in-time (JIT) manufacturing and Cross-docking.  Supply Chain Information Systems   Subsequent to achieve functional integration within the supply chain, information technology that manages product flow, information flow and cash flow from end to end is indispensable. Some of the important supply chain information systems are forecasting systems and extranets.  Applications  Some applications of SC information systems are Quick response (QR), Efficient customer response (ECR), vendor-managed inventory (VMI), and Automatic replenishment (AR). E-Business Components Another trend in ERP development and use involves vendors making the software available to client companies on the Internet. Known as hosted ERP or Web-deployed ERP, this trend has also contributed to making ERP systems available to smaller businesses. When a company chooses to run its ERP systems through a Web-based host, the software is not purchased by or installed at the client company. Instead, it resides on the vendors host computer, where clients access it through an Internet connection. "Rather than dispersing ERP to multiple corporate sites and incurring the costs of many servers needed to run the software, Web-deployed ERP centralizes the system," Forger noted. "Using the Web to access a single ERP system at a central location, companies can reduce their IT investment on two fronts—hardware and personnel." Running ERP systems on a host computer relieves small businesses from the need to purchase a main frame computer (basically large computer supporting typically 100 to 500 users at a time) or hire information technology specialists to support the system. In addition, this arrangement allows client companies to save money by paying only for the ERP applications they use rather than having to buy a certain number of modules. In effect, ERP vendors act as application service providers (ASPs) for several client firms. "Systems supplied by ASPs are particularly attractive to start-up companies that cant reliably predict their future business volumes, cant afford to pay for first-tier ERP systems, and dont want to be continually replacing cheaper, less capable systems as their businesses grow," James and Wolf explained (Salimi, 2005). Integrated SCM, CRM, and ERP Critically, customer management and supplier relationship management, provide important linkages throughout the supply chain. This is because for each supplier, in the supply chain: the ultimate measure for success for customer relationship management process is the change in profitability of an individual customer or section of customers. Unfortunately, there are a wide range of views as to what constitutes customer relationship management. At one extreme it is about the implementation of a specific technology solution, and on the other it is a holistic approach to selectively managing relationships to create shareholder value. Integration Tools In summary the tools of integration in ERP are as varied as the solutions that they offer, depending on the scope of the organization. However, the most pertinent tools that must be taken into consideration to smoothly set into motions the various components of ERP in order for positive results to be yielded are: A) Supply Chain Proper understanding of an organization’s supply chain highly mitigates crucial yet unforeseen problems out the process with real-time check into sales data, inventory, shipment schedules, etc. Critical purchasing and receiving processes must be simplified to eliminate irregularities. Conversely knowledge of what customers need now, coupled with the planning for what they need next. Keep inventory lean and address demand while negotiating better terms and making smart buying decisions. Moreover help improve customer service and therefore customer relationships. Knowing what’s coming is very important, besides recognizing and capitalizing on opportunities. Know how profits are projected: predicting trends and reacting appropriately (Salimi, 2005). B) Financial Maintaining accountability and compliance while giving the organization speed and agility needed to respond to shifting market conditions and the shifting regulatory requirements. Reference Salimi, F. (2005). ERP implementation methodologies: differences in ERP implementation between manufacturing and services : a scientific essay in management sciences. Nijmegen: Radboud University Nijmegen.   Read More