Enterprise Resource Planning (ERP) Proposal - Case Study Example

?Enterprise Resource Planning (ERP) Proposal Inserts His/her Inserts Grade Inserts 31.05 Enterprise Resource Planning (ERP) Proposal Introduction BrainFreeze Pty Ltd manufactures and sells ice cream, with most of its revenue being recognized from the manufacturing process. The company was started in 2001 by 5 partners who still own and manage the company. A description of Brain Freeze’s existing “legacy” information systems Brain freeze ltd, it still relies on information systems that are not current and not able to accommodate the growth rate of the company. The company relies on an outdated financial accounting system known as solution 7. Solution 7 financial accounting system does not have a manufacturing module and does not support sales and marketing of the products. BrainFreeze Pty Ltd also uses excel spread sheets to record the warehouse inventories and track the distributions channels and record the different transactions. The company also relies on manual methods for the production and packaging operations. The tracking of data required for production is done using the available clipboards. The tracking of raw materials is facilitated by a pear tree module that is not adequately reliable as payments are made through the accounting system. Business processes One of the most common business processes at BrainFreeze Pty Ltd is the order management process where the customer’s order the products on phone. This process involves the set of actions that BrainFreeze Pty Ltd takes to ensure that they deliver the goods ordered by the customer. Some of the main steps include processing the order, production of the goods and delivery of the goods to the client. The production of the goods is done in case they are not available in the companies’ warehouse or if the customer makes the order according to their own preferences. Additionally to ensure customer satisfaction, the management of the orders is closely related to the Customer Relationship Management. The parties involved in the order management process include; the customer (orders the products on phone), the manufacturer (BrainFreeze Pty) and the shipping service process. Below is a flow chart for the ordering process; Another common business process at BrainFreeze Pty Ltd is the accounting process that involves the recording of all sequential activities of how cash is received and how it is paid out. The accounting process is done through recording of various financial statements such as journals, ledgers and trial balance. Below is a flow chart for the current accounting process; The human resource management process is also common at BrainFreeze Pty Ltd. The human resource department in the organization is responsible for recruitment of new staff, management of the staff within the organization and providing direction for the staff members. The human resource management as a business process involves both the human resources department and the management. The human resource management process is also concerned with evaluating the staff’s performance, qualifications and their safety among others. This process also involves moving away the traditional staff members. The main goal of human resource management at BrainFreeze Pty Ltd is to enhance strategic utilization of the staff members to influence the business in as beneficial way. Below is a flow chart for the human resource management process of staff hiring; How the proposed ERP streamlines the business processes This system is likely to eliminate most tedious tasks that are considered to be time consuming; therefore, the management of BrainFreeze Pty Ltd becomes more effective. Some of the benefits of the use of the modern improved systems include easier control over the different processes, clearer monitoring of operations, streamlining the supply chains and more efficient storage and retrieval of information. The system will give the managers a better view of the operation of the organization by easily accessing all the information on quality management, the updates and the informational statistics. Some of the most successful organizations clearly understand the performance of the business that is facilitated by an effective reliable ERP. The ERP also facilitates easier accessibility to the information stored on the data base through the historical and real time data (Leon 2008). Some of the most common internal processes that are managed by the ERP include inventory management, efficient custom care and services, and product planning among other internal processes. The ERP also handles processes such as management of the supply chain, invoicing, tracking of previous orders and interacting with the suppliers. The ERP can also play a major role at BrainFreeze Pty Ltd in reducing redundancy, and by completing the specified tasks within a shorter period and in a more accurate manner. The systems being currently used as BrainFreeze Pty Ltd are likely to result to more errors inasmuch as they consume so much time. The ERP thus cut the time consumed by the employees thus minimizing on the labor cost and eliminating human errors in the process. The accountability of the staff members is also enhanced as the system is programmed to determine the completion of the task by the various users of the system. The tracking of the users of the system is either dome using communication logs, task reviews and the use of form quotas. The use of information logs in the ERP requires all the staff members and users of the system to documents their activities thus the evaluation of the employees is easier. Another benefit of implementing the ERP at BrainFreeze Pty Ltd is to increase the business values which are mostly likely to yield better results. The use of the ERP should also provide a value than the cost invested in purchasing and training employees. How the ERP adoption will give if BrainFreeze Pty Ltd a competitive advantage over the competitors The operating environment in the business world has greatly changed and it requires for the players in the industries to be dynamic so as to survive the high rates of competition. One of the most strategic methods to survive in a highly competitive environment is embracing new and modern technology such as the use of ERP to manage most of the business processes and operations. BrainFreeze Pty Ltd already has a competitive advantage over its competitors since it has a wider market share. However, if BrainFreeze Pty Ltd is not able to sustain their customers, it may lose the customer base in most regions. One of the competitive advantage factors that BrainFreeze Pty Ltd is likely to have over its competitors due to the implementation of ERP, is that it would lower the cost incurred in the supply chain. The lower costs in the supply chain will lead to higher revenues and could also reduce the cost of the product to avail the product cheaply as compared to the competitors. The implementation of the ERP BrainFreeze Pty Ltd would also offer as a competitive advantage to BrainFreeze Pty Ltd by improving the product quality thus producing products of higher quality as compared to their competitors. The implementations of ERP at BrainFreeze Pty Ltd will also help the company coordinate the global demand supply and production. In summary, the ERP will help BrainFreeze Pty Ltd enhance the reductions of operating costs and the customer satisfaction. These factors will also help the company acquire a larger market share as compared to its competitors. Justification for the implementation strategy The most appropriate strategy for the implementation of the proposed ERP is using the phased approach where the system is implemented gradually as it is being used together with the current systems. This strategy is better as compared to the big bang approach where the ERP system is implemented in one instance after scrapping the current one. The phased approach will be effective as it will give the users ample time and experience to learn how to use the system. The phased approach will also be essential as the users will have the chance to point out errors that may have been made in the ERP. In case of any errors in the ERP system, they errors can be corrected while the other system is running without interrupting the business processes. Additionally using the phased approach will help in reducing the cases inaccuracy as users can compare between the results from the current system and the newly implemented ERP system. Factors to consider in the entire process of the ERP implementation There are, however, various factors that the management board of BrainFreeze Pty Ltd should consider before selecting the type of information system to implement. One of the factors is the willingness of the employees, and management to change. The company members should have a zeal for change as a strategy of achieving the company goals. Another factor that the board should consider is the knowledge, skills, and the experience of the staff members. This is the ability of the staff members to make effective use of the newly implemented system. The staff members should also have a broad experience in the use of IT infrastructure. The board should as well consider the technical capabilities of the company and support. There should be standby IT specialists who carry out the maintenance and repairs of the system. The management boards should also consider the teamwork of the institution to determine whether the staff can be assigned common tasks and implement large projects such as the ERP. Justification of the system hosting approach There are two options for implementing the ERP system; either by buying the ERP license annually or using the system as software (SaaS) that requires a monthly payment of the usage fees. Using this method, the company does not purchase the whole system but it only rents the software and uses it through the owner’s servers. The total cost for a standalone license over 5 years is $400,000, therefore over a period of 10 years the amount would accumulate to $800,000. Secondly, the monthly fees for using the system as software is $20,000 per month, therefore, over a period of 10 years the cost will have accumulated to 2,400,000 which is much more expensive than buying the system license. Therefore the recommended method for the implementation of the ERP system at BrainFreeze Pty Ltd is fully purchasing the systems license as it is cheaper and it ensures the privacy of the stored information. Purchasing an ERP system comes with many unexpected costs. BrainFreeze Pty Ltd will spend a lot of resources to purchase and implement the ERP system. Some of the other unexpected costs incurred as a consequence of the ERP system purchase include maintenance support, implementing the system, upgrades, and the people responsible for implementing the system internally. It is also advisable that large and international such as BrainFreeze Pty Ltd where the privacy of data is highly valued to consider purchasing the whole ERP system as the security of the data may be at risk as it is not managed by the company itself. The SaaS approach may not also be reliable for the transactions that require access within milliseconds as it relies on the internet to access the data. Another weakness is on the reliability of internet since; if the internet speeds are low it is likely to affect the company’s operations. Despite the initial cost of implementation such as purchasing the IT infrastructure, it is advisable for BrainFreeze Pty Ltd to purchase the ERP systems as they will have control over all the resources including data. References Burns, M 2011, what does an ERP system cost? [Accessed 02 June, 2013] Leon, L 2008, Enterprise Resource Planning, New York, McGraw-Hill Education. Read More