Enterprise Resource Planning (ERP) System at Best Inc - Case Study Example

Enterprise Resource Planning (ERP) in an organization Enterprise Resource Planning (ERP) at Best Inc Enterprise resource planning is defined by Aladwani as an integrated system of programs aiding a business in the performance of core activities including accounting, logistics and production, finance and accounting, human resources, marketing and sales (Aladwani, 2001: 2). The importance of an ERP system has never been higher especially the current global environment where business efficiency and effectiveness in internal operations and supply chain are requisites for success. ERP system implementation provides a basis for a business to gain competitive advantage and overcome supply chain challenges as well as be in a better position to forecast market changes. This study aims at analyzing aspects of successful ERP adoption project at Best Inc. with an emphasis on the internal and external characteristics of the business and other aspects of the ERP implementation process. Why Best Inc. needs an ERP system Best Inc. is a global company in the coffee industry with over 400 stores in three continents and relies heavily in an efficient supply chain to ensure efficiency and success. The business expansion and development has been quick in recent years. The need for implementing an ERP system in business has been augmented by the inability of manual systems to allow for forecasting, time require to fulfill customer needs in the manual system, and the need to augment efficiency and effectiveness in the operations of the business (Shields, 2001: 44). The business growth has necessitated the use of technological developments to provide the business with a competitive advantage in the business resulting in the need for the implementation of an ERP system. Benefits of an ERP System to the business Best Inc. will accrue a number of benefits from implementing an ERP system that is focused on supply chain management. These benefits include a reduction in the annual costs of supply chain will be reduced considerably with the implementation of an ERP system (Pearlson & Saunders, 2010: p 12). The supply chain costs have been increasing from untimely deliveries by suppliers and outsourcing of supply decisions to other firms. The ERP system will be able to overcome these challenges through focusing on the procurement aspect of the supply chain to aid in managing the costs of dairy products and paper required as well as coffee products. The ERP system will manage purchase from coffee suppliers involved with the company globally, reduced use of paper forms and mailing papers and effective use of electronic communication by the system will reduce costs, and automatic update on procurement of products, billing, and expected delivery date and time. The delivery time and date have to be adhered to by all the supplies to allow for efficiency and effectiveness of the system augmenting business competitive advantage. These measures deliver streamlined, effective, and efficient supply chain is allowing for ordering and receive of supplies by stores within the required time improving the efficiency by the stores in meeting client needs. The ERP system integrates the functions of the business in terms of supply chain, finance and accounting, sales, marketing, and administration among other facets of the organization reducing costs of paperwork and confusion in communication between these facets (Lientz & REA, 2000: p. 28). Mistakes in ordering and financing will decrease allowing for efficient supply chain. ERP system efficiently allows for the effectiveness in meeting client needs increasing customer goodwill generating loyalty and allowing Best Inc. to access return clients and new clients to the business. ERP integrating all facets of the organization allows limited time for ordering, manufacture, supply, and delivery of the supplies to the stores. The implementation of an ERP system requires the use of fewer personnel in the supply chain management process due to lack of paperwork owing to computerization of the system. The result is a reduction in the employees reducing salary costs and the reduced paperwork result in a reduction in overhead costs for Best Inc. Integrating accounting component of Best Inc. in ERP allows ERP to consider all transactions in the business and realize high costs areas allowing the business to take measures to reduce costs and manage expenses. The ERP system provides all the information on all the facets of the business in a document allowing employees and management to read and evaluate with recommendations on making changes. Other benefits that Best Inc. is poised to benefit from the introduction of an ERP system are an improved efficiency of business infrastructure and integrating of its global business. Risks and unexpected events that could occur in adoption and implementation phases Enterprise resource management (ERP) support supply chain management in an organization due to the impacts of ERP on inventory management and other factors affecting supply chain. It is fundamental to have an understanding of the internal and external factors in an industry owing to other effects on the running of the supply chain. The international and external factors affecting Best Company are discussed in two facets internal and external analysis. External factors Supply chain structure: the coffee industry has a unique supply chain because of the start of the supply chain from transporting the requirements for planting to waste management after consuming coffee. Water, fertilizers, and pesticides are transported to the farm where cultivation of coffee for occurs through organic or conventional methods followed by harvesting and treatment. Through transportation, the coffee enters the production phase where cleaning, weighing, refining, cooling, blending, grinding, and packing occurs. The supplies are made to Best Inc. where four roasting centers are fully operated by Best Inc. allowing for packaging, preparation, and manufacture of each coffee.. Distribution of the manufactured coffee is done through 2,000 deliveries each day to ensure all the stores have adequate coffee supply. Cups, milk, and other supplies are efficiently delivered through the delivery system as well allowing for adequacy and on time arrival and minimizing delays. The main waste management method used in the industry is recycling of wastes including use of recyclable cups and other materials. Global versus local orientation: Best Inc. has a global orientation, as evidenced by the high amount of deliveries spanning a number of countries and 400 stores in three continents. Global orientation of the business and industry is due to the supply of coffee from far continents including Africa and Asia with notable countries being Brazil, Kenya, and Mauritius, among others. The global orientation is also because of the universality of coffee, the high demand, and the expansionary development of the coffee industry in recent years. Digital divide into the supply chain: the coffee industry has seen a reduction in the digital divide with many firms increasingly implementing and introducing digital technology in all its businesses. Digital technology implementation in the coffee industry has been necessitated by the needs for augmented efficiency and productivity to manage in an environment that is getting more competitive. Current technologies used in the industry’s supply chain: technology is an important aspect in the management of the supply chain owing to the presence of logistics and distribution requirements of the business and spanning of large areas. Lean management is one of the methods that has been incorporated in supply chain management in the coffee industry to ensure efficiency and increased profitability. Large corporations in the coffee industry have also incorporated ERP systems in their supply management systems effectively augmenting their competitive advantage and improving performance (Boykin, 2001: p.103). Other technologies used to manage the supply chain in the coffee industry for inventory planning; demand planning, replenishment planning, and other performance indicators include Logility Voyagers solutions, tracking and logistics security for the transportation systems, and having electronic policy library for all the employees. Recent technology introduced to the supply chain in the coffee industry is wireless tracing and tracking systems, use of smartphones to report delivery time and proof instantly, Transportation Management Systems, Labor Management Systems, and Warehouse Management Systems. Internal factors Core services of the company: the core service offered by Best Inc. is provision of quality coffee for clients as they relax. Complimentary products are also offered including other beverages and food, but the main service is providing the clients quality product delivered through exquisite service. Training needs of the staff: the implementation of an ERP system at Best Inc. will require the training of staff on the needs and requirements for the effective use of the system. The training on ERP will aim at informing employees on new roles and responsibilities and the importance each role played by employment is to the success of ERP system. This will allow employees to take cognizance of the fact that each step taken ways in on the success of an ERP system (Babb et al., 2012: 18). Employee’ training will also touch on the importance of ERP input requirements that have to be correct and clearly guided for all the ERP functions to be effective and ensure knowledge and information generated from the system is quality and concise (Lawrence, 2005: 34). Training will reduce poor information exchanges and reduce shortcuts augmenting success in the implementation of an ERP system (Babb et al., 2012: 18). Training and education will allow for better change management at Best Inc. and benefit ERP at the acceptance phase of the project through better understanding of the system and the participation of the employees in all the systems implementation process stages. Technologies and systems used from the company: the company uses real-time tracking systems of the delivery vehicles, has a manual reporting f delivery time and quantity, and uses lean management system in the supply chain. Other technologies used include computers installed in accounting, tracking, reporting, customer service, and other areas of the company. Wireless tracking has been instituted in the company to allow efficiency of the transportation process. Part 2: Success factors for successful Enterprise Resource Planning There are certain critical success factors that have to be considered in the adoption and implementation of an ERP system at Best Inc. These factors include risk management, Time, quality management, and vendor management. Risk Management Risk management are the measures that will be taken at Best Inc. to mitigate the effects of risks that can arise during or after the implementation of the ERP system and affect the success of the system in meeting the needs of the company. There are certain risks that have to be mitigated because the lack of it will present doom to the success of an ERP system. These risks include lack of management support for the implementation, resistance of the employees on the ERP system implementation, negligence, and ignorance of system requirements, and ineffective communication. Measures to minimize risks and the performance of these measures to gauge satisfactory implementation Best Inc. will take specific needs to solve each risk that will arise from the implementation of the system through prevention and solving techniques depending on the time of occurrence. These include: Training employees and the management on the need for the risk and explaining the benefit this will accrue for all involved will reduce the risk of employee resistance and augment management support for the system. The employees will be trained on using the system effectively (Gefen, 2004: 267). Testing will be done on the employees prior to the role out of the system at the implementation phase to ensure all employees have a clear understanding of the responsibilities, roles, and duties in the new system. Fear of loss o jobs by employees that may result in resistance will be dealt with through informing all the employees that non of them will lose their jobs owing to the system implementation. Negligence and ignorance of the ERP system’s requirements as a risk will also be mitigated through training the employees prior to the implementation of the system. Ineffective communication is the other risk that has been identified in ERP implementation and will be mitigated through having forums for informing employees and management on the new system, the benefits to their personal and professional development, benefits for the company, and their responsibilities and roles (Al-nafjan a.n & Al-mudimigh, 2011: p 94). This will create a better understanding of the system. Other communication mechanisms will include having posters, through email communication, use of instant messaging, and video conferencing during the training. Other digital media relating to the new system will all used for communication to ensure the information is available to each employee on all aspects of the ERP system. The suppliers will also be informed on the new requirements and guidelines on their part to ensure adherence and success of the new system as they are part of the stakeholders in the implementation of the new system. Appropriate planning: ERP implementation and success requires a lot of planning on the adoption, implementation, testing, roll out of the system and the benefits aimed by the system (Ke & Wei, 2008: 212). The planning will be undertaken by the project manager and a team of six qualified employees from different facets of the organization in collaboration with the information technology department at Best Inc. to form a project implementation committee. The members of the committee have an understanding of the state of the business currently and the expected state after ERP implementation (Brown, 2001: 11). The selection of the team has been made in consideration of cross-sectional requirements, experience, and skills in project management allowing for the improved planning of the system. The team will have training, rollout, and implementation experience allowing them to have a better possibility of fairing well in the new system and guide other employees in their different business areas in the organization increases chances of ERP implementation success (Brown, 2001: 11). Quality management ERP implementation has to take into consideration the need for measures to augment the quality at Best Inc. Quality management includes customer driven quality, commitment by management to ensure quality, fast response to queries, and continuous improvement by all. The ERP system will have quality management controls including providing a measure for quality definition, testing at production stages, and testing raw materials for quality on delivery. ERP has a quality inspection subsystem that allows supervision and control that is integrated with other facets of the company including inventory management, purchasing, and shop floor control. These features allow the management and others involved in quality control to ensure right quality control procedures are adhered to in the manufacturing process. The other control measures for quality provision include online maintenance of specifications on the quality according to the client, production, samples. The measures to ensure quality include having tests results entered in the ERP resource for quality performance and analysis/ these measures in total will augment the ability of Best Inc. to meet the client needs in terms of production via the implementation of the ERP system. Time management: ERP implementation will be successful with the adherence to plan by both the vendor and the project implementation committee (Buonanno, 2005: 387). Adherence to the deadline ensures the project meets the specified quality within budget and allows all the operations of the business to run effectively without any compromise. Vendor management: choice of a vendor by the project implementation committee will have certain considerations. A vendor who has proven quality performance, support for the business, and effectiveness will have the best chance of being chosen. The applications by different vendors have to state the budget, quality, previous projects successfully completed, and duration of the project and support specification. The project implementation committee has to manage the ability of the ERP System vendor to provide the best quality, adhere to the timeframe, and within the budget. Selection Selection begins by analyzing the requirements that have to be met by the ERP system to be implemented (Santana, 2000: p. 4). The specifics have to be put in sending for applications by the companies to provide the ERP system to the business. The selection process will also have to consider the selection of an ERP providing company that provides ERP specific to the coffee industry to avoid customization and other solutions after or during the project implementation stage. An ERP system that allows for use in computers, tablets, and smartphones securely is the other consideration that has to be considered in the selection process. Selection of the firm responsible for the implementation of an ERP system at Best Inc. will have to follow certain guidelines and measures for efficiency and success of the project. Some considerations for the choice of the company include that the company has to have efficient client support mechanism allowing for services and communication throughout the adoption and implementation process. Support mechanism will include incorporating the system to Best Inc. business and training lead personnel at the company on the performance of the system until they are well engrossed in its functionality for effectiveness in managing the system. Support will also entail the provision of measures and avenues to reach the company in an efficient manner within a short time when there are emergencies in the system in terms of the breakdown of malware infestation. Requesting for recommendations from players in the coffee industry that have been successful are the other ways to ensure the best vendor is selected for the provision of an integrated ERP system to Best Inc. selecting the correct software fitting the organizations needs in terms of technical, functional, and cost factors. Adoption After selecting a vendor that best fits the selection criteria and considering the effectiveness and support of the vendor in meeting client needs, the ERP system is adopted. Adoption involves communicating with the vendor to set up schedules and preparations for the implementation process. The main emphasis is on quality and time considerations that have to be fulfilled within the stipulated budget. Other factors considered at the adoption stage include employee training for the implementation and the meeting of the personnel from the vendor company with project implementation committee for planning purposes that will culminate in project implementation. The adoption stage lays the basis for the implementation stage, which is the main stage of the ERP implementation process in an organization. Implementation The implementation stage for ERP is most fundamental as it determines the ability of the ERP systems to meet the business needs after the success of the planning, selection, and adoption phases (Harwood, 2003: p. 27). The implementation stage has to be a well coordinated process done in collaboration between project implementation committee and personnel from the vendor. Certain considerations have to be made to ensure the success of an ERP system in the implementation stage including having the full support of the top management for the implementation process. The top management have to show full commitment including participating in the implementation of the system to give employees the motivation and morale to participate and accept the new system Showing top management commitment at the implementation stage ensures the ERP system is accepted through reducing employee resistance. The implementation will be done by first applying the system to the information and communications department of the company. This will allow the employees who are well versed with communication technology to have a try at the system and aid in guiding other members in the company on the system (Babb, 2012: p. 18). Employees from the ICT department have better understanding of information technology and will have a better chance of understanding and being conversant with the system to allow them to train other members of the business. The technical Architecture module is implemented first in the ERP system to allow for the technical considerations of the business to be understood by the information communication and technology department. After the successful implementation of the ICT department, the supply chain management, customer relationship, finance and performance management, and human resource management will be implemented in that order, to allow gradual confidence in the system. The order of implementation of the modules is chosen on the consideration of the sectors that have more chances of success. The other reason for the choice is a start of the modules implementations that have less relation to the employees and allow the employees to gauge the success of the other modules in other areas allowing employees to have confidence in the ERP implementation. Pilot implementation phase (lessons, performance process, feedback) There will be a pilot implementation phase of two weeks for all the modules followed by a six-week transition period. The pilot implementation phase will allow the implementation team and the vendor to learn about the use of the system and master it before full rollout. The pilot implementation phase will also allow the project implementation term and the trainers from the vendor to teach the employees on the use of the system and the best manner to ensure effectiveness in ERP performance. The employees also have a better understanding of the system to allow for the reduction of mistakes before the firm fully depends on the system for all its processes. The other benefits of this phase include giving the management a chance to test the system and give the ERP system a clean bill of health prior to the rolling out of the system for full implementation. The pilot implementation phase gives time for testing the system to ensure all the benefits of the system are accrued and beneficial and allow for the reduction of setbacks and errors that could occur. The pilot implementation phase also allows the improvement of the performance of the system after realizing the amount of performance benefits of the system. The lessons learned are used to improve the system and ensure the effective performance of the system in meeting the goals and aspirations of the users. In the case of a general ERP system, the phase allows the ERP system to be customized to equirementse requirements of the Best Inc. but customization is not done for an industry specific ERP system meeting. Collection of feedback from the customer, suppliers, management, and employees is collected at the implementation phase. The feedback allows for the realization of the benefits and errors associated with the system (Herschel, 2012: p. 14). The feedback is incorporated in the system to allow for the meeting of plenty of users requirements augmenting the chances of system’s acceptability in the organization. The testing period proceeds the transition period where the current system and the ERP system run at the same time. The transition period affords employees extra time to learn about the working of the ERP system and allow them to start the transition resulting in the total disuse of the current system and maximum use of the ERP system. The transition period also allows the vendor and the implementation committee to make any corrections and errors in the system preparing the system for use on its own. The transition period allows the realization of full potential of the system. Migration of data Data migration involves movement of data from an existing to a new system. This is evident in the management of data from the current system in a company when an ERP system is implemented. Following the end of the transition system, data is transferred from all the facets of the organization to allow the success of ERP implementation. There are certain matters for consideration in migration of data that have to be dealt with including ensuring the risks of the migration are low owing to the importance of data to the organization. Migration of data should be in a position to improve the quality of data through optimizing the migrated data and making corrections and cleansing during the migration process. The third consideration is low cost of the migration to allow the better management of the core activities of the business. Documentation of all the ERP operations is necessary to avoid confusion and challenges after the implementation of the system. The documentation include the reasons for the selection of the vendor and the reasons for implementing the ERP system to allow the management and other personnel in the organization to explain the reasons in future and at as a benchmark for performance. The codes used for modification of the system by a programme cannot be understood easily by another person forming the other reason for documentation. Documentation of the systems forms the ground for the development of ERP user manuals allows users to manage and corrects errors in the system. Standardization allows the system to be used by a large number of people comfortable and using the same manual for their differing needs to allow the organization’s different facets to run effectively. Documenting and standardizing allow the business to resolve differences easily and make the ERP system usable for all easily. Debugging the system Debugging allows the system developers and users to have a set of hypothesis that allow for solving errors that arise in the use of the ERP system. Debugging process involves analyzing the error messages to decipher the information and to generate the hypothesis for the cause of the error. A set s tests previously designed specifically for the purpose are used to generate the nature of the problem and find the exact solution to solve the problem. Performance evaluation and success of the project The success of any system implementation has to be evaluated at the end of the implementation phase and this will be the case of the ERP system at Best Inc. the implementation team will have six months after the completion of the project to tender a report to the management on the success of the system. The main areas of evaluation that will be considered in the report will include: The effects of the ERP system on the planning cycle, delivery times, and production times in terms of time requirements, efficiency, and effectiveness in cost and time dimensions. Other items that have to be evaluated in the report on ERP implementation include late deliveries, productivity, and the participation and involvement of top management and employees in the use of ERP. The report will provide the recommendation for improvement of the success that will be considered below the desired level. Conclusion ERP system implementation is an important aspect for any business and calls for a lot of commitment, time, and dedication for employees, management, and other stakeholders to be successful. The main facets of ERP implementation process in an organization is realization of the benefits to be accrued from the system, analysis of the characteristics required of the new system for success in the organization, and selection of the vendor suited to provide the most effective system. The other facets are adoption, implementation phases, and transition to the new system. There are certain considerations in the implementation stage to ensure the ERP system implementation is not hampered including time, quality, vendor, and risk management. There are certain risks that could arise in ERP implementation including lack of management support for the implementation, resistance of the employees on the ERP system implementation, negligence, and ignorance of system requirements, and ineffective communication. These risks are mitigated through risk management to ensure they do not interfere with the implementation of an ERP system. 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