Enterprise Resource Planning - Case Study Example

Enterprise Resource Planning Student Name: Lecturer: Institution: Date: Table of Contents Enterprise Resource Planning 1 Enterprise Resource Planning 2 Introduction 2 Analysis 3 Identification of ERP integrated business functions 3 Data infrastructure 6 ERP implementation tools and techniques 7 Evaluation of implementation alternatives for Nike Company 8 Evaluation of ERP systems and components 12 Management information 12 Supply chain management 13 Financial management 13 Implementation strategy Nike Company 14 Conclusion 15 Bibliography 16 Enterprise Resource Planning Introduction Organizations implement enterprise resource planning as a tool to enhance internal and external management information across the organization. ERP links organizational units and enhance information flow among organizational functions. It facilitates movement of information between the organization and its stakeholders. The management tool involves software and hardware installed throughout the organization. EPR tool is used to integrate organizational processes such as supply management, finance, inventory maintenance and human resource management. The system integrates best practices in the organizations that reflect effective ways of enterprise process management. This ensures an effective management of time for complex processes such as documentation, training, configuration and testing. According to Nilesh, (2007), organizational risks are also reduced as a result of implementation of ERP. This paper critically analyses ERP system and its applicability to Nike Company. This includes the business functions integrated, techniques and implementation procedures. Analysis Identification of ERP integrated business functions A number of business functions are integrated using ERP system. It is to integrate financial accounting function, supply chain management function, human resource, project management and customer relation. Nike Company can apply Enterprise Resource planning in such functions of the organization. ERP facilitates accuracy in financial accounting functionality and safeguards shareholder funds from misappropriation and fraud. Accuracy applies in financial accounting areas such as cash management, fixed asset management, general ledgers and receivables. ERP finance and accounting will reduce the financial bottlenecks experienced by Nike Company which was caused by supply chain management problems. This is the organizational area that deals with preparation of financial accounts and is responsible for keeping track of organizations’ financial activities. ERP ensures that the finance department complies with accounting requirements and facilitates predictability of business performance. Control of finances is also ensured. The balance sheet misappropriation as a result of failure in the supply-demand software will be reduced. It will facilitate clear presentation of output requirements. ERP reduces chances of redundancies in preparation of financial accounts. Through linking of organizational functions, mistakes are easily identified and corrected to secure organizational finances. Management accounting areas such as cost management, budgeting and activity based costing are efficiently controlled by the ERP system. ERP provides the automation which saves both financial and time resource. Nike’s intention to cut on costs through implementation of the i2 software will be achieved through implementation of ERP. The system forecasts purchasing requirements from suppliers and relay them with customers’ demands. Costs incurred in employing more human resource will also be reduced since ERP increases automation in the organization that requires less people to run it. Reduction in costs reduces the shareholder money used in compensating workers thus more is saved for investment and other productive activities. Accuracy is ensured through efficient work distribution and hiring of the workforce (Bhatti, 2005). ERP also provides accuracy in data entry and avoid double calculations of expenses or income. Human capital management is also another area that can be integrated using ERP system. ERP ensures that the human resource processes are optimized through comprehensive universal human capital management solutions. Such facilities maximize the abilities of human resources within the organization and encourage innovativeness, flexibility and growth. Talent management, human resource procedures and organization are automated thus improving efficiency and adaptability with the changing universal business environments and regulations. Supply chain management is another important function that Nike can apply ERP system. With the recent inventory hitches and overdue deliveries, ERP will integrate supply chain planning, supply program and purchasing management which prevents further hiccups on inventory, supply and demand procedures. Nike performs poorly in inventory control and project management. It will also ensure that resource planning, project costing and activity management are ensured or efficient management and control of organizational projects. Project planning ensures that time and resources are efficiently allocated throughout the project. Nike Company was experiencing the problem of time allocation among different projects. Operations functionality can also be integrated using ERP. The system provides a complete business cycle through end to end logistics and procurement procedures. The flow of materials is improved by transforming self-service application to flexible billing. Process manufactures are also able to manage production, life cycle in product development and manufacturing procedures. Automation of the manufacturing and production processes cut costs incurred on controlling. ERP improve customer satisfaction by increasing the quality of products offered to consumers (Loh, 2004). Data infrastructure Manufacturing company lie Nike requires different designs of data infrastructure to facilitate connectivity which will satisfy consumers’ needs. Data infrastructure links the resources and tools available in business to the ERP system to be implemented. It helps organizations to manage their data. This reflects to success in the implementation of ERP system and general business productivity. Nike can apply direct implementation data infrastructure. The system will connect general organization procedures directly to its manufactured products. Being a manufacturing company, direct connection of the procedures is the most appropriate way to integrate ERP system. The company will also require incorporating a database. Organizational information is linked with all the plants operational bases. This facilitates transfer of information on operation to the main data base. Installation of a database facilitates flow of information across the organization. This helps the strategic level management in making sound, effective decisions. Another data infrastructure is the enterprise transaction appliance segment. Organization will be able to link its equipment and resources to the ERP system through the module (OZ, 2009, p.22). ERP provides information needed by the strategic level management for acute decision making. The organization is also able to adequately adjust to positive changes through the swiftness that ERP offers. There are also shortcomings that ERP poses to the organization through its implementation. Reconstruction procedures aimed to adopt business processes to ERP system might interfere with the organization focus on important issues and competitiveness. The costs involved in switching and upgrading organizations’ systems to ERP increase their expenses and might be expensive for some to afford. The management is likely to divert attention by focusing to prevent transfer and sharing of important information between organizational units. Nike Company is experiencing problems with its supply chain. ERP implementation tools and techniques Organizations require tools and techniques to facilitate implementation of the Enterprise Resource planning. Organizational processes need to be re-engineered to suit the ERP process. Configuration, customization and process preparation techniques are applicable in implementation of the ERP system. The most appropriate technique for Nike Company is the configuration technique. Nike Company’s supply chain problem included failure to balance supplies requirement from suppliers with the demand of their customers. This resulted to overdue deliveries and inventory challenges. Configuration will help develop la balance between the company operations with its demands. Nike Company will be required to balance customer requirements from the system and ERP working design (Ptak & Schragenheim, 2004). Configuration requires developing a viable system. This is to provide a common guide for both employees and managers working towards common and best outcome. The executive level of the organization then reviews and edits the developed system for any possible inefficiency likely to occur. Testing of the system and training of the team then follows for clear implementation. The management of Nike Company will need to come up with a Business process master list to clarify the company’s responsibilities and create simulation processes of real situations. Goals and organizational procedures need to be adequately implemented to facilitate execution of the processes. Evaluation of implementation alternatives for Nike Company There are other techniques for implementing ERP other than configuration procedures. Customization is another alternative that integrates the industries requirements other than business policies and procedures. Customization comes in to fill gaps that organizational policies cannot fill. Nike will be able to incorporate their own business policies like meeting kits sneaker manufacturing cycle needs. The company management will be allowed to integrate these policies. Incorporation of the policies is important for Nike as some of the business rules are quite unique to the organization. The company will also be able to modify some of operations provided by the system through customization technique. Web services, messaging, transactional database and management portal are also provided. These are the tools that the company is likely to use while implementing ERP system.The success of the implantation is also dependent on the tools and techniques used (O'Brien, 2011). This technique facilitates user acceptance of the changes that are ongoing in business environment. For organizations using standard features, they are likely to develop a competitive advantage over its rivals (Meg, 2010). Functionality gaps can be settled using technical applications like revising a part of the functionality which was delivered. The company can also rewrite its in house built module within the Enterprise Resource planning system as a way of modifying it too suit its business environment. Finally, it can also create boundaries to external systems and operations it is involved in. These options vary in degree of customization of the ERP system. The disadvantage of customization is that it might involve higher costs and intrusive. Changing business practices or re-engineering of processes to suit ERP applicability is another alternative that involve less technicality. Other alternatives aim at eradicating barriers to ERP implementation while encouraging success factors. Training enables staff of the company to gain a better understanding of what concepts of the enterprise resource planning are. Such awareness creating initiatives enables employees to know what the company expects of them and from the implementation of the ERP system. It also eliminates any sort of misunderstandings during the implementation period. The training should be continuous since the ERP technological concept is constantly changing. Nike Company failed to address constant training to accommodate any technological change. The next strategy during the implementation of the enterprise resource planning involves establishing a relationship between the business processes and the software used during the implementation of the enterprise resource planning. According to Yakovley (2002), management for such organization should ensure that the company is flexible and willing to make changes at any time with regard to the enterprise resource planning. Nike was not flexible enough in terms of dealing with the supply chain management and hence resulting to the problems experienced by the company. The flexibility is important in terms of dealing with the changes in the market environment. Extensions technique of ERP system implementation provides implementation through extension. The system can be protracted using third-party software. Dealers in the software provide data accessibility through strongly developed boundaries. The technique suggests archiving, republishing and reporting features through the implementation process. Data used in implementation can be easily captured using scanners. APS technique is also provided. This involves planning and scheduling in advance for effective implementation. There is real time management of resources and transfer of facilities. It provides an access to special data and competencies like syndicated marketing information and analysis of the organization’s trend in the market and general business operations. There must be harmony between the marketing and manufacturing department in order to ensure efficiency in implementing ERP system. This includes adequate communication and transfer of information. Nike Company failed to ensure harmony and effective data transfer in its manufacturing and marketing departments. According to Jain (2012), this led to a situation where there was a surplus in the production of the products that were least required and a shortage in the most required products. The success of the enterprise resource planning is thus dependent on the measures put in place to balance the marketing and the manufacturing. To ensure that a balance is strived, it is important to put in place performance metric measures so as to fully benefit from the enterprise resource planning. Increasing the role of purchasing is also an important strategic tactic that is applicable during the implementation of the enterprise resource planning. Data migration is also another alternative for effective implementation of ERP system. Here, data is migrated from a previous system into the newly implemented ERP system. Planning is a mandatory requirement for the implementation process. The organization data is identified, time set and transfer done timely. Nike Company was previously using the i2 technologies which brought about shortcomings that were experienced by the company. Nike therefore would transfer its data from the software to the installed ERP application for effective implementation. Nike management should ensure that more authority is enacted in case of making purchases and purchasing decisions. This is important as the enterprise resource planning has a lot of impacts on the purchase. It is also important for an organization to encourage teamwork when making decisions regarding the supply chain. This is also an issue that was overlooked by Nike during the management of the supply chain. The alternative strategies therefore provides guideline for the implementation of the enterprise resource planning incase the strategies used do not work (Turban, 2008). Monitoring techniques need to be provided for the implemented ERP system to ensure compliance and to ensure that the objectives are successfully, attained. Internal checks will ensure that the staffs comply with ERP requirements. Productivity and efficiency is also assured. Internal and external audits are also important during the monitoring of the enterprise resource planning. Through the use of the continuous audits, it is possible to detect any breakdown in the system during the implementation. This therefore presents the company with an opportunity to automatically make corrections. The management of Nike should also ensure that the results of the audits are accurate so as to avoid making errors. Internal auditors should not be biased as this may impact negatively on the enterprise resource planning implementation. The continuous audits should also be in a position to provide an organization with the details concerning the operations of the enterprise resource planning software. It is also important to note that the concepts of the enterprise resource planning and the continuous auditing are almost similar. This should guide the organization during the monitoring process whenever any change occurs (Kraemmerand, et al, 2003). Evaluation of ERP systems and components Management information Management of a company requires information to use in effective decision making. The management also formulates organization’s vision and objectives and clarifies them to the other levels of the organization. ERP system avails reliable information from all organizational units by providing a connection between the departments. Such information is used in decision making considering all requirements established from the acquired information. The ERP system provides transactional database, web services and messaging which are components of management information. This allows for flow of information within the business organization and among its stakeholders from managers. The database of an organization is important in terms of ensuring that the information is not accessed by unauthorized personnel. Nike’s database is highly secured. Nike is equipped with proper web services that aid the management of information. The messaging services used by the company are important in ensuring the flow of information between different departments. As a result, communication is thus enhanced through integration of ERP elements. Web services ensure that the organization is technologically updated Supply chain management Supply chain includes planning, purchasing, inventory, scheduling and product configuration. Planning covers resources required to be utilized in providing customer quality requirements. This includes resource allocation and procedures for supply and demand. The management of Nike need to create a plan for resource requirement. Although Nike had a good plan, its implementation was not good as it demonstrated the lack of patience. The source is also an important component of the supply chain management. This requires an organization to find a reliable source in terms of the supply of the raw materials. The source of supply for Nike was above average as the company was able to continue with its manufacturing.in order to balance demand and supply requirement, supply chain management, is necessary for Nike Company. Financial management ERP solves the aspects of redundancies and untimely preparation of accounts. Accuracy applies in financial accounting areas such as cash management, fixed asset management, general ledgers and receivables. ERP finance and accounting will reduce the financial bottlenecks for efficiency in Nike Company which caused by supply chain management problems. This is the organizational area that deals with preparation of financial accounts and is responsible for keeping track of organizations’ financial activities. ERP ensures that the finance department complies with accounting requirements and facilitates predictability of business performance. Control of finances is also ensured. The balance sheet misappropriation as a result of failure in the supply demand software to present correct output requirements will be reduced. Implementation strategy Nike Company Implementation of Oracle ERP system will be relevant to Nike Company. The modules to be implemented will include Oracle human resource, financial modules, manufacturing module, supply management module and enterprise asset management (Bhatti, 2005). ERP MIS and SCM are likely to upgrade the company’s technology to help it cope with competition. The benefits are not only for the organization but the customers. However, the success of the application will depend on how it is implemented and the strategies used. This process involves transforming the information systems of the organization for the purpose of properly managing the data as well as providing easy access to the database. Virtualization of the server ensures that the efficiency of the operations is increased and hence increasing the prospects of Nike. The virtualization of the server is also important in terms of reducing costs and enhancing the data center standards (Moohebat et al, 2010). Oracle ERP will ensure that all the organization functionalities are linked in project management and availability of readily documented information to authorized department personnel. Vertical integration through units and horizontal integration across the units will be facilitated through Oracle ERP. The financial module implemented in the finance department will improve traditional manual organization finance unit into an automated data entry unit with fast operations and efficient management. Repetition in performance and data entry will be reduced, saving the company previous human errors and redundancies. ERP also improves transparency in the department that was previously not clear to the stakeholder through effective cash management. Financial inflows and outflows are adequately updated and tracked through the system, thus reducing possible fraud and misappropriation of funds currently experienced. Supply chain management will also improve compared to previous supply management procedures which could only handle a limited number of suppliers and raw materials. Oracle’s supply chain management module will facilitate payroll improvement and time change management strategies. Staff in the supply management department is also updated on quantities and organizational projects. Supplies are tracked from the main source to production and distribution Conclusion ERP system is a proven tools of management that organizational use to improve their competitiveness and viability. Nike Company is likely to achieve success in its supply chain management, finance accounting and production if it adopts ERP system. Effective implementation also requires that the organization is committed to attaining its objectives and change its technological status. Bibliography Nilesh, V.K. (2007). Data Migration Strategy in ERP. Loh, T. (2004). Critical elements for a successful ERP implementation in SMEs. International Journal of Production Research 42 (17): 3433–3455. Bhatti, T. R. (2005). Critical Success Factors for the Implementation of Enterprise International Conference on Innovation in Information Technology (IIT"05). (2009). Resource Planning (ERP): Empirical Validation. (pp. 1-10). Dubai, UAE OZ, E. (2009). Management information systems. Boston, Mass, Thomson/Course Technology Ptak, C. A., & Schragenheim, E. (2004). ERP tools, techniques, and applications for integrating the supply chain. Boca Raton, St. Lucie Press. Fryling, Meg (2010). Total Cost of Ownership, System Acceptance and Perceived Success of Enterprise Resource Planning Software: Simulating a Dynamic Feedback Perspective of ERP in the Higher Education Environment. ProQuest Dissertations and Theses database. p. 403. Jain, M.K. (2012). Nike’s ERP implementation Saga: Case study. Case study inc. info@casestudyinc.com Turban et al. (2008). Information Technology for Management, Transforming Organizations in the Digital Economy. Massachusetts: John Wiley & Sons, Inc., pp. 300–343. Yakovlev, I. (2002). An ERP implementation and business process reengineering at a Small University. Educause Quarterly 2: 52–57. Moohebat, M. R ., Jazi, M.D & Asemi, A. (2010). Evaluation of the ERP Implementation at Esfahan Steel Company Based on Five Critical Success Factors: A Case Study. International Journal of Business and Management Read More