Improvements of Logistics Processes Using Best Practices of ERP in Organisations - Research Paper Example

IMPROVEMENTS OF LOGISTICS PROCESSES USING “BEST PRACTICES” OF ERP IN ORGANISATIONS By Name Course Instructor Institution City/State Date Table of Contents IMPROVEMENTS OF LOGISTICS PROCESSES USING “BEST PRACTICES” OF ERP IN ORGANISATIONS 1 Table of Contents 2 Executive summary 3 Introduction 3 Research and Discussion 4 Research method 4 Discussion 5 Conclusion, recommendations and/or future directions 8 Improvements of Logistics Processes Using “Best Practices” of ERP in Organisations Executive summary The Enterprise Resource Planning (ERP) systems together with other emerging technologies have generated strategic opportunities that enable firms to create competitive advantages in different management’s functional areas, such as supply chain management as well as logistics. Still, the level of success relies on the accessibility of organisational infrastructure, organisation’s ability to select suitable technology, management policies and culture. As it will be evidenced in this paper, automation technologies in logistics have significantly increased identification speed, the collection of data, analysis, processing, and broadcasting, with high reliability and accuracy level. Scores of businesses are using technology as a way to improve business performance and competitiveness. It has continually played a crucial role in making supply chain successful through by improving the logistics system overall efficiency and competitiveness. This piece examines the improvements of logistics processes using “best practices” of ERP in organisations. Introduction ERP systems have become more important in the modern-day organisation since they integrate scores of organisation’s business processes. Enterprises are facing a major challenge due to the legacy systems’ limitations as well as the rapid changing environment. This has resulted in a gap between output and input. This challenge has been addressed by some companies by adopting the ERP system. ERP system facilitates the management of organisation’s outbound logistics with linkage to as well as control of other organisation’s divisions like warehouses and external customers. Clearly, the ERP system offers a crucial connection to the firm’s external supply chain. The strategies for ‘best practice’ logistics focus on increasing automation and reducing manual processes. As pointed out by Bhandari (2004, p.24), technologies are promoting a whole new level of synchronisation and automation, which some years ago were not possible or practical. Furthermore, the data gateways have led to reduced IT costs since they promote electronic collaboration. For this reason, ERP systems are means of improving supply chain performance and competitiveness by improving the logistic processes’ efficiency and effectiveness. Selecting ERP system for different logistics processes would enable the organisation to achieve competitive advantage in the modern-day market, which is increasingly competitive. Research and Discussion Research method Data for this piece was collected through literature review, which involved information search as well as articulation and identification of relationships between researched topic and the literature. The literature review was considered more suitable because it offers a research context and justifies the research. More importantly, the review of literature facilitates identification of gaps in the existing literature and allows the researcher to learn the theories underpinning the researched topic. In addition, the literature review provides a solid knowledge foundation in the area of logistics processes and integration of ERP systems. Discussion In theory study, An-ru et al. (2009, p.3) illustrate the benefits that organisations can realise after implementing the ERP solutions, which includes improved logistics as well as financial management; better decision making at the management level; improved asset and inventory management; reduced cycle time; and improved performance. Basically, the present manufacturing systems are experiencing increased pressure attributed to aggressive competition. As pointed out by Matičević et al. (2007, p.11), this is an outcome of globalisation, shorter product lifecycles, and dynamic business environment. Technological advancement has brought logistics management to the fore in the majority of service and manufacturing firms. The efficiency of supply chain relies on the firm’s ability to facilitate the timely and undisturbed information flow, which is made possible integrating ERP system into the supply chain. Integrating ERP systems into the organisation’s supply chain has become a crucial industrial trend (Matičević et al., 2007, p.11). Coordination of supply chain as observed in Matičević et al. (2007) study plays a crucial role in different industries. They exhibited that applying ERP system into the internal supply chain coordination can result in improved logistics processes and organisational performance. This finding was also observed in Rutner et al. (2003, p.92) study, arguing that successful implementation of the ERP results in reduce total cost and supports different decision making levels. Rutner et al. (2003) established that the widespread adoption of ERP systems have become essentially important in business environments as well as logistics. Therefore, they suggest that organisations should focus on establishing whether the ERP components would result in beneficial outcomes for the business. In addition, implementing the ERP systems result in improved support levels for integrating the logistical operations through improvement of linkages and access amongst various forms of information, which are crucial to the logistic processes. Rutner et al. (2003) assert that if the integration trend of information systems and logistics persist it would result in increased complexity due to the addition of more inter-enterprise functionality. For this reason, it has become very crucial for logistics managers and ERP system administrators to tighten and strengthen the working relationships between logistics and information systems. Implementing the integrated logistics concept successfully as well as ERP solution would promote cooperation between different organisation’s department and costs would also be reduced. As mentioned by Crumbly and Fryling (2012, p.2), integrating ERP system in the logistics processes could result in improved efficiencies and reduce costs. Furthermore, information access throughout the organisation would be improved since ERP systems facilitate the exchange of information. Crumbly and Fryling (2012, p. ‘4) observed that ERP systems result in improved operational efficiencies and some logistics processes are improved, but cannot effectively manage the whole supply chain network. This is attributed to the supply chain’s ‘black hole’ that cannot be handled by ERP systems since the systems were created with the objective of managing the whole enterprise of a single organisation, but not numerous organisations. Crumbly and Fryling (2012) further posits that the ERP systems do not have the agility needed in order to adapt to organisational changes or logistic processes. Furthermore, organisations have to depend on consultants as well as software vendors and in order to extend or modify capabilities as desired. Still, Crumbly and Fryling (20120 observed that installations of ERP could result in improved logistics processes, but some functionality of the supply chain are missing. For instance, the ERP system fails to offer functions which could enhance the warehouse and transportation processes carried out by the supply chain partners. Furthermore, they found out that ERP processes lack the flexibility needed to promote the supply chain of the organisation devoid of committing for long to the software customizations, consultants, third-party vendors, and ERP vendors. This demonstrates that ERP cannot offer every required feature to support the entire supply chain. Still, the system plays a major role in businesses integration. The system enables the firm to break the organisation’s internal silos and promotes activities coordination with the customers and supply chain members. In their study, Brah and Lim (2006, p.193) established that information systems enable the business to improve their product and services quality of as well as the schedule dependability. Improve logistics processes in the organisation depend on the firm’s ability to realise external and internal integration. That is to say, integrating firm’s logistics processes with ERP system would enable the company to eliminate the environment’s functional silos. ERP system can be used as an organisational broad approach for reducing or get rid of silos in the organisation. Technology is increasingly enabling companies to achieve the sought-after integration. Brah and Lim (2006) noted that there was a positive relationship between performance and the process of external integration and internal integration process. They established that the organisational performance improves with the external as well as external integration. Conclusion, recommendations and/or future directions In conclusion, this paper has demonstrated that integrating logistics processes with ERP system can result in efficiency and performance gains since the new system functionality eliminates the manual processes, The ERP system facilitates efficient operations of logistics; thus, enabling the companies to operate with improved efficiency and lower costs. In addition, ERP system results in improved competitive advantage since issues and disruptions in the supply chain are swiftly resolved considering that the logistics processes have been automated. Therefore, companies should integrate ERP system into their logistic processes in order to achieve responsiveness, analytics and compliance. As mentioned in the report, ERP systems generate a supply chain that is more flexible since it promotes communication between parties and enables the business to meet the expectations of the customers. Using ‘best practice’ of ERP can standardise reporting at the company, and make could make it easy for the organisation to identify repetitive problems, mine trends, and eliminate manual techniques used for data collection. Given that the global supply chain demands are increasing, companies should adopt ERP systems in order to streamline the operations of their logistics and enable them to achieve competitive advantage over the competitors still using inefficient manual processes in their logistic processes.  Adoption of ERP system would enable the company’s supply chain to become not just cost optimised, but also more compliant and stable. There is a need for future research to find out how the integration of logistics processes with information systems can be influenced by factors like globalisation and customer expectations. References An-ru, F., Yi-jun, L., Lu Qi, S.B.-n. & Qiang, Y., 2009. The Process of ERP Usage in Manufacturing Firms in China: An Empirical Investigation. In 2009 International Conference on Management Science & Engineering. Moscow, Russia, 2009. Bhandari, R., 2004. Impact of Technology on Logistics and Supply Chain Management. IOSR Journal of Business and Management, vol. 2, no. 17, pp.19-24. Brah, S.A. & Lim, H.Y., 2006. The effects of technology and TQM on the performance of logistics companies. International Journal of Physical Distribution & Logistics Management, vol. 36, no. 3, pp.192-209. Crumbly, J. & Fryling, M., 2012. Rocky Relationships: Enterprise Resource Planning and Supply Chain Management. In Proceedings of the Conference on Information Systems Applied Research. New Orleans Louisiana, USA, 2012. Matičević, G., Lovrić, T. & Čičak, M., 2007. Using Erp System To Improve Internal Supply Chain Coordination. TEHNIČKI VJESNIK, vol. 3, no. 4, pp.11-21. Rutner, S.M., Gibson, B.J. & Williams, S.R., 2003. The impacts of the integrated logistics systems on electronic commerce and enterprise resource planning systems. 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