Application of Enterprise Resource Planning - Coursework Example

Application of ERP within a particular sector or type of organization Application of ERP within a particular sector or type of organization Abstract Many companies have shifted from using stand-alone systems for business information applications to more integrated ones that are enterprise wide, enterprise resource planning (ERP). The implementation of ERP has created a chance where business processes can be reinvented within the company and beyond its scope. ERP aims to advance all parts of a business. It benefits all sectors included in businesses like production, distribution, security, technological sectors, communication, transportation and banking. These sectors are very crucial in maintaining the status of the business and running the business fully. It goes a long into maintaining the businesses production and competitive edge while most businesses are struggling to produce. In this paper, various case studies on the applications of ERP will be discussed. It is proposed that more should be considered in the implementation process; careful transition management, bureaucracy, network organization and most importantly culture readiness. Management should prepare the employees so that the transition is smooth and successful. Data collected was secondary. Lessons on how ERP helped curb organizational problems is discussed and explained in depth. Recommendations and possible solutions are provided too (Al-Mudimigh 2001). Introduction ERP systems usually organize a company’s resource accordingly in order to render them profitable, efficient and productive. This study focuses on the stages that should be applied in instilling the appropriate strategies in most organizations for the purpose of implementing Enterprise Resource Planning. In organizations where this strategy is embraced, enormous and distinguished performance is perceived. If this is the case, it denotes that inevitable and dramatic failures have being too vivid due to the strongholds resistances for the change. It is a common issue when making any implementation of the operation of a company or any organization, resistance happens to be a barrier from the working mate amongst other barriers. These impediments may at-most end up sabotaging the change that was intended and counteract innovation and creativity. Employee’s environment plays a critical role in gauging the level of productivity for any firm it being profit oriented or non-profit oriented. This study cultivates on the challenges encountered with implementation of ERP and the prospective approaches for dealing with them (Strauss 2000). Service companies as well are in demand of the use of ERP services in their day to day operations (Davenport 2000). Some of these applications include; cut on the workload of the employees, replacing the outdated tools with the reliable, sophisticated and up-to date one, distributing their products beyond their zone of production, ensuring the reliability of the financial assistance, on-time data processing. Objectives There are several reasons why a company would adopt ERP system. Some of them include; being able to achieve growth within the company at a tremendous rate, increase their various returns on investments that have been made by the company, Dissemination of information on a regular basis and make it more available to employees, better decision making and to the business operations very scalable (Al-Mudimigh 2001). Aim The main aim of in cooperating ERP systems is to make businesses more productive or profitable. What ERP systems do for a company is to make all systems more efficient and improve on what had lapsed behind in a company. ERP also aims at reducing the costs that are incurred by undertaken certain business processes that is why the system is integrated into one major enterprise. Additionally it helps in human resource management. Background for Enterprise Resource Planning (ERP) ERP is a system that is computer based which has been made to specifically streamline processes and transmit information within various companies. The intent for this is to unify the resources used by the company (Champy 2003). The database for this software usually utilizes a common platform for computing. This is amongst the best and latest technology for information transmission that provides high end solutions to business processes. Below is an example of a representation of ERP system and how it is linked to all departments. Case One Title: Bottlers in Soft Drink Industry ERP Problem: People (Skills), Business (Decision, Understating, Resistance) Background Soft drink bottlers are taking over land since 1935 because the companies are growing up and also they changing or updating their system to keep up with manufacturing market competition. Bottler demand was increasing and the tools for each department were unable to keep up with such demand. The company started spending time and money researching variable options to find how to improve each department needs and their growth. Finally the IT department decided to implement an ERP system to handle the company growth and communication between the company departments. The ERP vendor offered new features that were linked to soft drink bottler like finical module (tracking profit, forecast sales and manage cash flow). Also human resources and payroll modules and the entire inventory will be updated automatically (Francesconi 1998). The problem The owner of the project was a young person with less staff experienced, IT knowledge. Also the employees did not get the right training because the undertaking did not have the right ERP knowledge. The consultant offered to train the staff as a part time job. The idea was rejected and ignored by the company. The bottle had a history of “do-it-yourself” philosophy. The decisions warranted to the adoptions of new techniques which were put into consideration. A great amount of money and time had to be set aside to implement the necessary viable options of change to be included in the transformational process. Therefore it was amongst the viable options that were under discussion with the company. For several months studies were carried out on the expenditure in case they would implement it. Finally a decision was made and ERP had to be implemented in the company (Strauss 2000). Companys reaction Implementation of the ERP process was what the company settled for. During the ERP product evaluation and recommendation paths the company rejected the consultant advice which complicated the ERP implementation process. The company started spending time and money researching variable options to find how to improve each department needs and their growth. They therefore hired an ERP vendor, who by the way, was well known for slicing and dicing techniques. The company’s IT office decided to implement the ERP process to improve on communication and other features in the bottling company like financial modules (sales trackers and forecasters). It also tackled the human resources department and payroll modules and designed them to automatically update the whole inventory. The companys executive committee gave the green light to go ahead with ERP implementation (Bogart 2004). Lessons The ERP system is not a simple system to implement. In the above case the main lesson when a company implementing ERP the executive management must reduce their personal pride and listen to the project expert personal. Also select the right ERP training personnel to train the staff. On the other hand the new system must be reliable on after a good test and full training staff. Finally the functions of the new system must meet the business day by day work and the business concept. This can be achieved by open source for the project team to access or to be updated on the business processes (Strauss 2000). Recommendations A company should be ready to bear all cost incurred and should give workers incentive as they help implement the process. The company should also be keen on retaining workers who are really talented in their work. It should also recognise the efforts its employees are putting in implementing the process. Case Two Title: Company A & B for Confidentiality ERP Problem: Implementing Process (Failures, Success) Background (Company A) Company A is a big pharmacy manufactory for non-prescription medicine. Over the years the company is growing and their net sales exceeding $900 million. The products are sold in general supermarkets, drug stores and merchandising stores as well. Some of the products from the company included laxatives, analgesics, cough suppressants and feminine hygienic products. The aim of the project was to upgrade their inventory management process that ran on an AS/400. They selected ERP system to be able to improve and integrate accounting, inventory, production, planning, and materials management. The problem After implementing ERP system the company lost in their first quarter $14,075,000 from their operation. The company started to face more problems for example, locating the product at the warehouse. Once a customer places their order the ERP system provide a location pin for the goods to be transferred to the customer. On the other hand two issues were found either the food is not there in the warehouse location or the different product in the location provided by the ERP system. This cause the wrong product shifted to the customer. A physical inventory was the only way to correct the errors of the ERP implementation (Keller 2004). The Lessons The company dealt with ERP as software without understanding the dynamic of the system. They used the function of the ERP system wrong which caused the company to lose at $14,075,000 in the first quarter after implementing the new system. The company must train their people to the new system before they used or they can use both systems at the same time to reduce errors (Oakland 2008). Background (Company B) Company B is a footwear designer, manufacturer, and marketer of shoes. Their total staffs about 6,600 employees. The aim of the project was for the Company to use AS/400 to throw the company activity from production to delivery and other processes. The process was very slow it takes about a week from placing an order to delivery day. The company decided to implement ERP in phases to improve their business process (Tay-Yap 2000). The ERP Outcome The company implemented ERP system in phases. They transfer and converted the finance and marketing functions to the new system. Next they shifted the operations function of the new system. The company was successfully implemented ERP without any problem. The Lessons The company implemented ERP in phases to give their employees the chance to learn and understand the new system. Also to get the employees use of the new changes wit out any error or mistake. On the other hand, if the error or mistake appears would be a big error because it would not affect the whole business processing. Case Three Title: A Major Middle Eastern Manufacturer Comp Group ERP problem: Technology and Employee resistance Background Manufacturer, Comp groups, Comp1, Comp2, Comp3 Comp4.The company had many reasons to implement the system. One is that, the competition was high in growth, so that the company needed to cope in order to keep its competitive advantage. Second is that, the company had the need of quality improvement in order to provide flexible, cost-effective and timely services and products for customers (Aaker 2002) The problem Although the implementation process was considered a success, there were various concerns that it had failed to delays, it caused an excess in the budget, and there were many employees who said they did not see the benefits the system offered the company. Companys reaction After the decision of implementing the ERP system, the company hired ConsCo, Consultant Company to support the re-engineering of technical and methodological aspects. After assessing the company, ConsCo suggested to implement a world-class package rather than upgrading the existing one. The suggestion aim was to integrate the system; also, to simplify and enhance the access of information between departments. The reengineering process was not well received by the employees they had a negative attitude towards it and it consequently failed. Recommendations and Lessons Companies should adapt a change or a transition strategy when implementing ERP systems. Employees should allow for time for the necessary changes take place. The company should also give incentive to its employees for having taken their time to learn and implement the new system .The company should not be frugal to employ people who would help in the transition process (Jesitus 2007). References Aaker, D. (2002), Developing Business Strategies, John Wiley, New York, NY. Al-Mudimigh, A., Zairi, M. and Al-Mashari, M. (2001), “ERP software implementation: an integrative framework”, European Journal of Information Systems, Vol. 10 No. 4,pp. 216-26. Bogart, L. (2004), Strategy in Marketing: Matching Media and Messages to Markets and Motivation, 2nd ed., Crain Books, Chicago, IL. C. Soh, S. Tien, J. Tay-Yap, (2000) Cultural fits and misfits: Is ERP a universal solution? Communications of the ACM 43 (4) 47–51. Davenport, T. (2000), Mission Critical: Realizing the Promise of Enterprise Systems, Harvard Business School Press, Cambridge, MA. Francesconi, T. (1998), “Transforming Lucent’s CFO”, Management Accounting, Vol. 80 No. 1, pp. 22-30. Hammer, M. and Champy, J. (2003), Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business, New York, NY. Jesitus, J. (2007), “Change management: energy to the people”, Industry Week, Vol. 246 No. 16,pp. 37-41. Keller, G. and Teufel, T. (1998), SAP R/3 Process Oriented Implementation, Addison-Wesley, London Oakland, J. (2008), Total Quality Management: The Route to Improving Performance, Butterworth-Heinemann, Oxford. ERP implementation 33 Strauss, A. and Corbin, J. (2000), Basics of Qualitative Research: Grounded Theory Procedures and Techniques, Sage Publications, London Read More