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Successful Implementation of Enterprise Resource Planning (erp) Systems

Essay by   •  May 6, 2012  •  Research Paper  •  1,609 Words (7 Pages)  •  1,813 Views

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Many businesses are able to achieve a successful and productive work environment with the aid of numerous systems; however, such methods are often incompatible with each other. Individual computer systems are regularly used in all areas of a corporation including: manufacturing, Human Resources, finance, and the warehouse. Due to the limitations of each system to provide a clear picture of inter-departmental relations, management may be faced with losing money, inventory, and even customers. An enterprise resource planning (ERP) system, when implemented correctly, links all areas of the business. The manufacturing department will know about new orders as soon as they are entered in the system. The sales department knows the exact status of a customer order. The purchasing department knows, to the minute, what the manufacturing department needs, and the accounting system is updated while the relevant transactions occur. Reports that are generated will help managers to identify critical data points upon which they can make better choices. Using ERP Systems can help reduce supply chain costs, but only if those who are using the systems are fully trained and are able to extract information from the system that helps them reach their critical goals. While logistics planning relies greatly on demand management and production planning, several of the inconsistencies which occur between departments can be resolved with an enterprise resource planning (ERP) system.

Implementing an ERP system into any company causes enormous transformations which must be carefully managed to be successful. According to a case study conducted by A. Ansarinejad, Amalnick, Ghadamyari, S. Ansarinejad, and Hatami-Shirkouhi, there are fourteen factors that must be considered when a company implements an ERP system, which often lead to confusion and implementation errors. Of these factors, the ones that companies most often have issues with include: business process reengineering with software modifications, carefully selecting an ERP vendor, choosing project team members from various departments of the company, choosing the best implementation method, dedication from top management, collaborating with skilled and trained ERP consultants, training employees and management on how to use the ERP system effectively, and creating and staying within a realistic budget. These are vital issues which top management must anticipate to reap the most benefit from the ERP system with as few complications as possible.

Business process reengineering is one of the main problems that top management is faced with during ERP implementation. During ERP implementation, it is important that every process of a company is aligned with the ERP model; however, the difficulty is in convincing everyone to agree to the same process. Since departments have business processes unique to their needs, each department may feel that they need to maintain their current processes, not change them. This makes ERP implementation even more challenging because the company must then decide between implementing the ERP system and adapting to it or customizing the system to the particular needs of each department. If the company chooses to customize the ERP system, the total price of implementation increases considerably.

Another area which causes problems for companies is choosing an ERP vendor. Due to the numerous ERP applications, companies may find that narrowing down the options is challenging and confusing. Top management plays a crucial role in this process. They not only need to provide their input, but must also know which concerns to address. They must consider such issues as: whether it has been tailored for large or small organizations, whether previous customers had a positive or negative experience, what the vendor's goals are, who the vendor is associated with, and whether the software is capable of working globally. If the ERP software is able to work in various countries, top management must be sure that the same version is available in every country where the company is implementing it. Information provided by the vendor may be unreliable because they are trying to sell a product. The project team should make sure that the employees in other countries are well-trained and familiar with the system otherwise additional staff may need to be provided which will increase implementation costs.

An additional factor which may be challenging during the implementation process is choosing the best employees to be project team members. Top management should choose those who understand the overall goals of the company and demonstrate the ability to guide the project to success. There may be altercations with departments who are reluctant to forfeit their best employees to the project; however, choosing those who do not meet these standards will undoubtedly lead to failure of ERP implementation.

Another factor which may cause complications for companies is in choosing the right implementation method for their specific company. There are three options available for companies to choose from. The first option allows the company to integrate the entire system at one time and moves to the new system on a specific date. The second option, called the phase-in method, allows the company to implement the new system in phases over an extended period of time. The third option allows the company

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