Enterprise resource planning

ENTERPRISE RESOURCE PLANNING 11

Enterpriseresource planning

Abstract

Enterprisesneed to go an extra mile in their way of operations to ensure theyremain competitive and relevant in the market. There is a need forthem to make transformations to operate in line with the needs of thecustomers for them to survive in the industry. With the currentprogress resulting from globalization, Small and Medium Enterprises(SMEs) equally face the competition and cannot remain relevantwithout improvement in their way pf operation. The SMEs thus have nooption but to improve their data management, transparency in theiroperations, and standardized processes. This paper discusses the roleof Enterprise Resource Planning as a useful tool for enabling theSMEs to remain relevant and competitive in their operations.

Theprevailing conditions with regard to the operations of Small andMedium Enterprises (SMEs) called for a better tool in their way ofoperation for the SMEs to remain relevant. Enterprise ResourcePlanning (ERP) system is a good option for the SMEs. The use of ERPhas become a familiar system applied by SMEs to support theiroperations. The ERP is an integrated software that incorporates arange of business processes that helps companies and organizations tomanage their operations and automate functions to help availinformation on real time (Dantes &amp Hasibuan, 2010). The majorrole played by ERP in the operations of SMEs is the facilitation ofis the information flow between the functions of the business fromwithin and without. ERP also ensures the utilization of the resourcesof the SMEs in the most optimal way. The successful application andimplementation of ERP can result in short production cycles,increased accuracy in the operation of SMEs, and efficient managementpersonnel.

Keyconcept explanation

Thekey concept for this study is Enterprise Resource Planning (ERP)) andthe role it plays in Small and Medium Enterprises (SMEs). ERP is themanagement system that enables the management of the resources of anorganization in an integrated manner through automated functions anddepartments to avail information in real time (Dantes &amp Hasibuan,2010). The ERP system can be incorporated by SMEs to bring aboutchange and improve their operations to become responsive to changeand thus remain relevant in the industry. The SMEs can, therefore,make use of ERP tool successfully as a means of plan and control toimprove their production. Through the use of ERP systems, SMEs are ina position to come up with a competitive advantage to meet deliveryperformance. This is possible because the ERP tool allows holisticmanagement of the risks and uncertainties portrayed by the previoussystems in place.

Myinterest in studying ERP and its role in SMEs

Forquite a long time, people have been in search of a technology thatwould ensure that their businesses thrive in the market despite thecompetition from rival companies. Therefore, there was a need for thedevelopment of a system that would ensure that organizations remainrelevant in the industry. This development gave birth to ERP. Myinterest in studying ERP and its role in SMEs is to help bring out aclear understanding of its benefits as well as risks involved withits application. This understanding will in turn help individuals andorganizations to come up with the right strategies in employing ERPto ensure they remain relevant despite the competition from rivals.

Comparison

Themodule in class demonstrated that the ERP system is the tool thatbusinesses and organizations have been in search of to improve theiroperations and competitiveness in the industry. The module alsopresented ERP as a valuable tool that would enable businesses toachieve high returns from their investments. Again, it was stilltaught that the ERP system has particular factors that must beconsidered for its successful implementation. There are equally risksassociated with the implementation of the ERP systems that have beendiscussed. From my research, I have been able to concur with theabove discussions. The differences I have noticed arise from the mainreasons that would make a company apply ERP as a practical tool. Themodule speculated that remaining relevant and competitive in themarket as the primary reason for the implementation of ERP system.From my research, I have been able to determine that ERP is avaluable tool because it helps the organization tap and make use ofthe resources in the most profitable way possible (Azevedo, Romao, &ampRebelo, 2012). The ERP system has its own set of challenges in theimplementation process that are key in ensuring its success (Sundtoft&amp Mouritsen, 2013). This is a key factor in determining thesuccess of the ERP system but was not dwelt on much by the modulework.

ArticleSummary: The role of ERP for SMEs

Themain argument in the article, the role of Enterprise ResourcePlanning for Small and Medium Enterprises, is that the application ofERP can be critical in improving the responsiveness of SMEs tochange. The above is achieved through the use of the ERP system as atool for planning and controlling production. The changes range fromnecessary updating of information to product design changes. However,because the ERP system is unpredictable and random nature, it cannothandle uncertainty experienced after the issue and release of workorders (Jofreh Et al, 2013). Because of this fact, a majority of theSMEs apply other techniques addressing uncertainty in order to remainrelevant and competitive. Studies have, however, shown that use ofERP system by the SMEs impacts the SMEs significantly. Research hasproven that the use of ERP by SMEs creates a competitive advantage tothe SMEs through an address and management of the root causes ofuncertainties (Jofreh ET al, 2013). It is significant for the variousSMEs to identify the specific root causes and deal with them throughthe application of the appropriate techniques. After theidentification of the underlying causes of uncertainty, the necessarychanges to ERP system can be implemented thus improving theperformance of the product delivery.

Thearticle also discusses about the factors that ensure successfulimplementation of the ERP systems among the SMEs. Although there islittle literature on the impact of the application of ERP by SMEs, itcan be pointed out that the installation of the ERP systems should beaccompanied by certain steps to ensure that the implementation issuccessful (Jofreh Et al, 2013) The implementation of the ERP systemhas more likelihood in succeeding in the situation whereby the SMEplaces the system as the strategic business idea and incorporates itinto the redesigning process. Most importantly, the system should bein line with the general strategy of the SME and should be intendedto serve the customers in the most appropriate way. It would also benecessary to start from the most fundamental systems before expandingto more complicated functional areas. After the implementation of theERP system, it is important for the SME to undertake a careful andaccurate interpretation of collected data for the system to besuccessful.

Thearticle as well discusses the benefits and risks experienced by SMEsin the implementation of the ERP system. In the most cases, thebenefit of ERP system stems from the long-term and the return oninvestment. However, a good ERP system should be that which helps inthe rationalization of technical resources used by the business. TheERP system helps change the operations of an SME to ensure that theSME takes the core competence. The implementation of the ERP systemhas benefits for the financial sector. It is more importantlybeneficial in the instances where the available resources aresufficient to carry out the implementation process. Theimplementation of an ERP system has its set of risks. The risks stemfrom the linkage of interdepended business processes, relateddatabase, and the re-engineering process (Jofreh et al, 2013). Themain risks in the implementation process of ERP system by SMEs arepoor management and planning, diverted business goals at the middleof a project, and unavailable support from the company management.

Thearticle is summed up by a discussion on the challenges faced by SMEsahead of the ERP implementation. Various challenges are experiencedwhen planning to initiate ERP system to the business. The fact thatthe SMEs are poor paymasters presents a significant challenge to theproviders of ERP system. Although the vendors of ERP system submit itat a cost, the system should instead be viewed as an asset to theSME. Although the costs associated with ERP systems are high, theadvantages of the implementation outweigh the costs by far. It isalso challenging to educate the SMEs on the benefits of the ERPsystem. A significant challenge is equally faced during training andthe implementation process of the usage of ERP.

Biblicalintegration

Thewell-being of mankind is even enshrined in the bible. Just as theBible, ERP is out to make lives better. Various verses in the bibletalks are aimed at making the life of man better. It is evident fromthe Bible that God wants what is best for us (Luke14:28-33). In 2 Corinthians 9:6, the bible talks of sowing, “Thepoint is this: whoever sows sparingly will also reap sparingly, andwhoever sows bountifully will also reap bountifully”.This is integrated in enterprise resource planning in a way that onehas to understand the time to implement an idea. Doing it sparinglybrings out inefficient yields. God’s desire for us is to see usemploy the best skills to get the best from business (proverbs22:29). This is connected to ERP in SME because it is a platformwhere people can apply the system to get the best from theirbusinesses. The Bible goes ahead to assure us that we will not workin vain which is made possible by application of ERP. The use of ERPtranslates to good business and thus wealth. This is in line with theBible teachings that God gives us the power to get wealth, as foundin Deuteronomy 8:18. The Bible also tells us that God teaches usabout the profitable ways and on the path to follow (Isaiah 48:17).This is in line with the implementation of ERP system that ensuresprofit in our business ventures. We have been empowered with wisdomto make use of ERP to be profitable in our business ventures.

Applicationof ERP to real world businesses

Overtwo decades ago, people had desire to apply technological advancementin making or improving their operations. ERP system providessolutions to the ways of doing business to come up with the bestresults for the organization. The primary objective of ERP is tomanage the critical resources of the organization that in turntranslates to successful projects for the companies that implementthe same (Aslan, Stevenson, &amp Hendry, 2015). ERP system has beenused by a business to automate and rationalize daily tasks and reduceor eliminate human intervention (Azevedo, Romao, &amp Rebelo, 2012).The use of ERP system enables a company to centralize information bystoring it in a single database that allows better planning anddecision making through an effective and efficient data analysis(Azevedo, Romao, &amp Rebelo, 2012).

Conclusion

Fromthe above discussion, it is evident that ERP is the currently desiredsystem to help improve the operations of SMEs. Although there arerisks and challenges associated with the system, a carefulimplementation of the system will at the end ensure profitableresults for the SMEs. Different scholars who have studied the samehave been in a position to point out the same. The system is readilyapplicable in the real world business with research showing that itpresents the best results as long as it is applied in the rightmanner. The SMEs should also understand that the implementation ofERP system has its own set of challenges that should be addressedappropriately for the system to work efficiently.

AnnotatedBibliography

Aslan,B., Stevenson, M., &amp Hendry, L. (2015). The applicability andimpact of Enterprise Resource Planning (ERP) systems: Results from amixed method study on the Make-To-Order (MTO) Companies. Computersin Industry, 70,127-143

Thisarticle presents a discussion on the necessary planning stagesrelevant to Make-To-Order (MTO) Companies. These MTO requirementsinclude the function of ERP in the management of customer inquiries,redesigning and re-engineering process, the stage of the order entry,and the phase of the release of the order during the dispatchingstage. The theoretical framework supporting the same has beenpresented too. The paper brings out a discussion on the researchmethods applied and the results obtained from the study. The findingselaborate on the ERP applicability by MTO companies, how suchcompanies employ ERP and reasons behind its inception, and how theuse of ERP impacts the MTO companies.

Azevedo,P., Romao, M., &amp Rebelo, E. (2012). Advantages, Limitations, andSolutions in the Use of ERP Systems (Enterprise Resource Planning) –A Case Study in the Hospitality Industry. ProcediaTechnology, 5,264-272

Thisarticle presents ERP as a critical tool for organizations through adiscussion of the main features of ERP system, the benefits that canbe tapped through the use of ERP system, and the important successfactors following the implementation of ERP system. A research wascarried out to help explain the applicability of ERP as a solution tothe information disintegration in the hospitality industry. Theresults of the case study showed that the hospitality industry hasundergone critical changes with information technology being pointedout to play a decisive role. The success factors accompanied by theuse of ERP system in the hospitality industry apparently came outtogether with factors that make the industry uncompetitive have beendiscussed.

Dantes,G., &amp Hasibuan, Z. (2010). Measurements of Key Success Factors onEnterprise Resource Planning (ERP) Implementation. IBIMABR,1-11

Thisarticle presents a discussion on the popularity of the use of ERPsystem by organizations. The article clearly pinpoints on the successfactors that occur alongside the implementation of ERP system. Thetheoretical framework brings out the success factors like thematurity level of the organization, the approach used in implementingthe ERP system, and the connection between ERP system and anorganization. The findings from the study show that the maturitylevel does not determine the application of ERP system. The approachapplied in the implementation process of ERP system is critical inthe determination of the success of the system. According to thestudy, the failure ERP system is brought about by poor planning ofthe whole process.

Jofreh,M., Et al. (2013). The Role of Enterprise Resource Planning (ERP) forSmall and Medium Enterprises (SMEs). ResearchJournal of Applied Sciences, Engineering and Technology, 5(7),2317-2320

Themain discussion by this article is the status of ERP in SMEs. Thearticle elaborates on the importance of ERP and how it could helpimprove how SMEs respond to change and uncertainty. It is equallyclear on the point that ERP works better for SMEs in response tochange as opposed to uncertainty. The factors on the success of ERPamong SMEs are also discussed. Such factors include instances where acompany places the implementation of ERP as a strategy in businessand the ability of the enterprise to make the right interpretation ofdata. The authors went ahead to discuss the risks, challenges, andbenefits of ERP implementation by SMEs. The benefits are mostly feltin returns of investment and information connectivity. The risks, onthe other hand, stem from business processes that have tightinterdependence linkages to business process and re-engineering afterERP implementation. The challenges faced in ERP implementation havebeen highlighted alongside the possible solutions to the challenges.

SundtoftHald, K., &amp Mouritsen, J. (2013). ,operations and management. InternationalJournal of Production Management. 33(8),1075-1104

Theprimary aim of this article is to identify the effects ofimplementing ERP system and a speculation of the linkage betweenthese forces and the roles of operation management. The articlepresents ERP as an essential aspect in the information needs of acompany. The research approach dwelled on ERP and the effects of ERP.The study was keen to identify the constraining and enabling effectsof the implementation of ERP system. The article also demonstratesthe potential implications to operation management followingimplementation of ERP. This was possible through a discussion on theimportance of ERP system in undertaking the roles of the managementof an organization. The study also identified that there is a need tofocus on the communities of research for the effect of ERP system inoperation management to be felt.