ERP- A Tool To Manage Company Processes

Discuss About The Triggers Business Process Controlling In ERP.

The purpose of the paper is to examine the implementation of ERP and its impact on both organizational capabilities and business strategy which will enhance a firm’s performance. It specifically focuses on the organizational capabilities and mediating effect on business strategy.  ERP implementations has a positive strategy when a firm employs a positive prospector business strategy (Bintoro, Simatupang, Putro & Hermawan,2015).. A prospector strategy in an organization enhances its ability to achieve organizational capabilities and achieve a higher performance in terms of finances.  The practical implications of ERP implementation encourages support of enhancing a better business strategy. ERP in organizations not only supports cost control but also supports creation of new and better products.

The management of a company involves the constant adaptation to changes that generate new environments and therefore it is necessary to provide technology that allows companies to anticipate and adapt to the needs of customers. With the emergence of ERP’s (Enterprice Resource Planning) in the 90’s this is possible since the ERP is a software tool that has helped companies in the management of their processes. The ERP is a technology that focuses on the internal processes of a company opposed to e-business which is focused on the external relationship between companies; the ERP supports business strategies, e-business opens the doors to new strategic opportunities.

Having a tool that connects all the areas of information of a company is a value that will allow you to be successful in the current environment that organizations live in, but you must take special care with the human factor since the change generated by the Implementation of this type of technology in any company is very important because it changes the organizational structure, affects the culture and mainly changes the individual role of the members. It is important to know what is and what is not an ERP and how a bad implementation of such software will undoubtedly lead to failure (Nordin & Adegoke, 2015)..

Among its main features are the ability to model and automate most of the basic processes of an organization, from the sales order, to the distribution of the product; The range of functions covered by ERP are: accounting, finance, sales order management, logistics, production and human resources (Tenhiälä & Helkiö,2015).. We must bear in mind that ERP solutions have been specialized by industry segments, which implies that the logic to optimize processes is based on specific operating models.

Factors to Consider When Implementing ERP

Material Resource Planning that allowed to reduce the levels of inventories and control the production and distribution times appear. It is in the decade of the nineties when the concept of ERP is known, based on the concepts mentioned above and on technological evolution (Kharuddin,, Foong & Senik, 2015).. But now integrating other aspects of business such as finance, engineering, human resources, projects, etc., which the moment had been operated with isolated systems; ERPs have continued to evolve in such a way that currently the EERP or extended ERP is recognized with the integration of other processes that had not previously been considered or that did not exist as self-management, trade (Conteh & Akhtar, 2015).

The objective and vision of the business project must be clearly defined.

Have the right team to implement the project, as well as the person who will take on the role of project leader (Huang & Handfield, 2015)..

Continuous training not only technological

Adaptation to existing programs (back-office and front-office integration),

Make a well-defined Work Plan

Have expert advice and benchmark companies that already have this type of tools already integrated.

LG is a case of a successful ERP implementation: LG implementation of HRMS

A multinational with 114 subsidiaries, operating in 40 countries and has 82000 employees and counting, it needed to harmonize its HR functions. The challenges were enormous (Blount, Abedin, Vatanasakdakul & Erfani,2016).. Challenges that it faced included; the underutilization of resources, inefficient decision making mechanisms , high maintenance of labor costs, lack of transparency controls and a lot of manual systems. It needed to boost up its operations and ERP was the route it decided to take ( Kramer, 2018).. However there were more challenges that came along in the implementation processes, they included;

• Multiplicity of systems and lack of resource optimum utilization
• Employees disengagement and limited outlook
• Limited local resources
• Lack of transparency and global automation needs
• Decision making challenges that had significant impact in business

The company’s familiarity with the Oracle systems and technology led to an easier solution. It hired the IT company oracle to build a centralized single system which integrated available Oracle HR modules for its use in its global outlets. It aimed at replacing system dependency in a specific location. The IT Company had to use an ERP that could host large data, easy migration of HR data, more scalability, centralized access and control.

• Minimal maintenance due to a centrally managed system
• Transparency in hiring and appraisal of all employees
• Introduction of E-Learning application
• Improved efficiency in HR functions
• Informed decisions due to availability of HR reports
• Objectivity in reporting and setting goals
• Cost saving measures
• Increased productivity and efficiency among employees.
• Sharing of globally accepted best practices across various centers.

The implementation process took over five years(2002-2006) in organized planed phases with a clear set of objectives. The ERP system mitigated the challenges posed by vastly spread global centers in its HRM.

With the new oracle E business suit, the company required a thoughtful, great and successful implementation of the business operation and required it to be effective. The implementation of this type of technology required an organizational change and had to take into account the type of culture of the company (Iqbal, Nadeem & Zaheer, 2015)..

Successful ERP Implementation Case Study: LG

The ERP (Enterprise Resource Planning) systems are not a new concept, until the fifties the companies concentrated all their efforts exclusively on controlling the cost of their inventories for which some tools were developed such as EOQ Economic Order of Quantities (Economic Order of Quantities.

Much has been said of what the ERP can do, however there are small gaps in the design that have come to light, not to discredit this type of tools but to mention the areas that can be strengthened and corrected. Some of these weaknesses that we can mention are the complexity of the process to integrate information contained in systems external to the ERP or in the operationalization of LG company.

However, the efficiency of operation of the systems is considerably affected if the history of the transactions is maintained in the databases. It is necessary to see the advantages and disadvantages of the different software packages that best suit the needs of the company, the characteristics of the company, the money, the resources it has, among others must be considered. The organizational culture will be a key factor for the success of the implementation, to know how to involve the personnel of the company and there is no resistance to change that undoubtedly will change the organization. Among the success factors of the same can be mentioned the improvement of the processes, involvement of the staff, training, culture, acceptance and appropriate selection, but the key is in the commitment and dedication that an investment of this type deserves, which can lead the company to the operation and financial efficiency or bankruptcy of the company.

Montell electrical suppliers is a company that deals with supply of electrical appliances across the Southern part of Australia.  The company has grown in leaps and bounds for the last three years. The company has consequently increased the number of staff due to the increase in works. The company management implemented a new ERP system known as SAP and the changes that this system has made are quite evident.  As the management points out, the efficiency brought in by SAP system has changed the how the company’s operations are undertaken.  The following are the areas in which the SAP has improved the company;

Throughout the project, a study has been made of the various areas that converge in the management of the integration project of an ERP system:

1. The company object of the integration that to a great extent give life and progress to the integration project based on a tangible and viable business case according to the business and strategic needs of the same (Capraro & Riehle,2017). The project presents the mission, vision and objectives of the organization under study describing its strategic plan in the short and medium term, thus identifying the need to implement the ERP system.
2. The functional analysis of the areas of the organization has allowed us to identify the areas involved in the integral implementation of an ERP system. For it, Emphasis is placed on knowing and documenting the needs of the organization by areas to elaborate the requirements or technical specifications of the system integral (Erturk & Arora, 2017).
3. The feasibility analysis and the preparation of the business case for the implementation of the ERP system, analyzing its key components and the necessary information for its development. The project presents the development of the business case and its viability technique to make the executive report of the proposal for its implementation (Gandhi & Sarukesi, 2015).
4. The implementation of the system is rigorously elaborating the methodology for its design, and the most relevant factors when establishing the parameters of the system based onto the requirements and needs of the different functional areas and users of the same. It also describes the plan of step to production and control of integrity cross-functional of the system (Kramer, 2018).
5. Putting the SAP system into production, where we highlight the key success factors and the possible risks that can hinder the integration of time, quality, and cost. HE has developed a summary with a summary in the form of best practices, together with risk and action analysis plan that enables mitigation (Harwood, 2017). 
6. Change management by carefully evaluating the impact of the system on the processes of operation of the company, paying special attention to the impact as one of the main factors of success in systems integration integrated ERP information in organizations (Zamre & Ismail, 2015).. We have identified factors of risk and action plans to facilitate the integration of the system with users, accelerating its penetration and success.

ERP Implementation Benefits

ERP systems are modular, each functional area of the organization corresponds to a module of the management system so that although they are independent, they share information from each other through a centralized database, this feature allows the customization and adaptability as well as the ease of integration (Lee, Shiue & Chen,2016). It is usual that each module uses a specific software for its functionality.

• Financial Management: accounting, financial statements, banks, accounting records,

tax report, etc. It is easier to carry out these tasks after the integration of SAP into the organization.

• Sales Management: orders, orders by customer, orders by reference, billing,

Price list, accounts receivable, etc. The company can receive reports on the orders sales and orders for planning purposes.

• Purchasing Management: accounts payable, purchase orders, suppliers list,

suppliers by reference, prices, etc. One of the impacts of SAP ERP in the organization is that it allows easier management of purchasing and therefore the company can be able to control prices and stock levels (Gandhi & Sarukesi, 2015)..

• Other impacts of SAP implementation in the organization are in the Distribution and Logistics Management: it enhances traceability, shipment tracking, management of warehouse, etc.
• Production management and planning: product traceability, registration of lots, cost control, knowledge of deviations, etc.
• Human Resources Management: personnel data, salaries, expenses of displacements, productivity, commissions, etc.

SAP R / 3 is the solution that covers the ERP solution of SAP in the 90s and that as we have explained today has become a much wider solution that covers CRM applications and even vertical solutions.

As we know, the SAP R / three solution offers modules that interconnect and operate in time to offer an integral solution to the transversal processes that make up the chain of creation of business value. Currently, in the era of standardization and globalization. The integration of different SAP solutions can be carried out with solutions from third-party providers which broadens the possibilities of the information system by offering benefits derived from standardization.

Differential factors of the ERP System SAP R / 3 Standard solutions widely used nowadays, fact that facilitates standardization of Systems Information and implementation of best practices of the industry.The scalable and modular solution that makes it possible to carry out a flexible and sustainable implementation in the middle and long-term.

Competitive price of a highly reliable product, with a moderate cost in updates and operations of maintenance or customization, a fact that makes possible “Total Cost Ownership” reasonable for a company of medium size as “Broadband Communications”. Implementation and integration feasible in a while reasonably short when we refer to a project of systems implementation. Facilitates the reengineering of transversal processes optimizing productive operations and management of services of the organization (Slabbert, Seymour & Schuler,2016).. SAP offers specialized technical support for the monitoring and resolution of incidents, including the professional improvement and customization services.

SAP R / 3 is the base application of the wide range of SAP solutions currently available. The modules that makeup SAP R / 3 and specifically and its different business solutions are the core of the different SAP solutions for companies available today in the market.

Gaps in ERP Design and Implementation

Obviously, the larger the enterprise, the more complex its organizational structure, the more functional components of the accounting and management system it will need and the higher the role of the human factor – hence, the risk factors are greater, and their consequences are more serious. Also, for large companies, consultants state, the problem of differences in the interests of owners and hired management

For example, enterprises from stable, conservative industries (in particular, extractive industries) are less sensitive to the consequences of risk factors manifested in the implementation of ERP-systems – such companies can easily carry out the project for three to five years and do not suffer much from this. In dynamic, highly competitive industries (in particular, in the food industry), the timing and volume of automated functions are of great importance. The dependence of risk factors on the type of business processes (Babaei, Gholami & Altafi, 2015).. The success of the project on the introduction of an integrated accounting and management system depends on the results of automation of individual production and economic processes, and these processes give rise to unequal risks (Shen, Chen & Wang, 2016).. As the results of the survey of consultants showed, the most common source of complications in the implementation of accounting and management systems is production planning and transport logistics. Also, the risk factors associated with these processes cause the most serious damage to the project and are neutralized the worst (Ranjan, Jha & Pal, 2016).

The reasons for the variation in the estimates were well explained by one of the consultants: the most challenging thing is that we have not learned yet (Ali & Miller, 2017).. In other words, the processes, the experience of automation of which the consultant has not yet accumulated, seem to him riskier than those already well developed.

There is no doubt that SAP is a platform for management on which companies can plan, organize and manage. Today’s resources and think about the future growth of your business.

By saying “platform” the reference is to a common, integration environment absolute between the different business processes of the company, which goes beyond the geographical, linguistic or particular ways of doing things; a real union between all the members of the business that focus their efforts in a common interest, to optimize, monetize and make more efficient the company, maximizing the results for it while reducing costs, through better and greater use of business resources (Sliusar, et al,2018).

The company includes it in the scope of SAP Business All-inOne, it requires more elaborate solutions and has the potential to pay for it. All-in-One is not only a very complex tool but also a complete one, can make the ideal solution for both the medians and the big companies more demanding (Al-Dhaafri,  Al-Swid & Yusoff, 2016).. They offer integrated and complete management of the business with packages based on knowledge and best practices in the sector. The “Advanced” is more oriented to the SAP Business One solution, usually have production and export needs, your level of business has a orientates more national and international incipient.

Conclusion

 With the emergence of technological tools such as ERPs that allow the integration of information, the companies benefit in the administration of their processes. It must take into account not only the technological factor but also the type of organization, its direction, its mission, its vision, culture, the general characteristics of the company, since knowing these factors can be determined with greater accuracy what You really want to comply with the implementation of the system. It is important to point out that the correct implementation of an ERP involves radical increases in productivity as well as the possibility of having better information in decision making. The implementation of an ERP is a decision that the company takes not only to obtain small results but results that really transcend the growth of the company. An ERP is not a fad more than the current economy but a technological need that day by day is being presented in many companies and that is why the need to know the scope and limitations of software of this type.

Finally, we can generalize the term ERP to business software, commenting that it is the software applications that allow a company to automate its operations and its main features are that all functions are related to each other. With the information presented here you can be more informed of what is an ERP and the scope of this, you can go deeper into the issue and investigate the requirements to implement an ERP in an organization, companies that are dedicated to the development of these tools as those mentioned above, as well as costs, among others; in order to make possible a successful implementation that leads to generate value to the company.

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