The main benefits of ERP systems are seen as the production of real-time data shared across integration and automation of business processes. This is particularly important in this new business environment where automation, effectiveness and efficiency in operations and real-time data are important factors for business success. Despite all these known benefits of ERP more than 50% of the suppliers who I worked with (mostly SMEs) do not deploy ERP and the ones who do, find the deployment very challenging in first go.
To remain competitive, companies are forced to keep up to date with the new technologies. ERP systems as a provider message provide distinct advantages to companies adopting them as they can integrate business applications using real-time information. Therefore, ERP systems provide the means for management to respond to the increasing business needs in more effective and efficient ways.
This blog briefly explain, underlying reasons why companies choose to adopt ERP systems, their impact on management process including implementation problems encountered.
Ferry Viawan (2004) study covers ERP system adoption motives, the benefits of ERP derived from system and problems encountered in ERP system implementations
1) ERP System Adoption Motives
• Increased demand for real-time information
• Information generation for decision making
• Integration of applications
• Business process re-engineering
• Cost reduction
2) The Key Benefits of ERP system for Supply Chain
• Increased flexibility in information generation
• Improved quality of reports – statements
• Increased integration of applications
• Easy maintenance of databases for current & historical information
• Use of MRP
• Link with information with other business functions
3) Problems encountered in ERP system implementations
• Delays in implementing the ERP system
• Employee resistance to change
• Difficulties in transferring data from previous applications
• Personnel training in ERP environment
• Increased costs in operating the ERP systems
Adoption Motives and Benefits of ERP Implementation
The ERP system adoption motives, generally indicates that the most highly rated perceived benefits achieved via ERP system reinforces the argument that ERP systems have been successful in fulfilling adopters’ needs.
Increasing demand for real-time information related to the demand of company to always have up to date information. To the great extent, real time data takes important role, particularly, in the new business environment where automation, effectiveness and efficiency in operations and real-time data are important factors for business success.
Another key benefit of ERP as a message provider is it will generate information automatically to the decision maker, in order to get information at early stage. The information can be generated in a flexible way, depend on the system necessity. Finally with ERP software companies can standardize their business and easily enact best practices.
The integrated application of ERP system facilitates the easier exchange information. For example, when the order is inputted, this order can be promptly answered, whether it can be served or not, because at the same time the stock on the warehouse can automatically be known. It will also easier the maintenance of database.
ERP systems are now necessary tool for companies regardless of size to remain competitive in this demanding business environment. With ERP application, more effective and efficient business can be achieved because using ERP software can reduce time for transaction processing and for issuing of report-statement. It means that quality of reports – statements is improved. The effective and efficient process will further reduce total operating and administration cost. So if you have not started to think about any ERP system, time starts now!
If you have any questions about benefits of ERP system or have any experience of additional benefits in your life or business, leave your thoughts in a comment below—I’d love to hear from you.
Book in Focus
Author: Marianne Bradford (5 Star Reviews)
About the Author- Dr Muddassir Ahmed
Dr MuddassirAhmed is the Founder & CEO of SCMDOJO. He is a global speaker, vlogger and supply chain industry expert with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles. Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.