Enterprise Resource Planning (erp) Research Paper

Enterprise Resource Planning (ERP) systems are continuously evolving and many supply chain companies use them to improve the integration of their business processes.  This paper describes some basic definitions and advantages of ERP systems and how they relate to supply chain management (SCM).  It also contains future predictions and developments of ERP systems relating to their architecture, technology, and their functionality in decision-making.  For example, using ERP with cloud-based technology will become an efficient way to adapt to rapidly changing business processes.  Also, the movement into using predictive analysis and machine learning to enhance the software will be a great improvement in the technology aspect of ERP systems.  In addition, changes to the user-interface can be a big help in training employees to make better decisions for the company.  Some of these developments have already been implemented by some companies and should be expanded to other companies in a standardized manner.                              

I have learned many good things about Enterprise Resource Planning (ERP) solutions and how they can be used in various companies to enhance and integrate their business processes and provide workflow management from the supply chain courses I have taken at Rutgers Business School.  All data and functionalities are implemented into a single computer system that can serve all the needs of the various departments within an organization.  Two popular ERP solution providers are SAP which focuses on logistics, SCM, sales and distribution, and Oracle which contains strengths in databases and financials.  Companies who use ERP solutions have many advantages over those who do not have such software systems.  One benefit of ERP is improved reporting and tracking.  By automating various functions, a company can track its orders more efficiently from acceptance to fulfillment.  In relation to revenue, an employee can track invoices through to cash receipts.  In addition, an ERP system could help reduce a company’s inventory by providing employees a tool for improvement.  Their implementation effort and focus on procedures and discipline allow for inventory reduction.  This reduces inventory costs and their overall operation costs.  Scalability is another advantage of ERP solutions.  Adding functionality to the systems as business needs evolve is easy and it facilitates the management of new processes, departments, and other additions/changes.  An ERP system can also improve customer service.  Since it allows the company to generate more accurate demand forecasts, the organization can have an idea of how much product is needed for various customers and never be out of stock.  Faster production cycles and the improved demand forecasts greatly enhance the customer relationship.  

It could take small organizations three to four months or large organizations two to three years to implement an ERP system depending on how complex the business processes are.  ERP is a modular software system.  Therefore, it is possible to implement a few modules or many modules based on the requirements of the organization.  An ERP system can have financial accounting, controlling, production planning, sales and distribution, human resources modules and more.  The ERP gets configured differently based on different business needs.    There are many settings that can be modified within the system.  For example, a company can select the option to pay for shipping costs on customer returns or it can select the type of inventory accounting to use-FIFO or LIFO.  The use of an ERP system can also vary between organizations.  For example, one company may need it simply to have easier access to information about the business and answer questions such as how many orders are taken per day, what is the average sales margin, and what are the number of sales to date.  Another company may need the ERP system to create a single database so that the accounting, sales and warehouse staff do not have to buy and maintain their own software.  Using different software among various functions makes it difficult and time-consuming to conduct one transaction for a customer.  Since a unified reporting system is used across all departments with ERP, employees can analyze the status in real-time.  If one department makes a change in its functional process, the other departments will see the change immediately, so the system does not have to backtrack manually to let other business segments know.  The system ensures a smooth transition and quicker completion of processes.  

There is a positive correlation between ERP solutions and supply chain management. ERP is enterprise-wide which means that there is one single system used within each individual company.  Supply chain management encompasses the entire supply chain which covers many organizations, such as manufacturers, suppliers, transporters, warehouses, retailers, and customers.  Successful usage of ERP systems aims to improve the supply chain management performance and decision making.  The implementation of ERP systems can contribute toward enhancing supply chain management performance in many ways such as integration of internal business processes, enhancement of information flow among different departments inside the company, improvement of the company's relationships and collaboration with outsourcing suppliers, customers and supply chain partners.  A supply chain includes all stages involved, directly or indirectly, in fulfilling a customer request.  The supply chain consists of information, product, and funds flow.  The type of information could be considered the demanded quantity or specification of a product.  The information flow is important because it guides and monitors the product flow with the use of information systems.  The funds flow is the last objective in order to receive the money.   The ERP systems facilitate the flow of this information and improve data availability within each company.  

ERP solutions such as SAP currently have a three-tier architecture that consists of the database layer, the application layer and the presentation layer.  The database layer consists of a central database system containing all of the data in the ECC system.  The application layer consists of one of more application servers which contain a set of services used to run the ECC system.  The presentation layer contains the software components that make up the SAP graphical user interface.  Having a multi-tiered architecture gives companies greater flexibility and allows them to balance the system to distribute the workload.  The biggest problem is that IT systems put constraints on a company’s ability to adapt quickly.  If there is a change that has to be made, a company may have to re-implement the ERP system and it could take a lot of time to change because it cannot be adjusted quickly.  Oracle has developed a new digital platform that is fully integrated which delivers every function in an “as a service” model.  It integrates everything from databases, middleware, applications to hardware.  Companies would be able to keep the capabilities of their customizations while receiving the advantages of cloud-based technology.  The software also runs much faster, which is a benefit to the users.  Oracle’s objective to providing this platform is to eliminate the manual labor involved in all of the services that are delivered to the business1(Accenture).