ERP Implementation What Do Vendors Seem to Essay

  • Length: 5 pages
  • Sources: 3
  • Subject: Business
  • Type: Essay
  • Paper: #38879520

Excerpt from Essay :

ERP Implementation

"What do vendors seem to know and not know about implementing ERP systems? How much influence should vendors have in an organization's ERP decision?"

"What do vendors seem to know and not know about implementing ERP systems? How much influence should vendors have in an organization's ERP decision?"

Problems in ERP Implementation

The Role of Vendors

"What do vendors seem to know and not know about implementing ERP systems? How much influence should vendors have in an organization's ERP decision?"

There is commercial software packages called enterprise resource planning aimed at integrating different types of data and information that flows through the company. The information includes financial and accounting data, data related to human resource, data related to supply chain and data about customers. ERP systems are a great solution for the problem of business integration for managers struggling since long with nonconforming information systems conflicting operating practices, thus has become a readymade resolution for business integration problem (Davenport, 1998). The current essay is a discussion on the role of vendors in ERP implementation. Based on the review of the research on ERP implementation, the author has tried to answer the question as what vendors seem to know and not know about implementing ERP systems. And how much influence should vendors have in an organization's ERP decision?"

Problems in ERP Implementation

In order to provide information systems capabilities that are highly integrated with business processes, many firms have adopted enterprise resource planning (ERP) systems. These systems are considered the price of entry for large organizations to do business (Wu & Wang, 2006; Kumar & van Hillegersberg, 2000). Almost 70% of large and mid-size organizations have adopted some form of ERP system (Liang, Saraf, Hue & Xue, 2007). These systems require organizations to spend a great deal of time, effort and resources on their implementation. Some organizations spend as much as $100 million for their initial implementation (Jasperson, Carter & Zmud, 2005; Robey, Ross & Boudreau, 2002). Yet the success rate of these implementations is poor. Between 40 and 60% of ERP projects fail to meet their expected implementation goals (Liang et al., 2007). And due to this loss and non-achievement of perceived benefits mostly vendors are blamed. Is that reality that venors are the only cause for failure of ERP systems; the research has proved that there are other factors involved and only vendor cannot be blamed.

Through ERP systems the modules such as production, purchasing, sales, human resources and the general ledger can be integrated. These software packages have replaced the legacy systems that are unable to sustain with present requirements of the business. Through these systems in place of keeping various stand-alone modules, companies can enter data once and this will impact other modules immediately. The ERP is an improved version of MRP (Material requirements planning) models which did not hold features like human resource management and customer management. Businesses need re-engineering of their processes in order to implement ERP which result in changes all through the organization. Therefore, the organization must take ERP implementation as a process of wider organization change instead of taking it as only implementation of software (Markus & Tanis, 2000; Somers et al., 2001). "ERP implementations usually require people to create new work relationships, share information that was once closely guarded, and make business decisions they never were required to make" (Appleton, 1997, p. 2)..

Today ERP is all inclusive of managing human resources, managing supply chain, managing finances of the company, managing projects manufacturing process, customer relation management and many other aspects suitable for growth and adaptation of the business processes. Some of the leaders in ERP business solution providers are SAP, Oracle Applications, Infor Global Solutions, The sage Group, Microsoft Dynamics etc.

There are numerous advantages to the company if ERP implementation project is successful. A significant reduction in the inventory level as a result of use of advanced technique of forecasting, a planned production schedule that can help manufacturing unit to produce orders in time and hence reduce penalties due to delayed production and a good transportation strategy are some of the advantages of ERP. ERP gives a good overall picture of the entire business and this visibility helps in better planning with reduced labor cost, less over time of workers, proper use of resources. To implement ERP system it is very important that the top management is willing to accept the changes that will take place as a result and to convince their subordinates to adapt these changes (Kakouris, 2005).

ERP brings out much needed co-ordination and helps multiple tasking like sending the reports via automatic email to all the persons involved in a particular process and cuts down the time required in manual handling and passing of documents from one department to another. A central database helps in informing changes to all required parts of a business and hence reducing ambiguity, errors and time wasted due to lack of communication in the process (Payne, 2002). This helps in better co-ordination within the organization as well as with external customers. Thus ERP helps in improving overall quality of the products and service provided. Implementation of ERP in an organization is complex, lengthy and costly affair. All minute process needs to be modeled to bring out the exact representation of working processes in the organization.

The Role of Vendors

When business organizations seek an ERP system they do not pay much attention to the business process involved jump to the functions of the software which is encouraged by vendors because they are interested that you purchase the software and get the license of their product. In addition the vendors implement the software and offer different guarantees. This is confusing for businesses as the vendors have to sell their product and they put best people in the sale who assure you that their provided software fully meets your requirements. Prior to selection of the software the company must review their business processes and business needs. (R. Michael Donovan

One of the most talked Supply Chain Management initiatives is Vendor Managed Inventory (VMI). In this partnership of supplier and customer, earlier takes the lead to replenish the inventory at customer's facility. Retailer in turn has to provide the sales figures occurring at its end which are used by supplier to create the forecasting and decide upon inventory policies to be followed. This strategic partnership is believed to show relatively quick results in terms of profit for both the parties (Vigti, 2007). Retailers do not have to worry about the inventory keeping once the required CSL is agreed by the supplier and retailer provides necessary space. On the other hand the supplier can have a better control on planning and scheduling to maximize the production capacity (Sari 2007). Here authors have also mentioned prominent causes of failure of VMI. Sharing of outdated and inaccurate data due to lack of good communication technology can be a major reason along with inaccurate demand forecasting.

The term "Vendor Managed Replenishment (VMR)" is of interest over here in which the ownership of the goods is transferred by the supplier to the customer upon arrival to customer's warehouse or dispatch of the order from its facility (Vigti, 2007). Another issue that should be paid proper attention is the frequency of the information forecast sharing. Nature of this information depends on the extent of collaboration but there is no doubt that this transfer should be frequent enough. In a survey by (Vigti, 2007), authors tried to find the nature of the data considered as essential by the scholars, researchers and the industry people in VMI. It is observed that most of them have emphasized on sales forecasting, stock levels, incoming orders, current sales, POS data, production schedules, promotions etc. It is also agreed that the level of the integration should be automated as much as suitable for the parties. The nature of the information shared also depends on the manufacturers policies of Make to Order (MTO) or Made to Stock (MTS). In order to have smooth co-ordination between both the parties frequency of this transfer should be more than or equal to the supplier's planning and scheduling frequency.

Vendors should first of all be aware with the requirements of the organization and provide ERP system accordingly. Second they should consult the management and visit the facility before implementation so that the ERP system exactly meeting the requirements of the organization is provided. It is also the responsibility of the vendors to provide training for users. For many organizations, the initial appeal of ERP systems is the integration it can provide to the various business processes within the organization This integration subsequently leads to achievement of operational goals such as cost savings, customer service, and operational efficiency These operational and strategic goals are quantified to help set and measure the expected benefits of ERP (Stratman, 2007).


From the above discussion it can be concluded that ERP systems have facilitated business processes and information flow however research has…

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