Production Scheduling and Control

Production & Non-Production Effects of ERP Technology on Businesses

Information Technology

Author's note with contact information and details of collegiate affiliation, etc.

Enterprise Resource Planning Software (ERP) ambitiously attempts to consolidate the departments and functions of an entire business, organization, etc. into a single computer system. ERP consolidates all the needs of the every department into one system. ERP systems are most often found within the Finance and Human Resources departments, but again, ERP aims to serve every department's needs. ERP systems must be dynamic because each department within any company operates differently and therefore requires specific options for their computer systems. ERP systems function similarly to the software used in departments such as manufacturing, finance, and human resources. Where ERP systems differ from those softwares is that ERP systems link all the softwares of every department within its systems together. Employees across departments can access information they need from another department with facility and often without needing to directly communicate with the person providing the information. The paper explores the potential for ERPs in business and contends that the affects are positive.

Production & Non-Production Effects of ERP Technology on Businesses

ERP systems have the potential to increase productivity, efficiency, and customer satisfaction. ERP systems additionally have the potential to improve overall functioning of a business. ERP systems add transparency and precision to business activities that are both related to production and related to non-production aspects of the business. This paper will define the ways in which ERP positively affects business operations.

An ERP system that allows different departments to see the same information with real time updates increases efficiency. As orders or other product information is updated, the system disperses that information to all or specifically designated departments. Communication among departments may decrease in frequency as a result. Communication among departments may also become more concentrated and intense. There is less need for stalling or questions because everyone has access to the same up-to-date information. A person in reception does not need to inquire to finance whether a bill was paid because reception/administration has access to the same information the finance department does. There is no need for communication between the departments unless to say "good job" or "thanks" or "how's it going?" With effective ERP systems in place, employee stress is likely to decrease even when business activity increases. ERP systems allow employees to collaborate with greater facility and ERPs also allow for staff to facilitate independent work.

The ideal experience of ERP systems is a process that happens over time. ERP systems require existing staff to modify the manner in which they perform their jobs. Change is difficult in any aspect of life; therefore, adapting and implementing an ERP system in a company that previously existed without one will take time and there will be resistance. ERP systems additionally take time to learn. Many people often resist opportunities for learning and resist them. The "people element" is definitely an obstacle when implementing and ERP. The software works best when the company continues to change based on how the employees operate, how the business operates, how the software affects operations, and how the software affects the employees. Koch and Wailgum write:

"People don't like to change, and ERP asks them to change how they do their jobs. That is why the value of ERP is so hard to pin down. The software is less important than the changes companies make in the ways they do business. If you use ERP to improve the ways your people take orders, manufacture goods, ship them and bill for them, you will see value from the software. If you simply install the software without changing the ways people do their jobs, you may not see any value at all -- indeed, the new software could slow you down by simply replacing the old software that everyone knew with new software that no one does." (Kock & Wailgum, 2011)

Businesses must always remember that their greatest assets are the employees. Any improvements to a company should be in service to the product, the company, and the employees. The software cannot take the place of the employees. The software should be a tool that assists the employees do their jobs even better and with less superfluous activity.

Hansen's Products is a company that was established in 1979 in New Zealand. This company has thirty-nine staff members. The company specializes in the manufacture of pipe fittings, threaded pipe fittings, and high flow foot and check valves. (iStart, 2008) This company selected an ERP, Axapta, an ERP Microsoft Business solution in 2003. (iStart, 2008) Since implementing Axapta, Hansen Products has seen improvements in their business related to production and not related to production. The management team at Hansen Products realized that their current systems were outdated, ineffective, and hindering productivity, and thus, revenue. Axapta connected Hansen Products financial department with their scheduling and manufacturing departments; the company saw dramatic improvement and streamlining of their manufacturing process. (iStart, 2008) They began by identifying their process and their needs. The company then made a well-researched decision about which system suited their needs best. They first implement just the financial and inventory modules first and spent adequate time training relevant staff. After a several months of this process, they fully integrated and use the system. The effects the system had on the company can be summed up in the following: