The Advantages of ERP Essay Example

The Advantages of ERP Essay Example The Advantages of ERP Essay The Advantages of ERP Essay The Advantages of ERP As companies grow and departmentalize their operations, it is increasingly important to ensure that the separation of function does not inhibit efficiency by erecting communication barriers. Smaller companies may be able to find tools to prevent this problem from occurring. Others, especially larger companies that operate complicated supply chains with thousands of suppliers and customers find creating effective links between departments more difficult. One way companies are successfully bridging the information gap between departments is by utilizing Enterprise Resource Planning or ERP. When utilized in the right way, ERP ties each organization function together in such a way that all departments know what is happening at all times. Creating uniform knowledge, which is readily available throughout every company department, is very beneficial for an organization. The following paper will outline the primary theoretical advantages of utilizing Enterprise Resource Planning. 91 percent of organizations report that efficiency is one of the top ten benefits of implementing ERP. There are so many aspects of the ERP system hat streamline operations that efficiency is a natural effect. Less manual entry as well as the prevention of duplicate entry improves speed and decreases errors. These improvements, in turn, allow employees to use their expertise and valuable time in other ways for the company. Improving information uniformity and availability also impacts efficiency in such a way that cycle time can be reduced . This is all made possible because software and processes among departments have been standardized to immediately respond to an order when this may have previously taken long periods of time. Consider the following scenario. An order is placed for a laptop with unique specifications. Without ERP, multiple departments and or suppliers must be individually contacted to obtain the parts to assemble the machine. An ERP System can issue a request for these parts, order a technician to assemble, create an invoice, and even make an accounting entry with a few keystrokes. What previously may have taken days or weeks may now only take minutes or hours. Empowering organizations to make better decisions on a daily basis and in response to their industrys rapidly changing environment is another key enefit of ERP. ERP accomplishes this in a number of ways. First, data entry as previously mentioned becomes more streamlined and is more automated providing more accurate data. This data, now unified across departments, can also be compared against itself and across functions without conversion errors. Because the data is collected regularly and does not require separate compilation, the reports are readily available and always current. This is perhaps one of the most important features as executives are often forced to make decisions at a moments notice and aving reliable information to assist their decision could make the difference between the right and wrong decision. ERP software implementation gives organizations a lot of technological integration capacity advantages. The software is so sophisticated that there are many integration options with e-commerce as well as supply chain partners. Reconsider the previously discussed scenario witn computer order. The technology available with ERP software would allow this same process to be initiated by a customers order placed on a company website. Simultaneously, suppliers who have applications that support the ERP software ould receive this same information as they are linked into the ERP software in order to more effectively communicate with their customer. Then, once the orders have been placed, all parties along the supply chain can see the status of the order through ERP system and web-based tracking collaboration systems . This offers a level of service that goes above and beyond and can be seen as a competitive advantage in a todays society. Finally, when collectively evaluating the above, one can see the most overwhelming reason for utilizing ERP is costs savings. If time is money, mproving the use of the employees time is an obvious cost savings. In fact, ERP may even eliminate labor depending upon a firms data entry positions. Cycle time improvements can also improve costs by increasing the amount of items that can be manufactured or by simply making the process more efficient. For example, streamlining the inventory ordering process following order receipt can dramatically impact inventory on hand and therefore cut inventory costs. Likewise, utilizing data and reporting to make the best decisions for organization could also assist with cost savings. Imagine deciding how much inventory to keep on hand without having any data to evaluate. Beyond the operational cost advantages to ERP, there are also cost savings to having all departments utilize the same software. A unified system cut costs as departments do not have to buy individual programs to support their processes . Also, if an organization uses one system, IT technicians only need to be familiar with one operating system saving in the number of specializations needed. Training also can be a cost savings as all employees will be using the same software across departments. Truly, ERP is the most important piece of the puzzle. Every department within an organization can operate with 100 percent efficiency by completing their roles as assigned. However, if there is nothing to link the departments one to another, the organization will fail as a whole. A human heart could be the strongest one in the world, but if it were not connected to the other organs in the body, what good would it be? Similarly, every department within an organization has its role to play and without an effective method of communication between these departments, the organization as a whole would die. Enterprise resource planning is a valuable tool for companies to utilize to increase efficiency, to support the decision making process, to integrate e-commerce and supplier software, and most importantly to cut costs. Effectively utilizing an ERP system will prevent fragmentation of departments and lead to a healthy organization. Sources Eresouce. (2010). ERP reduces cycle time, improves efficiency. Retrieved Nov 17, 2012, from Eresource: eresourceerp. com/ERP-reduces-cycle-time-improves- efficiency. html ExcitinglP. (2011 ,June 9). Advantages Disadvantages of ERP (Enterprise Resource Planning) Systems. Retrieved Nov 17, 2012, trom ExcitinglP. com: nttp:/ wrww. excitingip. com/2010/advantages-disadvantages-of-erp-enterprise-resource- planning-systems/ Exforsys Inc. (2006, Dec 4). The Advantages and Disadvantages of ERP. Retrieved Nov 1 7, 2012, from Exforsys. com: exforsys. com/tutorials/erp/the-advantages- and-disadvantages-of-erp. html Roman, K. (2009). Benefits of Implementing an ERP Top 10 Benefits an ERP Implementation Can Bring to Your Institution . Retrieved Nov 17, 2012, from Collegiate Project Services: collegiateproJect. com/articles/ERP%20Benefits. pdf