Research Paper on "ERP Systems Best Practices"

Research Paper 10 pages (2692 words) Sources: 3

[EXCERPT] . . . .

ERP Systems

Best Practices in ERP Systems Performance

Lessons from Market Leaders

Enterprise Resource Planning (ERP) systems are going through a fundamental transition from a system of record and enterprise-wide accounting system to being the catalyst of entirely new business strategies and initiatives. The intent of this analysis is to evaluate the best practices companies are adopting to fully realize the many benefits of having their ERP systems from a strategy standpoint. The last twenty years of ERP systems' growth has been accentuated by add-on applications and modules including Customer Relationship Management (CRM), Pricing and Revenue Management, Supply Chain Management (SCM), and Manufacturing Execution Systems (MES) that have extended these systems' reach into functional areas of organizations that required financial and manufacturing data to be more efficient. Attaining best practices in ERP system development, installation and use is more centered on how well these enterprise systems are first aligned to long-term or strategic plans and initiatives (Forslund, 2010). Transitioning from system of record to the center of corporate-wide strategies and initiatives, ERP systems are increasingly being relied on to significantly increase business process performance, deliver role-based data and intelligence securely, manage and optimize supply chains and also optimize manufacturing plans as well. Organizations who manage all of these tasks using their ERP systems as the synchronization hub or system are attaining exceptional levels of financial performance as a result. Throughout this analysis these companies will be evaluated on how they are capitalizing on their ERP system as a competitive advantage in turbulent global markets they compete in.

Introduction

Companies are realizing that in order to be more competitive globally they must attack the process inefficiencies that get in the way of their better serving customers first, and then work to increase the performance of internal processes (Chtioui, 2009) from manufacturing and service to supply chains and logistics. ERP systems are being used as a means to streamline these customer-facing and customer-facing processes more than ever before. The reasoning behind this is that massive amounts of data in an ERP system can be selectively applied to selling situations, strategies and opportunities often with positive results. Instead of ERP systems being used purely for internal control process management, they are increasingly being used for creating demand-driven strategies that center on streamlining and making more effective selling and service strategies. The global economic recession of the last three years has clearly changed the mindset of many organizations, making them reorient their entire organizational structure, strategies, systems, processes and people towards meeting and exceeding customer expectations over time (Rothenberger, Srite, 2009). Best practices in ERP performance concentrates on these customer-based strategies and seeks to optimize them from the customers' perspective, therefore earning more loyalty and sales as a result.

Current Situation

The level of competitive intensity in many industries continues to increase exponentially and as a result the traditional strategies used in the past for attracting, selling to and serving customers have become less effective. In place of these strategies that have proven over time to be less effective during recessions, more process-centric strategies, often requiring a high level of internal coordination and synchronization of data, have replaced them (Su, Yang, 2010). An example of this process-centric shift is in the area of how companies manage their quoting and product configuration processes, two critical areas that are tightly integrated to ERP systems and which are also critical for increasing customer profitability. Quoting processes ensure that prospects get the most accurate product configuration for their requirements in addition to accurate pricing and delivery information as well. Once a quote has been accepted the order is scheduled for manufacturing and produced.

This process workflow is the lifeline to new business revenue in many companies, across a wide variety of industries (Chtioui, 2009). At present, even in companies with ERP systems, this process is often manually completed, with little tracking of quoting accuracy or performance. Companies who are attaining best practices in ERP performance however are focusing on how to trim time from the quoting and product configuration processes while increasing accuracy, all focused on winning new customers and business.

Given the wide variation in how companies are going about automating these processes, the intent of this analysis is to evaluate how ERP systems can significantly improve these processes' performance, leading to new sales and higher levels of satisfaction from existing customers. Best practices in ERP performance concentrates on streamlining the quoting and product configuration processes by integrating real-time data from supply chain management (SCM), pricing and revenue management, contract management, manufacturing, and logistics systems. Every quote produced by these companies attaining best practices with their ERP systems reflect reality, or what the company can actually deliver. Companies attaining best practices in these areas are earning the title of trusted advisor as a result. The options for streamlining quoting and product configuration processes as part of a broader ERP-based strategic initiative are discussed in the next section.

Options

Companies whose ERP systems are oriented towards supporting pricing, contract management, supply chain integration and manufacturing scheduling are adept at automating the quoting and product configuration process (Helo, Xu, Kyllonen, Jiao, 2010). Many ERP systems have been purpose-built for financial reporting and analysis and do not scale well to support customer-facing processes. The transition to automate processes vs. reporting and financial analysis is a major one for many ERP systems and the companies relying on them. This becomes a major impediment to their ability to respond quickly to market conditions, especially when relationships with customers and the processes supporting them need to be re-designed to be agile and quick to respond.

As a result of this wide variation in how ERP systems have been designed, the ERP-based quote-to-order process workflow prior to process improvement shown in Figure 1 can take up to 21 days or three weeks to be completed. Please see the bottom of Figure 1, ERP-based Quote-to-Order Process Prior to Process Improvement for the total elapsed time it takes companies to respond to quotes when they choose to do this process manually. Even with an ERP system installed and with the necessary product, market, pricing and contract management data, companies who have not automated this process with their ERP systems quickly fall into a significant competitive disadvantage over time. This condition is exacerbated in industries where product lifecycles are very short and the commodity-like nature of these products makes price and availability the only differentiators over time. All of these external factors, combined with the fact that many ERP systems have not been designed to be more customer-centric, turn this critical process area for future revenue growth into a bottleneck.

Figure 1:

ERP-based quote-to-order process prior to process improvement

Source:

Based on analysis of Helo, Xu, Kyllonen, Jiao, 2010)

Even in those ERP systems implementations where the ERP system integration with Engineering is present as is shown in the left side of Figure 1, companies still struggle to gain the necessary process improvements to stay at competitive parity in their markets. This is the primary catalyst for their decision to completely modify their ERP systems and make them more customer-centric as a result. Despite many ERP systems being designed primarily for financial reporting, the modification of key process areas including document generation, ERP workflow integration, ERP integration to product configuration databases and taxonomies and more as shown in Figure 2 are the most critical process areas that need to be integrated into ERP systems to make the quoting and product configuration process as efficient as possible. The net result of these investments in process improvement through the use of ERP system integration and process reengineering are selected in the turn-around time for a quote of one hour.

Figure 2:

ERP-based Quote to Order Process after Process Improvement

Source:

Based on analysis of Helo, Xu, Kyllonen, Jiao, 2010)

Companies then have the option of manually updating the quote-to-order process, attempting to streamline specific areas of the overall process shown in figure 1 and 2 or attempt to integrate their ERP systems into these processes and accelerate their performance with better information. Best practices in ERP performance is clearly the latter, with many companies choosing to take very potential wasted process or step out of this process. Companies attaining best practices in ERP performance also concentrate on how to streamline this process over time, often concentrating on usability of their quoting and product configuration systems at the dealer, distributor and channel partner levels of the organization.

In conclusion the options available to companies who rely on the quoting and product configuration process to gain additional revenue and also increase customer satisfaction range from the very manual to the highly automated (Helo, Xu, Kyllonen, Jiao, 2010). Best practices focus on this process from the perspective of taking every conceivable wasted step and second out of it so that the company and its distribution partners are as responsive as possible to customers. The essence of best practices in this area concentrates on time-to-value from the customers' standpoint, alleviating bottlenecks potentially caused… READ MORE

How to Reference "ERP Systems Best Practices" Research Paper in a Bibliography

Related Research Papers:

Human Resource Information Systems Essay

Human Resource Information Systems: Wal-Mart

Identify HRM and business technologies that maximize organizational effectiveness, workforce productivity, and systems integration.

Wal-Mart is one of the powerful retail brands in the warehouse… read more

Essay 5 pages (1523 words) Sources: 5 Topic: Management / Organizations

---

ERP Is a Vital Resource to Help Small Businesses Financially Sustain Their Competitive Advantage Thesis

ERP is a Vital Resource to Help Small Businesses Financially Sustain their Competitive Advantage

The rate of failure for ERP implementations in small businesses exceeds those in larger enterprises as… read more

Thesis 16 pages (4357 words) Sources: 10 Topic: Management / Organizations

---

Challenges of Enterprise Resource Planning ERP Implementation Dissertation

ERP Systems

CHALLENGES of ENTERPRISE SOFTWARE IMPLEMENTATIONS

The contributions of Enterprise Resource Planning (ERP) systems continue to be problematic for many organizations globally. Continually challenged across industries to get the… read more

Dissertation 81 pages (22297 words) Sources: 50 Topic: Management / Organizations

---

Sociotechnical System Theory Contributions of Socio-Technical Systems Research Paper

Sociotechnical System Theory

Contributions of Socio-Technical Systems Theory to the Work Environment of the 21st Century

The role of Socio-Technical Systems Theory (STS) continues to be a galvanizing factor in… read more

Research Paper 8 pages (2375 words) Sources: 7 Style: APA Topic: Management / Organizations

---

ERP Systems Bibliography Bendoly, E., Rosenzweig Annotated Bibliography

ERP Systems Bibliography

Bendoly, E., Rosenzweig, E., & Stratman, J.. (2009). The efficient use of enterprise information for strategic advantage: A data envelopment analysis. Journal of Operations Management, 27(4), 310.… read more

Annotated Bibliography 10 pages (2900 words) Sources: 30 Topic: Management / Organizations

---

View 100+ more related papers  >>