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Benefits And Challanges Of Erp Essay

2796 words - 12 pages

Module Title: Logistics

Coursework Title: Enterprise-wide systems and Supply Chain Management

Professor: Fotis Missopoulos Student: Liridon Xhakaliu
Abstract
Most large corporations have adopted some form of ERP system. The purpose of this paper is to understand the benefits and challenges of Enterprise Resource Planning (ERP) systems. These benefits and challenges have a direct impact on the performance of the business. Another crucial thing that has to be well thought-out while implementing the ERP system is how to gain competitive advantage; however, in order to create this competitive advantage companies must ...view middle of the document...

Basically, enterprise systems make it possible for information to flow easily throughout the organization by integrating key business processes of the entire firm into a single software system (Laudon et al., 2006).
The ERP system is an integrated set of programs that provide support for core organizational activities such as: supply, manufacturing, logistics, finance, sales, marketing and human resources (Otieno, 2008). The top five ERP system vendors are SAP, PeopleSoft, Oracle, J.D. Edwards, and Baan. SAP is considered as the leader with more than 50% of the market (Findik, S & Kusakci, A et al 2012). However, nowadays ERP II is regarded as the “next generation” of ERP as it offers several advantages over the traditional ERP. Previously, ERP systems where mostly inadequate to Finance and Administration as they mostly served supply chain, warehousing and logistics functions. Therefore, ERP II increases the capacities of ERP in order to offer solutions for a larger range of industries and sectors (Moller, Ch)

Literature Review
ERP systems are information systems that allow organizations to run in a coordinated pattern that connect all elements of a business. ERP enhances competition advantage through saving resources eliminating redundant data entry as well as enables communication between different structures including hardware and software. An ERP system which is successfully set up can reduce inefficient spending, strengthen sales, reduce inventory turnaround times, increase consumer satisfaction, improve employee productivity as well as forecast. All of these reduce cost (Tandor, A & S. M. Padil., 2012).
Essentially, as Yeh & OuYang, 2010 stated: “For many organizations, implementing ERP means moving from a confederation of loosely coupled systems to a tightly coupled one”. ERP systems create a surrounding which permits, innovation, creativity and the expansion of individual awareness. According to Maguire, et. al. 2010 63% percent of large ERP consumers have approved that ERP implementation brings benefits and success. Various researches were conducted in order to observe the benefits after implementing the ERP system as such: Sharma et al 2007 found out that with the ERP implementation the use of power increases drastically across all levels of managers, in contrary autonomy and delegation declines therefore, the need of knowledgeable employee’s decreases. Moreover, this research also pointed out that standardization went up dramatically after the implementation of ERP whereby the complication of work flow has dropped off radically as well as flexibility of an organization is certainly increased with the implementation of ERP (Sharma, 2007).
Hence, ERP can improve employee satisfaction by removing redundancy and boredom from different activities. Employees can become more involved in decision making which leads to empowerment buy which decisions can be made without the attention of their supervisor. Coca cola for...

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