Management Study

Benefits and Success Factor in ERP Implementation

Written by webpunit

Benefits of ERP

1) Reduction of Lead Time:

Lead time is the time that elapses between placing an order and receiving it. ERP plays a very important role in the inventory control and purchasing process. A lot of problems like missing delivery schedules, losing the customer in the competitive market or losing customer goodwill due to delay in delivery can occur if the item required for production is not available.

2) On-Time Shipment:

As the ERP system is highly flexible in nature, it is possible to change the planning and manufacturing methods according to the needs. For this, there is no need to reconfigure the plant or workplace layouts. The businesses do not have to restrict themselves to a single planning process, such as make-to-order or make-to-stock.

3) Reduction in Cycle Time:

The time that elapses between receiving the order and delivering the product is known as the ‘cycle time’. With the help of the ERP system, it is possible to reduce the cycle time. The system checks whether the item is available as soon as the order is fed into the system. In this case, when the nearest manufacturer does not have the item, then the other nearest warehouse identifies the stock item for the customer.

4) Improved Resource Utilization:

It is possible to carry out detailed and rough-cut capacity planning with the help of the capacity planning features of the ERP module. The resource and capacity planners can also choose the best option by simulating the various resource and capacity utilization scenarios, using the simulation capabilities of the ERP systems. So, an organization is able to bring about a drastic improvement in resources and capacity utilization, with the help of an ERP system.

5) Better Customer Satisfaction:

With the help of various features of ERP systems, it is possible to produce goods using the make-to-order approach. Thus, the time and cost benefits of made-to-order operations can be obtained in a much more flexible manner.

6) Improved Supplier Performance:

It is possible to coordinate and manage the various aspects of the procurement process as there are a lot of tools in the ERP system that facilitates procurement support and vendor management. While assuring the superior quality of the products, the ERP system supports the organization in `monitoring’, ‘negotiating’, ‘controlling procurement schedule’ and ‘costs M an effective way.

7) Increased Flexibility:

One of the key issues that are taken into consideration at the time of formulating the strategic plans of the organization is ‘flexibility’. ERP systems enhance the flexibility of the whole organization by improving manufacturing operations.

8) Decision-Making Capability:

Business decision making is the outcome of the implementation of ERP as it improves the accuracy of information.

Success Factor in ERP

Once all the prerequisites are fulfilled, there are mainly 10 different important success factors which are given below:

1) Strong Leadership provided by an Executive Management Planning Committee:

The manner in which the complete enterprise will be combined supported the different costs which are essential for the implementation, effectively handling the project and demand full integration and cooperation, ERP must be understood by the group. For having a successful execution, there will be the requirement of a highly acknowledged, top-management level project champion to lead and manage the project.

Improvement of the business rather than simply installing the software should be the main objective of ERP implementation. Thus the new technology acquisition must be treated as an ongoing activity encompassing learning and adaptation which will change as time passes. The main focus of implementation should be on business and it must be regulated by the business requirements and opportunities

2) Great Implementation Teams:

The best employees who represent the variety of functions are part of the implementation team. This team is a cross-functional team that includes highly skilled employees from the various departments and the due consideration must be given to the critical decision-making responsibility which is advised by the executive-level input. The main responsibility of these teams the identification, examination, and reconsideration of prevailing business processes. The authority of reengineering the current business process or to come up with the new business.proce the accomplishment of organizational goals most be provided by the top management. • ed to these teams which are also fully supported

3) Mid-Level Management:

The decision-making process must also include mid-level management particularly while deciding on the comprehensive implementation plans. This will m the interest and concerns of each one are considered before making the final decisions. The hands-on responsibility and authority for the comprehensive implementation most be provided to the middle level u management. In fact, regular communication between the end-users and implementers has required different successful implementations. Regular feedback from the employees, the honest responses to questions and assistance in problem resolution must be facilitated to the mid-level managers.

4) Excellent Project Management Techniques:

A disciplined approach towards project management most is adopted by the implementation team which includes well-defined goals, work plan development and developing the resource requirement plan. Different milestones should be created and there should be close monitoring of the process against those milestones. As a lot of time and money can be saved by taking decisions on time, thus all the suitable levels must be empowered with the fast decision malting by the management.

Also Read:- What is ERP

5) Old Systems are Eliminated:

All the employees must work under the new set up rather than working around it. If there is a trust of people in the system, thus it is important that the data must be adequate and accurate. The old system can be dismantled after the successful implementation of a new system. This will have a greater commitment of the organization towards the use of the new system. If the old system is still being used, it will provide excuses for the employees to use the old system and neglect the use of the new one.

6) Proper Measurements:

Before starting the implementation, it is important to have suitable project evaluation measures. If there is no relation between the compensation and system implementation, success is doubtful. There is a greater chance of system failure if the management receives their raisers and bonuses next year despite the non-implementation of the system. The responsibilities must are shared by the management, vendors, the implementation team, and the users. If any employee is not able to fulfill the objective then he/ she must be provided some sort of help or he/she should be replaced. Once the determined objectives are accomplished by the team, the rewards must be given to them. Until the project and system are fully implemented, there must be proper monitoring.

7) Implementation Schedule:

Implementation schedule and a sense of urgency must be developed. This is particularly true when a phased approach is used in the implementation of ERP and thus the momentum will be boosted by the initial success and any kind of resistance to change can be addressed during the remaining part of the implementation. One should neglect scope creep which can slow down the entire process and can increase complications in the implementation and result in the increased budget of ERP. Thus customization of ERP codes should be minimized. The time and efforts required for the implementation can be minimized by having the standardized implementation and thus keeping the implementation as scheduled.

8) Successful Change Management Techniques:

Successful change management methods must be adopted by the implementation team, top management, mid-level managers, and supervisors so that they can identify and target any sort of resistance to change. The employees must be known about the probable advantages of the new system and how they make their jobs easier. More information can be availed with the help of ERP and greater improvements can be imparted as it was expected if there is greater flexibility in the organization to gain the benefits of different opportunities.

9) Extensive Education and Training:

The most vital and widely recognizable critical success factor is education as it is important to have the user understanding and buy-in. A vital level of knowledge is quite important for successful implementation so that problems can be resolved by the people within the system framework. The vital level of knowledge will consist of general education about the ERP system for almost everyone in the organization including top management to the end-user. Extensive training to the end-user is required before and during the implementation phase along with the follow-up training once the implementation is done.

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