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The role of Enterprise Resource Planning
The role of Enterprise Resource Planning Abstract:Confronting the arrival of the information age, standing on furious tides of a high speed development, we seize the information technology as the most important arms to gain us a leading position in the information war. Every enterprise is the economical organization which pursues for interests and benefits normally. Especially, once one organization owns a big structure, its information management would become necessary for the need of development in the information era. In fact, the outcome of one enterprise information management has already been regarded as the key factor to adjust whether or not the undertaking could grow faster and more efficiently than ever. Regarded as the advanced methodology which is complied with a modern management philosophy in the comparative environment, ERP (Enterprise Resource Planning) is considered as the most powerful weapon which can help an enterprise to accomplish the revolution of its development.
Another of those buzzwords that everyone talks of but no one seems to know much about. ERP (Enterprise Resource Planning) is not just about planning your resources more about how the various divisions in your Enterprise function. An ERP solution aims to provide single software which will integrate all the divisions in your organization planning, manufacturing, sales, marketing, finance, HR and yet fulfill each division information and planning needs. (Appssolutions, 2005)
The research mainly answers questions on what ERP is, why it can be important in the sociality nowadays, what kind of position it takes in the enterprise; moreover, which role ERP plays?
Key words: MRPII、ERP、Case Study
What is ERP?
There are various explanations from different people on ERP. Regardless the traditional angle of the functional management, it would reach a common agreement on the perspective of management characters of the Knowledge Economy Era. ERP is the initials of Enterprise Resource Planning. Confronting with the supply chain, It is the tool of management which can utilize information technologies in order to apply for features of the modern information economy era—Clients, Competition and Change; moreover, it can integrate all resources within and outside enterprises. ERP has remarkable features of this information age and re-defines the business processes of the undertaking. In the economic times it uses the new concept of Process to take the place of the bureaucracy management model in the old economic era, in order that it creates the management idea which put customers and staff on the core position.
Thanks for the information technologies; the big amount of enterprises’ data can be shared. Using information to replace the stock, it decreases warehouse’s cost and risk; moreover, by means of computer, these basic data could be searched and analyzed so as to improve the speed and accuracy of decisions. It embodies the idea that can predict and plan in advance, control during the process, and calculate & analyze afterwards. In the knowledge economy times, ERP system emphasizes its Open Resources characters mostly. Therefore, it could increase the employment effectiveness of Human Resources and Time Resources, solve the problem of information overflow, and improve the precision of the decision-making.
An ERP system basic includes:
? Supply chain management
? Customer relations management
? Supplier relate the management
? Product production cycle management
? Commercial intelligence
? Financial control
? Human resources management
? Profession solution
? Motion commerce
? And so on. ( Scott Hamilton,2003,p97)
ERP has been created from the concept developed by Gartner Group which described manufacture business system and material requirement planning (MRP II) ( San Jin,2005 ). It will include client/sever structure, using graphic user interface and applying for opening system design. Besides the standard function set up already, it covers other characters: such as quality, process operation management, and reports adjustment, etc.. Especially, the basic technology adopted by ERP provides users independence both in software and hardwar The role of Enterprise Resource Planninge which could be upgraded more easily than ever (Stedman, C. 2005,p54 p55). The key factor of ERP is that it could tailor to all customers’ requirements and boast for its easy usage.
There are four standard functions of ERP carried by Gartner Group: ( Khalid Sheikh, 2003,p80 )
1. The Strong Integration function which exceeds to the range of MRP II.
It contains the quality control, the laboratory management, the process management, the formulation management, the product data management, the maintenance management, the control report and the stock management.
2. Supporting Hybrid Manufacture Environment & Configuration
It includes either discrete or continuous process making environment, ability to combine service procedures according to the objected-oriented service models and to apply them internationally (Asokan Anandarajan, Cadambi A Srinivasan, Murugan Anandarajan, 2004,p143).
3. Supporting motivated monitoring ability and improving business performance
It covers the adaptation of the controlling and engineering methods, simulation function, decision-making support and graphic ability of production and analysis.
4. Supporting opening C/S computing environment
It embraces c/s architecture, Graphic User Interface (GUI), Computer-Aided Design Engineering (CASE); object-oriented techniques; SQL querying to relational database; internal integration engineering system, business system, electronic data interchange (EDI). ( Wu Hong,2002,p23-33 )
Hence, functions and techniques of ERP system have greatly surpassed the traditional MRPII. It is the enterprise resource planning which is customer-oriented, timing based, opening to the whole supply chain.
Thoughts of ERP system management
The core of ERP system management thoughts is to realize its effective supervision of the entire supply chain. Three parts followed are contributed to this idea:
1. Managing the total supply chain resources. ( Carol A.Ptak, Eli Schragenheim, 2004,p212 )
It would compete ineffectually within the market if one undertaking relies on its own resources alone. They should put all participants, such as supplier, manufactories, distribution network and clients, into a close-linked supply chain in the business process. This enables to arrange efficiently actives of produce, supply and sale; and to meet the requirements of enterprise, ability to utilize all marketing resources of the whole society in order to produce and manage fast and effectively. Moreover, it will help increasing the efficiency, achieving the leading position on the market. Applying ERP system into the management of the entire enterprise’s supply chain is the call from the marketing competition in the knowledge economy era.
2. Lean Production, Synchronous Engineering and Agile Manufacturing
ERP system supports to the management of hybrid manufacture. It is presented as the following two parts:
? The Lean Production (LP). ( Ni Ming,2005 )
It is the enterprise business strategy structure introduced by Massachusetts Institute Technology (MIT). Specifically, it indicates that an enterprise brings clients, sales representatives, suppliers and other collaborative units into production structure. Relationships among the undertaking and its sales representatives, clients and suppliers have not the simple link of Business Transactions but the co-operational partners shared with common interests. Then, this co-operational relationship set up one enterprise supply chain. Therefore, all of these are contributed to the center of the Lean Production.
? Agile Manufacturing Thought
Whenever the market starts to change as well as an enterprise encounters specific market segment, the ordinary cooperation partners would not meet the requirements of new products development sometimes. Consequently, the undertaking will organize one supply chain which structures ‘the virtual facture’, constructed by special supplier and sales channels in a short term or once a time. It regards suppliers and co-operational partners all together as one component in the enterprise. Then it exercises Synchronous Engineering, and manufactures collaboratively in order to launch the new product into the market within the shortest term, and to hold the product in the stage of high quality, variety and flexibility as well. Therefore, what we mentioned above is the core of the Agile Manufacturing Though.
3. Embodying the thoughts of pre-planning and controlling during the process
The planning structure in ERP syste The role of Enterprise Resource Planningm includes: main production planning, material requirement planning,
capability planning, purchasing planning, selling execution planning, interests planning, finance budget and
human resources planning, etc.. Furthermore, all of planning and value controlling functions have already
integrated into the entire supply chain. ( Avraham Shtub ,1999,p239 )
In conclusion, ERP system enables many advanced management thoughts into computer software systems which can be implemented and applied in the reality by the development and adoption of IT techniques in incredible speed.
The relationship between ERP system and an enterprise & ERP’s role in the enterprise.
ERP is based on the advanced and effective management thoughts and methods. It makes use of new management mode to rebuild old one in one enterprise. The relationship between ERP and the enterprise is supplementary to each other.
1.The implementation of ERP system is the revolution of an enterprise from all orientations.
Conductors of an enterprise should be trainees at first. The second comes others who are responsible to carry out and implement. It should be motivated activities for conductors, the leaders’ level and stuff to regulate the management of the undertaking and other relevant sectors. Therefore, it helps modern management consciousness being planted into enterprise and becomes one part of company culture finally.
2.The manage mental level should reach the common sense on the ERP implementation
It is important to notice and exercise fundamental works in the matters of one enterprise management. Applications and software suppliers can not offer any kinds of services on this, only can be obtained by hard-workings of the company itself gradually. The implementation of ERP has been regarded as ‘The Engineering of CEO’, which indicates that the company’s decision maker plays a special role during the implementation stage. ERP is the system on management which leads and supervises the entire enterprise. It would have not been effective if the CEO has not approved and authorized the system.
3.The investment of ERP system is the systematical engineering
Compared with the investment and outcome of capital asserts and equipment, the investment of ERP system could not be redounded soon. The ERP system adoption is the systematical engineering process which needs time to realize benefits step by step. What it carries out is the thought of enterprise management which is the red line of the undertaking management. It acts and creates profits in the long turn; moreover, it can achieve benefits and profits form the result of effective management more and more (Chen Jian, 2002 August 7 ).
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