Changes in the structure and design of organizations is increasingly frequent. The implementation of versatile work units, where the products are delivered directly to the processes, and not to a raw material warehouse; where the commitment to quality becomes a preponderant factor in the production chain; where systems control orders and regulate production, is where the question makes sense: ERP's really work?
Within the global context, ERP's (Enterprise Resources Planning) have positioned themselves in a key place for large emporiums, which has generated confusion for small and medium-sized companies that want to compete in global markets against transnational titans, the dilemma for this type of companies is if the implementation of a planning system truly offers added value to the client and manages to increase efficiency or only represents a financial burden for companies.
Next, I will explain the advantages and disadvantages of ERP's and how companies perceive their performance after implementing a planning system with the sole purpose of guiding those interested in this type of system about the cost-benefit of implementing software. of this type.
The main advantages offered by ERP's are:
- A complete integration of the different departments of the company (Finance, Sales, Human Resources, Marketing, Accounting). Between 95% and 99% of inventory accuracy. From 25% to 85% increase in inventory turnover. 50% and up to 88% in the reduction of time of the manufacturing cycle. Flexibility in changing orders at different production levels. Greater visibility and control of the company's financial issues, generating increases in profit margins, income and cash flow.
Among the companies that have achieved a successful implementation are:
- Eastman Kodak. The company structured 46 manufacturing sites that function as independent businesses thanks to the use of Fourth Shift (an ERP) which allows a complete integration of the company. Tim Bottoni, director of manufacturing of the company mentioned that the reasons that motivated him to implement this system were the accessibility of use and price.
- Ray Ban Sun Optics India Ltd. This company achieved excellent inventory management, managing to have material requirements on time without the need to store it. All thanks to the use of ERP.
The disadvantages that exist regarding the use of ERP's are:
- Some staff rejection of change. The high cost of software acquisition. Payment to external consultants for installation and training.
Hershey, one of the internationally known companies, lost about 19% of its profits due to a poor implementation of an ERP (SAP). The consequences are disastrous for a company that invests human and financial resources to develop a project of this magnitude and during implementation discovers these types of systems, hinder the normal operation of the company or does not meet the minimum requirements for it to be affordable.
In conclusion, the importance of ERP in companies is crucial for the achievement of organizational goals, but the cost-benefit ratio and the impact of this software on the company must be taken into account before implementing it.
The constant and meticulous evaluation of new alternatives in order to obtain a solid competitive advantage is essential, in the end each organization is different and is determined by the success or failure of an information system is the functionality and acceptance of it in the organization.
Bibliography.
Fogarty Donald: Production and Inventory Management Continental Publishing Company Second Edition.
Cohen Morris Manufacturing Automatio Irwin series First Edition
Sipper Daniel, Bulfin Robert Production Planning and Control Mc Graw Hill First Edition.
Sheikh Khalid Manufacturing Resource planning Mc Graw Hill International Edition.
