Prior to discussing the implementation of Enterprise Resource Planning in any particular company, it is of the crucial importance for us to analyze the so-called systems theory, which lays the foundations of ERP. Overall, such approach is based on the belief that any complex structure can be subdivided into smaller units or parts. This rule can be easily applied to enterprises because to a certain degree, they also represent such structure. In addition to that, such approach facilitates problem-solving and decision making techniques, because any problem can surmounted it is broken into smaller parts (Djaferis. 2000).
Overall, any ERP system is aimed at controlling or monitoring the resources, which the company has in its position. However, its main purpose is to coordinate the work of various departments in order to increase the productivity of the company. Apart from that, ERP involves the creation of a database, which stores information about the company’s products, services, clients, employees, suppliers departments etc (Monk, 2008). In this regard, it should be pointed out that in case this data should be damaged, the functioning of the company may be completely paralyzed.
Before implementing ERP system, it is necessary to clearly define organizational goals and strategies. For this task, SWOT (Strengths, Weakness, Opportunities and Treats) analysis may be very useful because it enables the management to identity major external and internal factors which may boost or hinder functioning of the company.
As regard the advantages of ERP system, it is quite possible for us to say that it allows covering nearly every aspect of the company’s structure. With its help, the management is able to maintain the flow of information between the departments, which in its turn increases productivity. Besides, ERP systems provide clear and concise information about the clients, suppliers, employees. The integral approach facilitates decision-making process; it enables to track the company’s expenses and benefits (Hossain).
Yet, it should be borne in mind that any ERP systems may have certain drawbacks. First, it should be pointed out that it is susceptible to external and internal attacks. It is supposed that ERP system stores information only in one location, thus, these data can be damaged or even stolen, which, naturally, poses grave threat to the company. Moreover, very often, such software may be very complicated, and every inaccuracy may result in financial delay and subsequent financial loss.
Probably, it would be better for us to draw some examples, illustrating the implementation of ERP system in a certain enterprise. We may focus on shipbuilding Company such as for instance, Goa Shipyard Limited, which occupies the forefront in this field. First, it should be noted that in any shipbuilding company, the success of any projects depends on efficient coordination between the departments. In this case, we may mark out the following ones: design or drafting departments, manufacturing facilities, assembling departments, customer service etc. The main peculiarity of shipbuilding industry is that departments cannot function independently; any failure or delay may eventually bring the process to a standstill, which is certainly impermissible. This is the main reason why the management of Goa Shipyard Limited attached primary importance departmentalization. ERP system proved to be very effective in maintain flow of information between production units, which eventually enabled them to complete several important projects by the deadline.
Moreover, any shipbuilding company is dependant on it suppliers, who provide it with hard and soft ware. The main problem is that a shipyard cannot operate only within its boundaries, some production processes has to be outsourced. Goa Shipyard placed special emphasis on effective coordination with its suppliers. The ERP system allowed to maintain constant contract with other companies, participating in the process.
However, one of the most important parts of such system as a shipbuilding company is the client or customer, who should be always kept informed about the progress. Additionally, the designing is always a two-sided process, requiring constant collaboration between the manufacture and the client, because certain alterations or amendments may be proposed and any misunderstanding or misinterpretation may lead to delay or even complete failure. ERP system allowed enabled to establish productive relationships between the management and the client. Certainly, there are many other examples, but it seems to be the most eloquent one. However, if the structure of the company had been more complicated ERP system might have been less successful (Arena, 2004).
Therefore, it is quite possible for us to arrive at the conclusion that the implementation enterprise resource system can be quite successful on condition that the management takes into not only internal but external factors as well, particular suppliers and customers. The case, which we have analyzed, proves that, it is necessary to establish effective flow of information not only within the company but beyond its boundaries. Overall, ERP may significantly boost the company’s growth and development, on the condition that it is wielded accurately. Finally, the management has to identify, which parts of the system are the most important ones.
Daniel Edmund O’Leary (2000). “Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk”. Cambridge University Press.
Ellen F. Monk, Bret J. Wagner (2008). Concepts in Enterprise Resource Planning. Cengage Learning EMEA.
Liaquat Hossain, Jon David Patrick, Mohammad A. Rashid (2002). Enterprise Resource Planning: Global Opportunities and Challenges. IGI.
Mark V. Arena, John Birkler, John F. Schank (2004). “Monitoring the Progress of Shipbuilding Programmes: How Can the Defence Procurement Agency More Accurately Monitor Progress?” Rand Corporation.
Theodore Euclid Djaferis, Irvin C. Schick (2000). System Theory: Modeling, Analysis, and Control. Springer.