A comparative study of ERP and SAP-based inventory control in

the manufacturing industry

Background-

ERP and SAP are known as recent market trends that brings enhancement to the existing

operations of manufacturing industry product, quality management, inventory management as

well as cost control. ERP Stands for an Enterprise Resource Planning which is a software that is

used to integrate several functional departments of a business. Systems Applications and Product

(SAP) works as a data processing referred to as SAP, is one of the most popular ERP software

worldwide. ERP SAP offers features like real time processing, integration of functions as well as

better decision making with advanced data analytics (Efendi, and Aditya 2022).

According to study in the manufacturing industry product, quality management,

inventory management as well as cost control are the key challenges which are addressed by the

manufacturing industries across the world (Zhao and Tu 2021). With the increase of global

competition, the struggle of manufacturers increases as the manufacturers struggles to meet the

demand of consumers. According to Ferrari et al., (2021), inventory control stands for a stock

control approach that deals with managing the inventory of the company consisting of the

operations of receiving, purchasing, tracking, warehousing as well as storing the goods. For any

manufacturing industry inventory control plays an important role to maximize profit with

minimum inventory investment that too has less impact on customer satisfaction. Followed by

this determination this is to state that inventory control in manufacturing needs to be practiced

with appropriate strategies to ensure that the industry is obtaining maximum benefits from its
manufacturing operations. In Oman heavy machinery manufacturing for ships and vessels holds

a large market that operates with traditional inventory management and decision making

(Husain, Javed and Araimi 2021). Further studies have presented that ERP implementation in the

field manufacturing industry has become one of the trending solutions which help the

manufacturer to improve their performance by eliminating the operating cost as well as ensuring

the enhancement to a streamlined process (Azizah, Puspitasari and Saputra 2020). Based on this

determination this is stated that a competitive study to investigate the implementation of ERP

and SAP-based inventory control in the manufacturing industry will bring deeper knowledge on

SAP ERP implementation on inventory control as well as identification of strategies to mitigate

SAP for enhancing the ERP products.

Problem Statement-

Heavy Machinery Manufacturing industries for vessels and ships in Oman with large

inventories drive the maximum amount of profit and customer satisfaction with excel inventory

management. As stated in the above section in a manufacturing industry inventory plays an

important role in the application of enterprise resource planning inventory management is a

trending solution that allows the manufacturing industry to manage every aspect of the

manufacturing operation including inventory, procurement, planning, logistics, and operations

(Sebayang, Tarigan and Panjaitan 2021). Implementation of an effective ERP-enabled inventory

management system offers real-time inventory data to the manufacturing unit which is important

for the unit to expand and comparatively less complex workflow with supply chain and process

automation approaches. Further studies have presented that as compared to the conventional

inventory control process the implementation of enterprise resource planning enabled inventory

management system has competencies to improve organizational performance (Macas et al.,

operations whereas in the enterprise resource planning enabled inventory management system

the activities are performed under the concept of process automation which increases the

accuracy of the production system alongside ensuring effective inventory control for the

manufacturing industry that helps the industry to obtain maximum benefits from its available

resources. Based on this determination this is to state that the issues associated with conventional

inventory control have influenced the implementation of ERP-enabled inventory control system

implementation in inventory control for the manufacturing industry (Efendi and Aditya 2022).

The conventional inventory control is a complex process and lacks efficiency thus, process

optimization is required using technology implementation. Further analysis is presented that in

traditional inventory management, there are multiple challenges which include insufficient

visibility of demand, isolated supply chain operations, and inadequate forecast demand which

results in loss of competitive advantage as well as incompetency to make effective decisions.

Hence the above analysis is to state that to improve the inventory control operations for the

manufacturing industry it is essential to implement SAP ERP-enabled inventory control system

that brings enhancement to the inventory control operations and eventually results in improving

the manufacturing productivity with a better decision.

Purpose-

Followed by determining the fact that in the manufacturing industry product, quality

management, inventory management as well as cost control are the key challenges which are

addressed by the manufacturing industries across the world. For any manufacturing industry

inventory control plays an important role to maximize profit with minimum inventory investment

that too has less impact on customer satisfaction. ERP implementation in the field manufacturing
industry has become one of the trending solutions which help the manufacturer to improve their

performance by eliminating the operating cost as well as ensuring the enhancement to a

streamlined process (Muchaendepi et al., 2019). This research thus focuses on determining the

impact of SAP ERP for inventory control and its operations, the difference in efficiency level on

conventional inventory control and advanced SAP ERP, SAP ERP for inventory control for

efficient material flow, as well as the strategies for mitigation to SAP SE company for further

bettering their ERP products.

Research Question-

Following research questions will be answered in this research: -

 What is the impact of SAP ERP for inventory control and how it operates?

 What is the difference in efficiency level on conventional inventory control and advanced

SAP ERP?

 How operating SAP ERP for inventory control for efficient material flow?

 What are the strategies for mitigation to SAP SE company for further bettering their ERP

products?

Research Aim and Objective-

The aim of this research is to justify the implementation of advanced SAP ERP skill for

efficient and accurate inventory control in the manufacturing industry.

Followings are the objectives that will be addressed throughout the research process: -

 To explore the impact of SAP ERP for inventory control and how it operates.

 To identify the difference in efficiency level on conventional inventory control and

advanced SAP ERP.

 To justify operating SAP ERP for inventory control for efficient material flow.
  To make possible mitigation to SAP SE company for further bettering their ERP

products.

Significance of research-

Manufacturing industries with large inventories drive the maximum amount of profit and

customer satisfaction with excel inventory management. Enterprise resource planning (ERP)

inventory management is a trending solution that allows the manufacturing industry to manage

every aspect of the manufacturing operation including inventory, procurement, planning,

logistics, and operations (Li et al., 2019). In traditional inventory management, each activity has

higher dependence on manual operations whereas in the enterprise resource planning enabled

inventory management system the activities are performed under the concept of process

automation which increases the accuracy of the production system alongside ensuring effective

inventory control for the manufacturing industry that helps the industry to obtain maximum

benefits from its available resources. However, there are multiple researches performed on the

application of ERP in organization a lack of research on manufacturing industry is determined

(Sebayang, Tarigan and Panjaitan 2021). Thus, the completion of this research will help to

determine the impact of SAP ERP for inventory control and its operations, the difference in

efficiency level on conventional inventory control and advanced SAP ERP, SAP ERP for

inventory control for efficient material flow, as well as the strategies for mitigation to SAP SE

company for further bettering their ERP products.

Outline-

This research paper consists of 5 distinct chapters including the Literature Review,

Methodology, Data Analysis, Results & Discussion as well as Discussion & Conclusion chapter

to determine the impact of SAP ERP for inventory control and its operations, the difference in
efficiency level on conventional inventory control and advanced SAP ERP, SAP ERP for

inventory control for efficient material flow, as well as the strategies for mitigation to SAP SE

company for further bettering their ERP products.

Chapter 2: Literature Review

Introduction-

This chapter aims at presenting a literature study on the selected research domain. The

purpose of a literature review is to gather evidence relevant to the research topic and synthesize

the evidence into a cohesive summary of the existing knowledge in the selected field. Successful

completion of the literature review offers wider clarity and focus on the research challenges,

improves the research methodology, increases the knowledge regarding the research topic as

well as develops findings. This research focuses on conducting a comparative study of ERP and

SAP-based inventory control in the manufacturing industry hence the literature review is

covering a literature study on the importance of inventory control in the manufacturing industry,

analysis of the impact of SAP ERP for inventory control, analyses the difference between

conventional inventory control and advanced SAP ERP. In addition to the above, it brings deeper

knowledge to SAP ERP for inventory control for efficient material flow. Lastly, a literature gap

is provided presenting the gap in recent research and the need to conduct the proposed research.

Importance of inventory control in Manufacturing Industry -

Inventory control refers to stock control which is a process of ensuring that the right

amount of supply is available in the organization. Inventory control is applied in an organization

with appropriate internal and production controls where the practice is ensured that the company

can address consumer requirements alongside maintaining financial elasticity. According to

on purchases, shipping, reorders, storage, warehousing, customer satisfaction as well as turnover

(Anagnostou 2021). By analysing the above-collected data inventory control enables the

capability for the organization to maximize the profit with their existing investment stock

without harming consumer satisfaction. In Oman, heavy machinery manufacturing for ships and

vessels holds a large market that operates with traditional inventory management and decision-

making. From studies, it is determined that Oman is an industry-rich country that has multiple

industries including fisheries, tourism, mining, manufacturing as well as technology services.

The government of Oman encourages foreign direct investment and it has used the proceeds

from the oil and gas to build the infrastructure and human resources of the country which has

majorly influences the growth of the manufacturing industry in Oman (Amann et al., 2021).

According to the author in this rapidly changing business environment, data has become an

important factor for the manufacturing industry and it is considered an asset for modern business

(Teerasoponpong and Sopadang 2022). Although the use of inappropriate tools can significantly

ruin the usability and value of business data. As stated in the above section inventory control is

termed stock control, which is a process of ensuring the right quantity of supply is there in an

organization. The manufacturing industry and companies worldwide have adopted inventory

control to meet consumer demand and offer financial flexibility. The author has highlighted that

the progressing growth of data warehousing and system implementation in an organization is

offering better decision-making as well as empowering the business to measure the existing gap

present in it. From the findings of another study, it is determined that with appropriate utilization

of data, the integration of inventory control in manufacturing industries is producing more

products, protecting the cost of warehousing, eliminating unnecessary wastage, and increasing
the communication and internal understanding of facts within the business infrastructure (Bialas,

Revanoglou and Manthou 2020). Apart from this, the implementation of appropriate inventory

control in the manufacturing industry has the potential to boost the performance efficiency of the

manufacturing firm by empowering the firm to address the expectations of its consumers.

Another author has highlighted the fact that the integration of an inventory control system within

a manufacturing industry guides to improve product quality standards with improved data

analytics and demand prediction (Shah 2021). Hence, from the above analysis it can be stated

that in a manufacturing industry inventory control plays an important role by offering process

optimization, performance enhancement, elimination of wastage as well as improvement in

product quality.

Impact of SAP ERP for inventory control-

SAP ERP refers to enterprise resource planning software that is developed by the company SAP

SE. Enterprise resource planning (ERP), software is a modular software build to integrate the

primary functions of the core business processes of an organization into a unified system.

According to the study, SAP helps supervise the flow of materials and goods in the warehouse.

This process starts with handling the receiving of materials to prevent overstocking (Nwankwo

2023). In addition, SAP emphasizes the shift and transportation of records and their amount.

There are multiple benefits that can be obtained from the application of SAP ERP that is

discussed in the section below: -

Material Receipts, issue, and movement-

Studies have highlighted that SAP helps to handle the material and product flow in the

warehouse. Handling of products in a warehouse consists of multiple activities including goods

receipt, goods allocation, and internal movement. From the findings of the research, it is
observed that in supply material handling goods receipt can be from the supplier end then the

company issues the product to customers and later on the goods are moved from one location to

another location according to the requirement of purchase request and customer demand. With

the aim to optimize inventory management and automate the stock handling process enterprise

resource planning software by SAP has the potential to maintain the optimal level of inventory

by integrating the inventory requirement of customers, suppliers, and staff (Elbahri et al., 2019).

Supports integrated business-

Further studies have highlighted that the integration of enterprise resource planning software

within an organization supports the organization to operate with integrated business processes

inside the company by improving capital planning as well as executing organizational strategies

for better decision-making. In addition to this, it is identified that the integration of enterprise

resource planning software encourages an organization to extend the business network to the

wider domain by expanding the services and products offered by the company to reach more

customers, partners, and suppliers (Menon 2019).

Sourcing and Procurement-

This is one of the functional areas of enterprise resource planning software offered by SAP.

According to the study sourcing and procurement is a visible key factor to identify accurate

Meeks of suppliers with the aim to eliminate supply chain management challenges. The

automated sourcing and procurement facility offered by SAP ERP empowers an organization to

streamline its process by delivering real-time insight regarding organizational expenses,

suppliers as well as market information. Furthermore, it is determined that the sourcing and

procurement facility offered by ERP refers to a centralized purchasing of goods with greater

flexibility and visibility across the organization (Menon 2019). This is a machine learning-based
analytical approach that aims at offering accurate demand prediction. In addition, the real-time

insight to enhance supplier negotiation as well as material management along with offering

automated payables machines helps an organization to improve its sourcing and recruitment

activities.

Manufacturing-

Manufacturing is an important aspect that is one of the influencing factors of a successful

operations and its business improvement. Manufacturing a product within a given time following

the standard quality helps an organization to address product demand efficiently and profitably.

The incorporation of an effective system to optimize the manufacturing operation has the

potential to improve the overall business performance and decision-making of the manufacturing

corporation (Menon 2019). According to research the manufacturing facilities offered by

enterprise resource planning encourages the delivery of real-time data access and insight across

the operations of manufacturing, effective collaboration amongst engineering, design as well as

production team, and production at a personalized scale with minimum human intervention is

also a beneficial aspect of manufacturing facility offered by SAP ERP (Akram, Zulqarnain and

Akram 2019).

Supply chain-

SAP ERP offers optimized supply chain management with high quality, agility, and visibility to

the supply chain management operations (Savchuk and Kirsta 2019). According to research the

integration of SAP ERP within a business infrastructure offers visibility to sales, procurement,

and stock transport to guide an organization regarding their supply planning and scheduling of

goods in transit (Poschadel 2019). In addition, the feature of SAP ERP offers live inventory

management with compliance and transparent material flow. Further studies have presented that
warehouse management is an important element in supply chain management operation which is

optimized by the supply chain feature offered by SAP ERP in terms of labour and process. Apart

from the above-mentioned Features improvement of supply chain management required

optimization of inventory management which is also offered by SAP ERP. The software aims at

optimizing the tracking and control of inventory and stock quantities to offer streamlined

material flow across outbound and inbound logistics operations with the aim to predict the

delivery dates as well as monitor the inventory operations in real time.

Asset Management-

Asset management is one of the features offered by SAP ERP. According to research holistic

maintenance management directed from demand processing to planning and execution requires

automation and real-time tracking to obtain maximum benefits from these services. While

evaluating the features offered by SAP ERP it is observed that the software offers smart

maintenance of scheduling and resource allocation along with real-time analytics to maintain the

breakdown rates, expenses, and damages (Subramanian 2022). In addition, it offers asset

performance monitoring with the aim to identify challenges and respond accordingly.

Furthermore, comprehensive health and safety management and environment management are

the two major features offered by the asset management facility of ERP by SAP.

Service-

For any organization incorporating manufacturing, supply chain, procurement, and delivery

operations service management plays an important role in delivering products seamlessly with a

personalized sales experience. To address this objective SAP ERP offers end-to-end commercial

service management that fulfils the billing and finance operations. In addition, it also offers data

tracking, visualization, and interaction. Further analysis has presented that to deliver a profitable
service outcomes analysis of customer master data, commercial agreements, service history as

well as maintenance plans helps to make every service transparent (Lestari, Kurniawan and

Usino 2019).

Difference between conventional inventory control and advanced SAP ERP-

Traditional inventory management refers to a manual process of handling the inventory and

supply chain operations of an organization. Inventory management aims at reducing the storage

cost as well as accomplishing the best capital investment whereas traditional inventory

management fails to predict and make a better decision to address these objectives. Traditional

inventory management is more focused on improving the forecasting continuously however due

to a lack of technology and data support the results are not accurate and efficient. According to

the study, there are multiple challenges with traditional inventory management including

insufficient visibility of demand, the existence of an isolated supply chain as well as the inability

to accurately forecast the demand which causes a loss of competitiveness and the inability to

make the right decision (Fang and Chen 2022). Whereas advanced inventory control and

management system offered by SAP includes ERP software which is known for its data analytics

and integrated operations to optimize the inventory management of an organization (Colvin and

Carmona 2020). The implementation of advanced inventory control and management software

has resulted in improving the efficiency of inventory control, elimination of manual processes,

improvement of customer satisfaction as well as resource-saving, and waste elimination.

According to the study as compared to traditional inventory management system advanced

technologies such as ERP and RFID system has the potential to enhance the utilization and

operating performance of an organization in terms of inventory control and product promotion

(Anagnostou 2021). It is further identified from the research that enhancement of product
replenishment is the result of adopting advanced inventory management which works by

analysing historical data from the inventory of the product. Followed by comparing the

traditional system with advanced inventory management assistance it is identified that the

traditional system focuses on market forecast whereas the advanced inventory management

system aims at real-time data forecasting for product promotion. Traditional inventory

management system consists of human power to perform activities like goods speaking whereas

the advanced inventory management and control approach is automated and is supported by the

automatic electronic system (Teerasoponpong and Sopadang 2022). Alongside the above

implementation of advanced inventory management systems such as SAP ERP and RFID

systems Reduces the inventory management cost as compared to traditional inventory control

and management operations. Manufacturing industries with large inventories drive the maximum

amount of profit and customer satisfaction with excel inventory management. Enterprise

resource planning (ERP) inventory management is a trending solution that allows the

manufacturing industry to manage every aspect of the manufacturing operation including

inventory, procurement, planning, logistics, and operations (Nwankwo 2023). In traditional

inventory management, each activity has higher dependence on manual operations whereas in

the enterprise resource planning enabled inventory management system the activities are

performed under the concept of process automation which increases the accuracy of the

production system alongside ensuring effective inventory control for the manufacturing industry

that helps the industry to obtain maximum benefits from its available resources. However, there

are multiple researches performed on the application of ERP in organization a lack of research

on manufacturing industry is determined. Heavy Machinery manufacturing industry for vessels

and ships in Oman with large inventories drive the maximum amount of profit and customer
satisfaction with excel inventory management. Implementation of an effective ERP-enabled

inventory management system offers real-time inventory data to the manufacturing unit which is

important for the unit to expand and comparatively less complex workflow with supply chain

and process automation approaches. In traditional inventory management, each activity has

higher dependence on manual operations whereas in the enterprise resource planning enabled

inventory management system the activities are performed under the concept of process

automation which increases the accuracy of the production system alongside ensuring effective

inventory control for the manufacturing industry that helps the industry to obtain maximum

benefits from its available resources.

Further analysis is presented that in traditional inventory management, there are multiple

challenges which include insufficient visibility of demand, isolated supply chain operations, and

inadequate forecast demand which results in loss of competitive advantage as well as

incompetency to make effective decisions (Elbahri et al., 2019). Hence the above analysis is to

state that to improve the inventory control operations for the manufacturing industry it is

essential to implement SAP ERP-enabled inventory control system that brings enhancement to

the inventory control operations and eventually results in improving the manufacturing

productivity with a better decision. in the manufacturing industry product, quality management,

inventory management as well as cost control are the key challenges which are addressed by the

manufacturing industries across the world. With the increase of global competition, the struggle

of manufacturers increases as the manufacturers struggles to meet the demand of consumers. For

any manufacturing industry inventory control plays an important role to maximize profit with

minimum inventory investment that too has less impact on customer satisfaction (Menon 2019).

Followed by this determination this is to state that inventory control in manufacturing needs to
be practiced with appropriate strategies to ensure that the industry is obtaining maximum

benefits from its manufacturing operations. In Oman heavy machinery manufacturing for ships

and vessels holds a large market that operates with traditional inventory management and

decision making. ERP implementation in the field manufacturing industry has become one of the

trending solutions which help the manufacturer to improve their performance by eliminating the

operating cost as well as ensuring the enhancement to a streamlined process. In traditional

inventory management, each activity has higher dependence on manual operations whereas in

the enterprise resource planning enabled inventory management system the activities are

performed under the concept of process automation which increases the accuracy of the

production system alongside ensuring effective inventory control for the manufacturing industry

that helps the industry to obtain maximum benefits from its available resources (Poschadel

2019).

Thus, the completion of this research will help to determine the impact of SAP ERP for

inventory control and its operations, the difference in efficiency level on conventional inventory

control and advanced SAP ERP, SAP ERP for inventory control for efficient material flow, as

well as the strategies for mitigation to SAP SE company for further bettering their ERP products.

SAP ERP for inventory control for efficient material flow-600 Words

Literature Gap-

Conclusion- 400
 Chapter 3: Methodology 2000 Words

Chapter 4: Results and Findings 3000 Words

Chapter 5: Discussion and Conclusion 1000 Words

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