Running head: Enterprise resource planning 1

Impact of ERP systems on business process agility

Venkata Satya Prakash, Goli (605916)

Srikanth Reddy, Guntaka (605694)

Tharuni, Karabaktula (605310)

Jagruthi, Gundeti (604119)

Prakruti, Gautam (605343)

Murali Sai, Kalakoti (605625)

Paresh, Kakade (609701)

Mayur Yadav, Golla (607628)

Abhinav Kumar Vuppala (605777)

Introduction

Enterprise resource planning (ERP) is considered crucial in any supply chain

management process as it takes care of each aspect required in the supply of goods and services.

Supply chain management (SCM) involves planning, execution, control, and monitoring of

supply activities. ERP generally plays a vital role in the physical and marketing aspects of

supply. Physical aspects involve transportation and storage, and the marketing aspects include

typically taking care of demand and supply to meet customers' needs. ERP helps an organization

to interact with various suppliers present in the market (Andrianto, 2019).

The ERP systems generally function as a medium between the suppliers and the end

consumers. It optimizes the business processes to streamline the business model, which involves

accepting the raw materials or goods from the supplier and storing them in the warehouses,

thereby transferring processed goods to the end customer. ERP System has various functional

modules that help in different business functions. The essential ERP function is data integration

into the subsystems operating at multiple levels of the organization. It integrates data from third-

party systems and processes them into a meaningful pattern from all organization departments

(Madanhire & Mbohwa, 2016). There are many benefits when we consider implementing ERP

systems in an organization. It includes ease of tracking resources, reliability, generating

insightful reports, handling various supplies, transparency, etc. To perform effectively in supply

chain management, any organization has to ensure that the logistics are performing well.

When organizations accommodate many distinct corporate knowledge structures, they are

typically subject to vast volumes of combined non-standard information that cannot transmit due

to their heterogeneous formats in various divisions, activities, and business processes within the

enterprise. It also adds to the monitoring and decision-making problems of administrators due to
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a lack of available knowledge. Multiple organizations use ERP systems to connect information

from different organizational units to promote timely and on-time delivery, increase customer

loyalty, and minimize costs (Oghazi, Rad, Karlsson, & Haftor, 2018).

Each module in the ERP coincides with a particular organization. ERP's enabling

businesses, underlining processes, and protocols to simplify routine activities. If used right, SCM

can get expanded by the integration of ERPs. The companies that have built a sufficient market

architecture leveraging the ERP tools are in the best position to prosper. ERPs help picks up the

pace during the output of the supply chain (Essila, 2018). Data from various parts then connect

between these modules. The management must obtain a more in-depth viewpoint on the

business's activities and make real-time, more rational decisions. Today companies are becoming

more dynamic, and it's essential to use ERP software to increase productivity. It can help an

organization improving the workflow and the performance of the employees. Business processes

and activities are efficient, giving organization and ability to work together and direct access to

all the most recent data accesses and updates (Sheik & Sulphey, 2020).

ERP architecture will automate operations, leading to higher performance and lower

business costs. However, companies must revisit their procedures before using ERP systems

since introducing an existing, outdated protocol ensures that the system is continually

consolidated and implemented and cannot be changed or updated until it is automated (Oghazi et

al., 2018). With ERP programs rapidly increasing, including medium-sized firms, a company will

improve its market efficiency with a range of day-to-day operations. The day-to-day operations

include supply chain management, shipment, receipt management, inventory management,

customer research and purchasing, project preparation, human resources management, recruiting,

procurement, and pay administration (Hitt, Wu, & Zhou, 2002).

Role of ERP tool in optimizing the organization’s efficiency

ERP suite brings several possible changes in the manual system with automation at its

doorstep as an advantage. It brings credible information about sources and activities happening

in and around the system so that managers can take accurate decisions in real-time and

implement them for further repercussions. However, to work with this software, one had to

integrate it in the best adaptation with its systems and processes. Most entrepreneurs judge

the ERP implementation by its cost (both initial investment and maintenance cost), return, and

time to value. One needs to consider some essential factors for successful implementation (Feng

& Sean, 2015).

Prioritize Requirements

As a core implementation, ERP manages all the operations. The employees must have a

keen knowledge of their requirements and the need to implement the suite. When all the

requirements are listed, one can prioritize the highest importance areas to keep an eye on it all

the time in every business operation (Feng & Sean, 2015).

Continuous Improvement

When loading new data, all equivalent entries or related records are updated to replicate

the workplace's latest information, enhancing business workflows and employee performance. In

that case, that will give all employees the capability to access information and improve

knowledge about different work processes and procedures to preserve the standards. ERP can

help the organization with continuous improvement by analyzing data. It will help reduce waste

and increase the organization's profits (Madanhire & Mbonhwa, 2016).

Training
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As the technology is new, many of the employees may not be aware of the process of

ERP. Or they may be working in other departments. In any case, the management must ensure

that proper training is given to its employees to understand the ERP suite's importance and its

advantages in the coming future.

Establish KPI

Key performance indicators are the ones that tell the company how effectively they are

achieving key business objectives according to the plan. It also lists the profits and the

improvements needed for better results. All the company personnel must quickly adapt to their

new roles and measure its performance after its implementation, checking the ROI.

Cost Control

ERP tools can help you control costs and walk similar to the current or upcoming projects

and benefit the Project team's effectiveness. An ERP system would cover all of the essential data

regarding a particular project. It also helps to incorporate this data with clear goals enclosed to a

specific date. Cost control will help the organization invest more in other resources to benefit the

organization (Madanhire & Mbonhwa, 2016).

Customer satisfaction

ERP will improve customer satisfaction with improved customer service tools like the

Customer Relation Management (CRM) tool to maintain workflow that includes the production,

services, and inventory. This tool will help to track the business flows from one department to

another department. ERP tools will help determine the flaws and feedback with reports on how

efficiency can be improved (Madanhire & Mbonhwa, 2016).

Data Migration
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Migrating data to a new spot or space creates difficulties in the transferring process. As it

is a vital asset to the firm, one should be careful of the movement as hackers may attack them in

the processor involved in human errors. To avoid any data loss, one has to migrate it before

implementation and then test it.

Get Everyone on the Same Page

The most important part of the implementation process is that all the officials, managers,

and employees must be on the same page of boardroom level to the daily user level to work for

the exact cause (Jose & Joan, 2001).

The combination of ERP efficiency and operationally efficient markets helps improve the

overall efficiency of different investment portfolios. Several factors have influenced the funds'

expense ratio, such as transaction costs, management fees, and administrative expenses. ERP

excellence helps reduce the risk by enabling different features to manage its chances (Jose &

Joan, 2001). The industries have become flexible with using various ERP tools that can help

them achieve their goals. More, ERP vendors have become more aware of the social media

platforms and can integrate with social media by making appropriate changes in the interface

(Sheik & Sulphey, 2020).

Typical functional areas served by ERP

Implementing ERP solutions is different for different industries and organizations, and

even within an organization, the effect varies over time. During the ERP implementation, the

organization's top management must use a strategic approach to facilitate cooperative and cross-

functional business perspectives and communicate the same across all its functional areas (Gupta

& Kohli, 2006).

Product Development:
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The process of developing a product based on customer demand, new technology

requirements, or inter-functional development is called product development. ERP systems

incorporate SAP solution that integrates all new product design departments from acquiring the

customer requirements/demands, product development, and releasing the product for

production.

The SAP solution facilitates synchronization between the production department and the

product development team, which prevents the organization from producing products that are not

feasible or expensive or unable to reach the final development stage (Gupta & Kohli, 2006).

Customer Relations Management:

Today's markets are highly competitive, with a flood of new products developed and sold

every second. To compete in such an environment, the company's most essential and only asset

appreciating over time is a loyal customer base. Focusing on effectively measuring and

managing relationships with customers can achieve customer retention. The ERP systems use

customer relationship management (CRM) modules to quickly and effectively provide accurate

information and facilitate a culture where employees can efficiently and effectively

communicate.

Quality Management:

Quality management is a crucial phase for a product's success in the market. In general,

ERP systems cannot replace quality management, but it has a lot of features that companies can

utilize to mitigate quality issues. The ERP systems can assess the quality of the resources

purchased, determine the source and application of defective material, evaluate the shortage of

resources, and manage wrong production scheduling. A low rate can result in additional financial
Enterprise resource planning 8

costs due to rework, scrap, investigation costs, and warranty costs, affecting customer

satisfaction and retention (Gupta & Kohli, 2006).

Human Resource Management:

Human resource management facilitates long-term management of employees, payroll,

training, and career advancement. ERP includes human resource modules that include tools and

dashboards that help collect, store, and assess practice, hiring, payroll, perks, 401(k), and

retirement. The HR management can utilize ERP modules to monitor and evaluate individual

employees or departments' performance and KPI's. Integration of Human resource management

with production and accounting will increase resource management efficiency in an organization.

Using the ERP module, companies can define their organization structure, which improves

efficient planning, staff expenses, and administration. ERP incorporates archived information

into other departments within the organization, such as perks management and accounting,

enabling efficient strategy for planning and management across all functional areas.

Production and Procurement logistics:

The process of product planning, execution, and performance management is called

production logistics. With ERP systems, the information can be shared across multiple

departments, increasing forecasting and production planning effectiveness minimizing

unexpected overtimes. It is easy to modify the production schedules using the ERP modules. The

procurement of raw materials from the suppliers and its flow through different organization

departments is called procurement logistics (Gupta & Kohli, 2006). ERP systems can generate

automatic purchase orders for a preferred vendor once the purchasing manager approves it. ERP

systems transmit the purchase orders electronically, thus eliminating the costs for mailing and

improving the process's speed and accuracy.

Marketing and Sales:

The sales and marketing departments are responsible for monitoring and analyzing the

customers' experience from presale functionalities to delivering the final product. The companies

can utilize ERP systems to automate monitoring and managing information related to customer

calls, financial costs, shipping, billing, forecasting, and analyzing the competition. The managers

or partners can use the ERP systems to analyze and assess employees' individual goals for the

sales and marketing teams.

Manufacturing and Supply chain management:

Supply chain management functions such as product purchase and configuration, product

delivery schedules, product inspections, order processing, product distribution, warehousing,

etc., can be performed using the ERP modules. The ERP modules can manage tasks like product

engineering, capacity planning, quality management, and product life management for

manufacturing (Oghazi et al., 2018).

Accounting:

ERP systems provide organizations with automation tools related to cost budgeting and

management, feed real-time performance data, and ensure compliance with financial

regulations.

Role of the ERP system within Supply Chain Management

Supply chain management helps the organization to process goods and services.

Automation allows the organization to avoid other risks associated with it. ERP systems have

different modules that support the various features of supply chain management, such as Product

configuration, Goods scheduling, and Goods storage (Slaman & Haddara, 2019).
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The accounting sector is the pillar of any organization and, managing it needs a lot of

intricate processes. ERP applications provide the modern-day solution to automate the financial

area and streaming it with all the essential functions are of the financial sector. ERP system

provides an integrated interface that can integrate with different areas of supply chain

management. This process can increase the transparency and productivity of the financial

department (Grant, 2003). Some of the significant domains include Accounts receivable or

payable, Ledger, Payroll, and Reporting.

The above route demonstrates the resource flow from upstream to downstream network

members. In this scenario, the commodity follows the way from the network's downstream side

to the upstream after the final output hits the customer. The materials, information, and funding

movement between the supply chain parties can carry out in both directions. An internal

information integration organization aims to link the various departments' different processes to a

standard central information system, to standardize the shared information to clarify all

organizational divisions. ERP systems allow the organization to combine packages stored in

different units in such a manner. ERP systems promote the standardization of records to use

multiple business unit documentation (Oghazi et al., 2018).

Chain Management of Goods and Services is the key's area of any organization.

Increasing the supply chain management in-process helps the organization develop efficiency

and speed in the supply chain management area. Meeting the market demand is the key objective

of any organization and, integrating supply changing management with ERP applications provide

visibility and efficiency in the process (Oksana, 2020).

Market demand changes with time and, to keep updating the supply chain needs a great

effort. Supply chain management deals with numerous sectors (Slaman & Haddara, 2019), such
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as interacting with a supplier getting raw material or contracting different services to bring

finished goods.

The supply chain network involves a target company, typically a producer, distributors,

and vendors at the upstream and downstream customer's stage. The number of downstream and

upstream network members varies depending on its particular structure and the proper supply

chain. The supply chain network demonstrates the direction taken by manufacturers' raw

materials to turn the producers into their finished products. This manufacturing and

transportation of the finished goods by the seller and delivery to consumers commence before

final buyers meet (Essila, 2018).

ERP application provides various workflows to help in automating all the required

processes. Integrating different areas can create operational efficiency and improve the overall

process (Oksana, 2020). Some of the Benefits of ERP with Supply Chain Management include

integrating with different departments to enhance chain management efficiency, Building

customer relationships, Reducing Operational Costs, Solving IT-related Problems, and

Flexibility.

Best Practices for ERP implementation

In today's business world, for an organization to survive in the market, it needs to

implement various strategies to face any business complexities. In Enterprise Resource Planning,

there are multiple practices that an enterprise must follow to create a good client relationship,

which in turn helps the businesses evolve and develop. Using the resources present in the ERP

systems, the right knowledge is needed to implement various tasks. Leadership shall grant a

considerable amount of time for training the organization’s staff on the newly incorporated ERP
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software that can satisfy the end-users and deriving much more great ROI from the ERP tool in

the long run.

Understanding the essential requirements helps any enterprise to manage the resources

effectively and prioritize them accordingly. It also helps in gaining knowledge of various

business functions that takes place in the organization. By establishing a well-defined key

performance indicator (KPIs), organizations will have the feasibility to measure the ERP

software's performance post-implementation quantifiably. The KPI helps the organization to

generate high ROI. Information is a crucial asset for any organization; thus, precautions during

data migration can avoid redundancies; therefore, prioritizing data migration is considered a best

practice. Holding regular meetings helps any enterprise know the various ins and outs in the

supply management process. During migrations, steps to ensure that all the parties, such as the

vendors, implementers, and the end-users, are represented. Also, holding these regular meetings

helps the enterprises collect reviews from the stakeholders. Thus, this can help them create

effective strategies to develop businesses.

According to Percin (2008), implementing the ERP software is not the problem, but it's

how the organization implements it and allows the stakeholders to adopt it. With the introduction

of the enterprise resource planning (ERP) system, there have been significant changes in the

organization's business process, allowing the businesses to set new standards on how efficiently

the process can maximize profits and streamline the business operations. Most organizations

involve all the key stakeholders right from top-level executives and end-users in adapting the

new ERP systems. Most organizations rely on the variables like Initial cost of setup, expenditure

related to ongoing operations, and return of investment in assessing the enterprise resource

planning (ERP) system’s efficiency (Seethamraju & Sundar, 2013).

Some of the best practices that organizations can consider before incorporating enterprise

resource planning (ERP) into the organization's business model to avoid cost overruns, delay in

deliveries, disruptions in the business operations are (a) teams assessment, and the load-bearing

factors on the organization's resources benefit the project teams in identifying the configurations

and process definition defined by the subject matter expert(s) specified at different stages of the

process, (b) assessing the various risk factors, complexities and challenges related to data

integration which helps the projects teams to decide whether the newer systems can reduce or

eliminate the existing complexities within the business process, (c) hiring the expertise resources

to handle the enterprise resource planning (ERP) project management responsibilities that will

help the leadership achieve its business goals at a faster rate than the anticipated deadlines, (d)

identifying the right enterprise resource planning (ERP) systems to improve the overall business

process by considering, how the communication will be affected in downstream and upstream

applications, (e) testing the system with the end users which is the crucial step in the

implementation process which helps the end user's to test the full capabilities of the enterprise

resource planning (ERP) system, (f) data conversion is another essential aspect that the senior

leadership relies on for all the further decision making, so the enterprise resource planning (ERP)

system shall provide accurate data by eliminating any possible errors or duplications, (g) driving

the performance improvements by configuring the future state of the ERP system which assists

the managers to compare the existing key performance indicators (KPIs) with the KPIs of the

new ERP systems (Benders et al., 2006).

CONCLUSION

Effective planning by senior leadership will play a vital role in successfully implementing

the Enterprise resource planning (ERP) tool. However, administration and other stakeholders

often measure success by considering the following factors: whether the delivery of the project is

on time and within the defined budget initially allocated. On the other hand, organizations ignore

the complete capabilities of the ERP systems, which affect the standards of improved business

practices. Key performance indicators (KPIs) further help the organizations measure the

Enterprise resource planning (ERP) system's performance versus the existing process. Project

teams must develop a standard implementation process to understand Enterprise Resource

Planning implementation's benefits. In the past decade, most organizations have successfully

implemented ERP systems to improve the process and maximize investment returns. However,

most agree stakeholders agree that there are few basic rules that the businesses need to consider

for successfully incorporating the ERP systems into the organization are, (a) establishing a

proper business process before selecting the enterprise resource planning (ERP) software, (b)

project teams must include business members from the user community in addition to IT staff

which adds the value to the end-user acceptance, (c) developing an effecting implementation

plan and follow those for rest of the implementation part, (d) allocate sufficient funds on training

the stakeholders thoroughly on the process changes and flow of information in addition to the

actual software, and (e) the project does not end post "go-live" as it requires continuous

monitoring for any possible errors.

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