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Friday 2 August 2013

Advantage of ERP

Advantage of ERP

According to Anthony, R. A, organizational processes fall into three levels - strategic planning, management control, and operational control. Even though much of ERP success has been in facilitating operational coordination across functional departments, successful implementation of ERP systems benefit strategic planning and management
control one way or other.

Help reduce operating costs

ERP software attempts to amalgamate commerce processes across departments onto a single enterprise-wide information system. The major benefits of ERP are enhanced harmonization across functional departments and increased efficiencies of doing business. The instant benefit from implementing ERP systems we can imagine is abridged operating costs, such as inferior inventory control price, inferior production costs, inferior marketing costs and inferior help desk support costs.

Facilitate Day-to-Day Management

The other benefits from implementing ERP systems is facilitation of day-to-day management. The implementations of ERP systems care for the organization of backbone data warehouses. ERP systems offer better convenience to data so that management can have up-to-the-minute access to information for decision making and managerial control. ERP software helps track actual costs of activities and perform activity based costing.

Support Strategic Planning

Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes."
Part of ERP software systems is intended to support resource planning section of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the difficulty of strategic planning and lack of sufficient integration with Decision Support Systems (DSS).

Enhances flexibility

Organizations followed rigid procedures and formalities prior to ERP intervention. One had to seek permission to view the details or data of the other department in the same company. This had to be routed through departmental heads. Of course there was nothing wrong because confidentiality had to be maintained at the interdepartmental levels itself in order to ensure the security of data. With the advent of ERP this practice has been given a go by. Whatever a person needs can be immediately accessed by him subject to the delegated authority and essentiality. ERP function has thus helped individuals.

Improves Quality

ERP support has vastly helped to improve the quality of services and products offered by the companies. ERP has been instrumental in identifying the areas for improvement In the event of speeding and improving the manufacturing process or other core functions of the company. This has greatly helped to improve the over all quality. For example in the course of implementing ERP software the company would have found some obsolete practice. They can devise a novel and productive measure in consultation with the ERP vendor which will double the benefits given the ERP software implementation. Thus ERP project helps to identify the existing mistakes and improve upon them in a better manner. The ERP function will accrue only if ERP is carried properly in an organization.

Economizes the resources

ERP support will help to save manpower, time and money not only on a large scale but also in the case of many sub process. During the course of ERP implementation the company can identify many areas that where resources are not properly put in use. This will help the company to decide on them and devise a suitable measure to properly use those resources. For E.g. during the course of ERP implementation the company can get to know the misallocation of the resources due to reasons like wrong organizational structure and procedures. These would not have been otherwise possible but for ERP function.

Helps decision making

ERP support has increased the autonomy and thereby the process of decision making process becomes easy in departments. Formerly departments had to get the consent and consensus from one another before finalizing or processing the end information. ERP has eliminated this need in the right time. Individual departments can function like separate entities (with good faith) because they can access the information required from other departments from the system in their table.

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