Enterprise Resource Planning Implementation Issues

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Introduction

Enterprise resource planning (ERP) entails the process applied by companies to integrate and manage essential parts of the business. They utilize various software applications to facilitate the implementation of resource planning by consolidating diverse processes to operate in a single system (Catherine & Abdurachman, 2018). Software in manufacturing companies usually integrates business activities such as production, human resources, finance, purchasing inventory, planning, as well as marketing (Jinno, Abe & Iizuka, 2017). ERP solutions have improved and it is now possible to achieve web-based applications accessible remotely (Slack, Chambers, Johnston & Betts, 2009). They come with many benefits particularly promoting the free flow of information and effective communication between a single source of information, business area, and accurate reporting (Duplaga & Astani, 2003). This paper explores ERP issues during implementation, plan execution, expected benefits and explains a successful and bad implementation experience.

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Implementation Issues

Organizations can face many issues during the ERP implementation resulting in the development of devastating challenges. Finding the right and perfect software is a major issue affecting organizations (Lo, Lin, Tsai, & Li, 2003). Since there exist many ERP systems, it is sometimes confusing to determine the most appropriate one based on efficiency, cost, and other features (Hassan & Mouakket, 2018). Lack of experience and understanding of how different systems function can hinder the software selection process.

Poor management commitment is another major issue affecting software implementation. Managers who are not interested may hinder effective communication and fail to pass beneficial information to workers (Schniederjans & Yadav, 2013). This means that the involved individuals would lack guidance and eventually lose focus (Ram, Wu & Tagg, 2014). The issues can make it difficult to identify the appropriate software and frustrate committed workers (Chondamrongkul, 2018). Moreover, the problem can affect the allocation of the necessary resources.

Inadequate system training is another issue that organizations have to overcome to achieve success in the implementation process. Since the system would be new to everyone, it is sometimes difficult to enable its users to attain desirable skills and achieve success (Zaied & Mohmed, 2021). Poor training creates room for errors because workers would be addressing issues using the wrong method (Saad &Aririguzo, 2012). Lack of budgeting and effective testing are other issues affecting ERP implementations (Reitsma, Hilletofth & Mukhtar, 2018). Lack of testing can affect the system performance in case of a malfunction and compromise the expected results (Magal & Word, 2011). Moreover, poor financing can hinder effective implementation due to a lack of the necessary tools and materials.

Proper Implementation Plan

ERP implementation process involves the installation of software, data transfer for both transactional and financial, process mapping as well training users on its application. The process is usually critical and there is a need to propose a workable plan before the process begins (Barker & Frolick, 2003). First, it is important to determine a workforce that will be involved in all departments (Shang & Seddon, 2000). However, few people will be required to lay down the draft and forecast the implementation costs and all the resources required (Al-Hadi & Al-Shaibany, 2017). This group may include a project manager, application developer, application analyst, and Quality assurance test engineer.

Secondly, there is a need to undergo a bidding process to ensure that the company hired to do the job is determined to offer quality work. Being selective with bidders and opting for an organization-specific solution is necessary (Annamalai & Ramayah, 2011). Importantly, the contractual agreement should be made in writing and signed by both parties (Koh & Saad, 2006). Hoping for the best and planning for the worst especially on maintenance and budgeting will help oversee proper implementation of the ERP process in a manufacturing company (Mahmood, Khan & Bokhari, 2019). Communication is key in every process of change management and across all departments (Kumar & Thapliyal, 2010). It is also important to ensure support from the executive team for the proper flow of resources and capital (Chan-Hsing, Yu-Hsin, Tsai & Li, 2003). The implementation group should remain dedicated to the ERP system in that they should not fall back on hoary business processes.

Expected Benefits from the Implementation

Integrating core business units comes with enhanced business reporting in real-time. It supports the smooth flow of information and plays a role in the improvement of manufacturing efficiency (Turban & Volonino, 2009). It enables better service delivery based on accuracy, time, and response. The system also promotes accessibility of customer information, cost reduction, and subsequent organizational expansion (Elsayed, Ammar & Mardini, 2021). Integration of services enables proper inventory planning, procurement management as well as improvement of customer relationships (Magal & Word, 2009). Automation enhances business processes by promoting efficiency and smarter workflows saving time and costs (Harrison & van Hoek, 2005). Moreover, the supply chain management becomes transparent by reducing bottlenecks in the production process.

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A Successful and Bad Implementation Story

The implementation of an ERP system is expected to take an organization to a better level. However, this is not always the case as failures have been witnessed. MillerCoors is one of such businesses that saw a failed ERP implementation process. In 2014, the company had acquired multiple businesses in the brewing industry. It hired an IT firm to restructure its operations in its entire enterprise. Several issues including forty-seven severity defects where eight of them were critical as well as other numerous problems marred the rollout (Fernandez, Zaino & Ahmad, 2018). Three years down the line, the project failed and the company sued the IT firm claiming that it did not allocate the required resources where it also made false promises.

LG Electronics is one of the successful companies in ERP implementation. With about 115 subsidiaries and more than 80,000 employees in 40 countries, the organization required a solution to centralize and consolidate its human resource operations. It contracted Oracle, which took five years to complete the project (Mahar, Ali, Jumani, & Khan, 2020). Although there were hitches on the way, Oracle was able to overcome them and made the project successful where LG yielded great benefits from the system.

Conclusion

ERP implementation entails the application of software to facilitate the management of different activities and integrate essential parts. Various issues including lack of budget, experience, and testing, as well as poor management commitment and inadequate training affect the process. It is necessary to address issues and follow a recommendable implementation plan to achieve the best outcome. The system influences many benefits including better accessibility and flow of information, cost reduction, and integration of company activities.

References

Al-Hadi, M. A., & Al-Shaibany, N. A. (2017). Critical success factors (CSFs) of ERP in higher education institutions. International Journal, 7(4), 92-95.

Annamalai, C., & Ramayah, T. (2011). Enterprise resource planning (ERP) benefits survey of Indian manufacturing firms. Business Process Management Journal 17(3):495-509

Barker, T., & Frolick, M. N. (2003). ERP implementation failure: A case study. Information Systems Management, 20(4), 43-49.

Catherine, C., & Abdurachman, E. (2018). ERP system adoption analysis using TOE framework in Permata Hijau Group (PHG) medan. International Journal of Enterprise Information Systems (IJEIS), 14(3), 91-105.

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Chan-Hsing, L., Yu-Hsin, L., Tsai, C. H., & Li, R. K. (2003). A Case Study of ERP Implementation for PCB Manufacturer. Asian Journal on Quality, 4(1), 160.

Chondamrongkul, N. (2018). ERP implementation in university: a case study in Thailand. International Journal of Business Information Systems, 27(2), 177-192.

Duplaga, E. A., & Astani, M. (2003). Implementing ERP in manufacturing. Information systems management, 20(3), 68-75.

Elsayed, N., Ammar, S., & Mardini, G. H. (2021). The impact of ERP utilisation experience and segmental reporting on corporate performance in the UK context. Enterprise Information Systems, 15(1), 61-86.

Fernandez, D., Zaino, Z., & Ahmad, H. (2018). An investigation of challenges in enterprise resource planning (ERP) implementation: The case of public sector in Malaysia. International Journal of Supply Chain Management, 7(3), 113-117.

Harrison, A., & van Hoek, R. (2005). Logistics Management and Strategy, FT. New Jersey: Prentice-Hall.

Hassan, M. K., & Mouakket, S. (2018). Power, trust and control: The interaction of political behaviours in accounting-based ERP system implementation processes. Journal of Accounting in Emerging Economies, 8(4), 476-494.

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Jinno, H., Abe, H., & Iizuka, K. (2017). Consideration of ERP effectiveness: From the perspective of ERP implementation policy and operational effectiveness. Information, 8(1), 14.

Koh, S. L., & Saad, S. M. (2006). Managing uncertainty in ERP-controlled manufacturing environments in SMEs. International Journal of Production Economics, 101(1), 109-127.

Kumar, P., & Thapliyal, M. P. (2010). Successful implementation of ERP in a large organisation. International Journal of Engineering Science and Technology, 2(7), 3218-3224.

Lo, C. H., Lin, Y. H., Tsai, C. H., & Li, R. K. (2003). A case study of ERP implementation for PCB manufacturer. The Asian Journal on Quality, 4(1), 160-174.

Magal, S. R., & Word, J. (2009). Essentials of business processes and information systems. Hoboken: John Wiley & Sons.

Magal, S. R., & Word, J. (2011). Integrated business processes with ERP systems. Hoboken: John Wiley & Son.

Mahar, F., Ali, S. I., Jumani, A. K., & Khan, M. O. (2020). ERP system implementation: planning, management, and administrative issues. Indian J. Sci. Technol, 13(01), 1-22.

Mahmood, F., Khan, A. Z., & Bokhari, R. H. (2019). ERP issues and challenges: a research synthesis. Kybernetes.

Ram, J., Wu, M. L., & Tagg, R. (2014). Competitive advantage from ERP projects: Examining the role of key implementation drivers. International Journal of Project Management, 32(4), 663-675.

Reitsma, E., Hilletofth, P., & Mukhtar, U. (2018). Enterprise resource planning system implementation: a user perspective. Operations and Supply Chain Management: An International Journal, 11(3), 110-117.

Saad, S.M & Aririguzo, J.C., (2012). Simulating the integration of original equipment manufacturing and suppliers in fractal environment. The International Journal of Simulation and Process Modelling. 7 (3), 148-158.

Schniederjans, D., & Yadav, S. (2013). Successful ERP implementation: An integrative model. Business Process Management Journal.19 (2) 1463-7154

Shang, S., & Seddon, P. B. (2000). A comprehensive framework for classifying the benefits of ERP systems. AMCIS 2000 proceedings, 39.

Slack, N., Chambers, S., Johnston, R., & Betts, A. (2009). Operations and process management – principles and practice for strategic impact. London: Prentice Hall.

Turban, E. & Volonino, L. (2009). Information technology for management: Improving performance in the digital economy. New Jersey: John Wiley & Sons

Zaied, A. N. H., & Mohmed, S. (2021). ERP implementation road map for small and medium size enterprises (SMEs). Journal of Intelligent Systems and Internet of Things, 2(1), 14-4.

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