Introduction
The acronym ERP stands for Enterprise Resource Planning and is used to define the specialized software that companies utilize to administer business activities, such as example, supply chain operations, project, and human resource management, and accounting. The critical benefit of the ERP system’s application is that it automatizes the business process and, hence, enhances productivity and reduces costs. The present essay discusses different types of ERP systems, analyzes relationships within them, and recommends which ERP system could be used by the Hershey Company.
Types of ERP Systems
There are several types of ERP systems: industry-specific ERP, large-scale ERP, intermediate ERP, and ERP in a box. The choice of the ERP system depends on an organization’s size, specialization, and particular needs. First of all, it should be noted that the success of the ERP system implementation is industry-specific, and factors that affect the success of the system are different in every industry (Lee and Kim, 2016). More precisely, oil and gas companies need a system that could help manage assets and control costs.
For this reason, an energy company could use, for example, Cetec ERP or IFS Applications 10. However, retailers and small businesses will find these systems inefficient because the first has no platform that focuses on human resource management. The second one was not designed for companies, the revenue of which is smaller than $100 million per annum. From this, it could be inferred that before deciding on which ERP system to apply, the managerial personnel should consider specific features and requirements of the company and the industry in which it operates.
In addition to that, there are traditional and cloud ERP software. Traditional ERPs are placed on the servers of the company and controlled by its IT specialists. Cloud ERP, in turn, is housed on an external server that does not belong to the company, accessed online, and updated automatically. The advantage of cloud systems is that they could be implemented more quickly, are easily accessed from anywhere, do not require any installation costs, and allow for the addition of new modules within a short time (Hadidi et al., 2020).
Furthermore, the ERP lifecycle timeframes of cloud-based systems are longer than of traditional ones (Demi and Haddara, 2018). According to Hadidi et al. (2020), online systems are commonly used by small and medium companies. This way, they do not need to establish an IT department that should maintain ERPs. Overall, it seems that cloud ERPs are more flexible, and private businesses should think of the transition from traditional systems to cloud ones.
Relationships Within ERP Systems
ERP systems consist of several modules that could be added or deleted depending on the needs of a company. The application of a suitable ERP system has a positive effect on a company’s supply chain performance. The reason for this lies in the fact that ERP’s Supply Chain Management (SCM) module controls warehouses, manages the movement of components in a warehouse, and calculates when to replenish stocks grounded on information on supply and demand. The Product Data Management (PLM) module is used to plan the manufacturing process.
SCM and PLM modules are interconnected because both control the use of material resources of a company. The human resource module is responsible for the maintenance of the employee database and efficient distribution of responsibilities. Some systems also have sales and customer services modules to create a schedule of shipping and selling and evaluate consumers’ reactions to the produced goods. As has already been mentioned above, the choice of ERP modules, which operate independently from one another depends, on the specialization of a company.
Deficiencies And Enhancements of ERP Systems
The primary deficiency of an ERP system that diminishes the productivity of a company’s performance is that employees should be distracted from their usual duties and trained on how to work with the software. However, the support of experts could facilitate and speed up the training process. Besides, the training of employees one day will be over, and they will get used to working with the ERP system.
Another disadvantage that affects productivity is that a company should spend money on hardware instead of allocating its financial resources to improve production or advertising. Nonetheless, investments in the introduction of the ERP system will save costs and improve supply chain management and business processes and, hence, contribute to the companys productivity. In other words, the ERP system could improve productivity by facilitating the efficiency of resource allocation, cost estimation, and asset management.
ERP System for Hershey
The Hershey Company used the SAP R/3 ERP software, but it failed. This software has modules on human resource management, planning of production, and billing. The main reason for failure was that the managers did not test the system before implementing it, and, hence, they were unable to create a plan on how to avoid risks and losses. Besides, employees were not trained enough to work with the new software. Hershey could use Sage Enterprise Management or Enterprise IQ because these systems were developed to help food manufacturers.
Sage Enterprise Management is a cloud system which means that it is less costly to install and work with it. It also has modules that help control the quality of raw materials and final goods and plan the bill of materials. Enterprise IQ has data collection tools that allow tracking the entire production process. Enterprise IQ also has Preventative Maintenance Software that is used to maintain manufacturing equipment and repair it timely. Still, it is necessary to consider the previous experience and dedicate enough time to employees’ training and the system’s testing.
References
Demi, S., & Haddara, M. (2018). Do cloud ERP systems retire? An ERP lifecycle perspective. Procedia Computer Science, 138, 587-594. Web.
Hadidi, M., Al-Rashdan, M., Hadidi, S., & Soubhi, Y. (2020). Comparison between Cloud ERP and Traditional ERP. Journal of Critical Reviews, 7(3), 140-142. Web.
Lee, S., & Kim, D. (2016). The effects of industry classification on a successful ERP implementation model. Journal of Information Processing Systems, 12(1), 169-181. Web.