Enterprise Resource Planning Origins and Evolution
Introduction
Since its invention in the 1960s, ERP systems have risen to a powerful solution by transforming, integrating, and scaling businesses (Leon, 2014). In today’s competitive business, ERP systems have become an essential component. However, due to the history surrounding the costly and complex ERP software packed with epic failures, outrageous hype, and tales of vendor mud-slinging, not all organizations have benefited from using ERP systems, for example, Revlon. A perfect example of organizations whose ERP system was properly implemented is Walmart. In this paper, the main benefits of a properly implemented ERP system will be identified and discussed.
Typical ERP Functions and Business Processes
Integration and scaling: According to (Monk & Wagner, 2012), ERP systems play essential roles in the running and success of a business, including manufacturing management, customer relationship, inventory management, accounting/financial management, human resource processes, and beyond. ERP system functions to integrate these functions into a complete system to streamline data and activities across the entire company.
ERP system synchronizes data automation and reporting: In Walmart for example, ERP systems enable staff to pull data and reports from a single system rather than compelling them to work with separate databases and spreadsheets that have to be manually merged to generate reports (Gupta, 2000). For instance, there is an automatic flow of sales orders into the company’s financial system without any manual re-keying.
ERP system and business intelligence: Also, ERP solutions enable staff to swiftly understand the performance of the business based on core metrics (Monk & Wagner, 2012). For example, in Walmart, ERP features include a dashboard or portal that supports the management in making key business decisions based on key metrics such as the company’s financial position.
Historical Background of the Development of ERP
The term “ERP” was first coined by Gartner in 1990. However, its history dates back to the 1960s. During this time, the ERP concept was applied in the manufacturing sector for inventory management and control. Since the 1960s, this concept has evolved and gained relevance in many industries and work roles, providing unprecedented integration of different organizational departments. According to (Leon, 2014), this integration function is what has come to define the ERP system were today know. ERP systems were thus innovated to solve fundamental human enterprise problems within the workplace. In this perspective, enhancing information validity across the fast-growing business that would have been impossible with manual systems. This rapid evolution of ERP module, from the precursor, MRP software, MRP II, ERP, ERP II, to ERP and the cloud has greatly transformed, integrated, and scaled modern-day business processes.
Benefits of ERP Systems
Superior supply chain management: A properly implemented ERP system contributes to effective demand forecasting and lean inventory management. As a result, this helps an organization lower its production bottlenecks while improving transparency in the business processes (Monk & Wagner, 2012). Unlike companies without ERP systems, companies like Walmart enjoy shortened lead times, superior scalability, timely delivery, improved workflow, and flexible modality.
Modernized business processes standardization: Data in Walmart and other organizations that use ERP systems are distributed across multiple servers and have dedicated security measures. Due to this standardization, there is little or no errors in the production process and the other key departments of the organization (Leon, 2014). Unlike Revlon whose ERP system collapsed, Walmart’s ERP deployment has brought about reduced errors, improved cost efficiency, data security, and reduces waste of resources.
Cost savings and quality customer service: ERP system contributes to improved inventory control and planning, better customer service, better procurement management, and improved vendor relationship management (Gupta, 2000). Also, unlike in Revlon and other companies where ERP systems are no longer used, Walmart’s use of ERP systems have seen the company register first customer response rates, improved order accuracy, improved on-time delivery, and easy access to customer information.
Conclusion
Every business must invest in technology to compete and maintain relevance in the industry where it operates. One such technology is ERP software; which most scholars consider to be the future of business reporting, customer service, inventory management, supply chain management, and human resource processes. Therefore, there is a need for companies like Revlon to re-implement the use of ERP modules for purposes of integration, business intelligence, automation, reporting, and quality control.
References
Gupta, A. (2000). Enterprise resource planning: The emerging organizational value systems. Industrial Management & Data Systems, 100(3), 114-118.
Leon, A. (2014). Enterprise resource planning. New York, NY: McGraw-Hill Education.
Monk, E., & Wagner, B. (2012). Concepts in enterprise resource planning. Boston: Cengage Learning.