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Reason for Adopting ERP software

Discuss about the Adaptation And Implementation of ERP Software.

The following report is all about implementation of ERP software in large factories or industries. ERP systems are generally designed in such a way that it can satisfy the need or demand of different firm all around the world (Ahmad and Cuenca, 2013). The five of ERP implementation has been discussed in brief. The biggest user of ERP in the industry is Nestle which is well known food processing firm. The firm claimed that after the implementation of ERP system in Nestle they have saved more than 325 million dollars and saving mainly raised from supply chain movement. Sarbanes Oxley Act has been discussed in detail which was passed by US congress to prevent investors from any fraud in the accounting department. SOX was mainly implemented in improvisation of financial status of different organization.

In this report a brief reason is given about the fact that why ERP software is adopted various organization ranging from medium to large. A complete discussion is given on Nestle which is largest user of ERP software in food processing units. Sarbanes-Oxley Act was launched for protection of various investor from any fraud in their accounting department. Nestle is one company which has been benefited by the implementation of ERP system in their organization. Hershey is an example of organization which has incurred huge loss after the implementation of ERP software in their system.

ERP system was previously used by large factories or industries but now a day’s many small scale industries are using it. This system may not be practically used by small companies on the contrary many companies ranging in size from small to medium has adopted it. ERP systems are mainly designed to satisfy the needs or demand of various organizations round the globe. Various ERP solutions are available in the market to satisfy the needs of retail stores, healthcare, oil and gas. Various organizations round the globe can find a possible solution to satisfy the needs of their business.

The following five reasons can be considered to an important reason for adoption of ERP software in any industry.

  • It helps in proper management of business with one system.
  • It helps in keeping the various technologies updated.
  • It helps in maintaining of streamline with progress of a Business.
  • It helps in analysing important data of any industry.
  • It helps in satisfying the needs of various customers.

The biggest benefit that can be achieved from the use of ERP solution in any industry can help in easy management of various important areas of a business with the help of just one system. A manufacturing ERP system can help in focusing functional areas like financial, inventory management, quality management and sales management. When a business manages several other businesses then it can have some problems like errors in data, duplication of stored records, and improper communication between domains of a business. The ultimate goal of ERP system is to add all the separate function into a single system which allow in establishing a proper communication between them (Ahmad and Cuenca, 2013). Now various organization of an industrial sector has one system which is used for managing various information then all the important areas can take on decision and action on the same set of data.

Reasons

Technologies round the globe are changing at a very rapid rate and the up gradation cost of programming the old system is increasing at a rapid rate. Current technologies like machine learning, internet of things are submerged with the modern system which helps the various organization of an industry to take better decision and helps in attaining competitive edge (Zhang, Zhu and Ding, 2013). For maintaining their position in the market various companies of the industry need latest systems. They need some system which can help in flexibility and scalability in their business.

ERP solutions are generally designed in such a way that they offer flexibility and adaptability for various organization of an industry. The latest ERP system comes up with different methods which help them in satisfying the requirements of the various businesses.

After the successful implementation of ERP systems various industrial sectors can easily judging the needs of a business. After the implementation of ERP system various organizations can easily achieve speed, efficiency (Schniederjans and Yadav, 2013). A latest ERP system can be beneficial in satisfying the needs of business partners, stakeholders and employees of the organization. ERP system in general consists of various complex features which can be considered complex for many users. It the duty of various companies of an industry to teach their employees about the working principle of an ERP system. If a user shows faster running of a system, then it is likely that can be adopted easily throughout any organization.

Analyzing the data of various companies can be considered useful for various companies. ERP solutions can be considered to effective way of gathering and checking of data from various areas of business which will ultimately help the various data teams of an organization. Firstly, it will help the data analysts to look into the core areas of business and gather important data from it. Secondly ERP system will help various organization of an industry in achieving real time data on various areas which is inclusive of business processes and work status.

Various customers expect that they can constantly receive their needs regardless of domain or department they interact and various businesses must ensure that various departments communicate with each other. Any department of various organization of an industry must have the details of customer at their fingertip so that they can easily interact with any customer irrespective of channel.

Food processing industries are considered as the largest user of ERP software. ERP software’s are considered to be medicine for every problem of an organization. Application of ERP system offers various firms to use various business processes, use data and allowing full access to the data of company in real time (Nour, and Mouakket, 2013). Nestle which is well known industry in food processing industry has claimed that after the implementation of ERP software they have saved more that 325 million dollars. The saving mainly arises from various domains like supply chain movement (Sarfaraz, Jenab and D'Souza, 2012). After the implementation of ERP system same database and business process have led to more trustworthy forecast of various demands for various of its products.

Biggest Industry in field Using ERP software

In the year of 2002 Sarbanes Oxley Act was passed by U.S congress in order to protect various investors from fraud in accounting departments of various organization. SOX mainly emphasizes in improving the financial condition of various corporation and prevent any fraud in the accounting department (Monk and Wagner, 2012). In reality SOX effects various organization in many ways. At the time of dealing with international client’s internal controls and compliance are considered to be biggest problem in the successes of ERP. Process needs to be designed in such a way that in must satisfy the regulatory compliance and systems need to be designed in such a way that it can satisfy the compliance and employees need to be trained in such a way that they can easily execute various complaint.

Sarbanes Oxley Act (SOX) was implemented in the year 2002 to helps in increasing the confidence of various investors in the market and aims in closing loopholes for various organization. SOX was implemented due to strengthen various committees of audit and perform various internal test for controlling of different things. The direct effect of SOX on corporate is increasing the level of efficiency (Mitra and Neale, 2014). Cost of compliance can be considered important for various firm which depend on manual control. SOX Act mainly emphasizes various firms to make financial system more efficient, centralized and automated.

 SAP is considered to be one of the leading ERP vendors which has been an expected market of 20% of the global market. My Sap ERP solution generally aims in providing complete software for enterprise resource planning with a flexible approach. SAP offers integrated modules for different domains like accounting, production planning, management of different materials. Sap ERP is considered to be complex process which helps various firms in integrating financial, human and management of data task in one IT structure. My Sap mainly focuses in providing functionalities in various domains of accounting which is inclusive of legal financial reporting and segment reporting.

One company which is successful in implementation of ERP is Nestle which a well-known food processing firm. ERP stands for enterprise resource planning which is used to overcome every problem. SAP ERP implementation was implemented in Nestle SA as the various executives felt the need of improvisation in the organization (Akeel and Wynn, 2015). Prior to Nestle SA, ERP was decision was implemented in Nestle UK. SAP ERP was implemented in Nestle SAP for a period of five years in eighteen sites of manufacturing division. A third implementation of ERP took place in Nestle USA (Mead and Sack). The project of ERP implementation began in USA division of Nestle as BEST (Business Excellence through technology system). Irrespective of case of ERP implementation in Nestle the ultimate goal behind the ERP implementation were similar in all cases.

Sarbanes-Oxley Act

After the implementation of SAP ERP Nestle USA claimed that they had made a savings of more than 325 million dollars and most of the savings came from supply chain improvements. With the help of SAP ERP similar database and various processes of business led to trusted forecasts of demand for various products of Nestle (Amid, Moalagh, and Ravasan, 2012). The problem of various brands of vanilla was solved with the common database. UK based Nestle experienced the similar success after the implementation of SAP ERP. Nestle USA was an excellent case study for the implementation of ERP because it consists of failures and success. During the planning phase of project there were breakdowns on the contrary the overall project can be considered to be successful. After analyzing Nestle USA other firms can easily learn a valuable lesson from it (Banerjee, Humphery-Jenner and Nanda, 2015). The first lesson that can be learned from the ERP implementation in Nestle USA is that right executives or individual must be involved from the beginning. The second lesson that can be learned from Nestle that the implementation of ERP is not a project which the company should force to implement on specific timeline (Chhaochharia et al., 2016). The future of the organization is on the line and it must be important for checking the business goals of a given project and after that setting a particular deadline for the project. Thirdly, the organization looking for the implementation of ERP must focus on training of different staff members (Li, 2014). Training is considered to be vital factor for the implementation of ERP in because without proper training various employees using it cannot process on a day to day.  

Hershey’s is considered to be largest manufacturer of chocolate in North America. The headquarter of this organization is located in Hershey, Pennsylvania which is also known as home to Hershey chocolate world (HassabElnaby, Hwang and Vonderembse, 2012). The chocolate business was started by Mr. Milton S. Hershey in 1876. The products of Hershey were sold to around sixty countries around the globe. Hershey’s sales comprise of 80% chocolate and 20% non-chocolate items. The competitors of Hershey comprise of Mars, Nestle, Palmer and many more.

For improving the service of different companies and providing better customer services ERP was implemented in Hershey’s (Chou et al., 2014). In the year of 1996 the management of this chocolate firm gave an approval to this project named Enterprise 21. Hershey selected SAP R/3 model of ERP software, manugistic SCM software, Seibel CRM software and IBM for properly managing of integration among the given three systems. The overall cost of the given project was expected to be 10 million dollars.

Reason of the Act and its implication

There were several impact on the failure of ERP system on Hershey. Firstly, there were problems on order fulfilment, processing and shipping started to rise and this firm was unable to meet the committed date of delivery. Several distributors of who had placed order regarding it cannot supply the product to retailer on time so there was a loss in credibility in the market (Deng, Melumad and Shibano, 2012). After the implementation of ERP in Hershey, the stock price of this firm fall by 8% on a single day which resulted due to malfunctioning of this newly installed system.

There were certain reasons behind the failure of ERP in Hershey that are over-squeezing schedule of implementation, Big bang approach instead of phase approach, sacrificing testing of different system (Erkan, Baç and Rouyendegh, 2012). Various lessons were learned from the failure of ERP in Hershey that are an implemented project should not be forced into an unreasonable timeline, testing phase are certain things that should not be compromised. The organization should provide time to employees to learn about various business process and about systems.

Conclusion

The above discussion is all about the implementation of ERP in various large scale and small scale industries.  The reason behind the implementation of ERP software in organization has been discussed in brief. The ERP systems are designed in a way that it can easily satisfy the requirement of various organization all-round the globe. The main five reasons behind the implementation of ERP software has been discussed in brief. Nestle which is a well-known food processing organization have saved from than 325 million dollars after the implementation of ERP software in their system. Sarbanes Oxley Act has been discussed in brief which was passed by US congress to protect investors from any fraud in the financial department of any company. Nestle is a well-known organization which was benefited a lot by the implementation of SOX in their system. SAP ERP was implemented in Nestle SA as the various executives and other members felt the need of improvisation in the company. Hershey was affected badly due to implementation of ERP software in their system. The effects and reason of failure of ERP system has been discussed in details. The reason behind the failure of ERP in Hershey were over-squeezing time of implementation, use of big bang approach in spite of phase approach, neglecting of testing of various systems after the implementation of ERP software.

My SAP benefits

References

Ahmad, M.M. and Cuenca, R.P., 2013. Critical success factors for ERP implementation in SMEs. Robotics and Computer-Integrated Manufacturing, 29(3), pp.104-111.

Amid, A., Moalagh, M. and Ravasan, A.Z., 2012. Identification and classification of ERP critical failure factors in Iranian industries. Information Systems, 37(3), pp.227-237.

Banerjee, S., Humphery-Jenner, M. and Nanda, V., 2015. Restraining overconfident CEOs through improved governance: Evidence from the Sarbanes-Oxley Act. The Review of Financial Studies, 28(10), pp.2812-2858.

Chhaochharia, V., Grinstein, Y., Grullon, G. and Michaely, R., 2016. Product market competition and internal governance: Evidence from the Sarbanes–Oxley Act. Management Science, 63(5), pp.1405-1424.

Chou, H.W., Lin, Y.H., Lu, H.S., Chang, H.H. and Chou, S.B., 2014. Knowledge sharing and ERP system usage in post-implementation stage. Computers in Human Behavior, 33, pp.16-22.

Deng, M., Melumad, N. and Shibano, T., 2012. Auditors’ Liability, Investments, and Capital Markets: A Potential Unintended Consequence of the Sarbanes?Oxley Act. Journal of Accounting Research, 50(5), pp.1179-1215.

Garg, P. and Garg, A., 2013. An empirical study on critical failure factors for enterprise resource planning implementation in Indian retail sector. Business Process Management Journal, 19(3), pp.496-514.

Ghosh, R., 2012. A comprehensive study on ERP failures stressing on reluctance to change as a cause of failure. Journal of Marketing and Management, 3(1), p.123.

Hasibuan, Z.A. and Dantes, G.R., 2012. Priority of key success factors (KSFS) on enterprise resource planning (ERP) system implementation life cycle. Journal of Enterprise Resource Planning Studies, 2012, p.1.

HassabElnaby, H.R., Hwang, W. and Vonderembse, M.A., 2012. The impact of ERP implementation on organizational capabilities and firm performance. Benchmarking: An International Journal, 19(4/5), pp.618-633.

Li, X., 2014. The Sarbanes–Oxley act and cross-listed foreign private issuers. Journal of Accounting and Economics, 58(1), pp.21-40.

Mead, J. and Sack, R.J., Sarbanes?Oxley Act. Wiley Encyclopedia of Management.

Mitra, A. and Neale, P., 2014. Visions of a pole position: Developing inimitable resource capacity through enterprise systems implementation in Nestlé. Strategic Change, 23(3-4), pp.225-235.

Monk, E. and Wagner, B., 2012. Concepts in enterprise resource planning. Cengage Learning.

Nour, M.A. and Mouakket, S., 2013. A classification framework of critical success factors for ERP systems implementation: A multi-stakeholder perspective. In Competition, Strategy, and Modern Enterprise Information Systems (pp. 98-113). IGI Global.

Sarfaraz, A., Jenab, K. and D'Souza, A.C., 2012. Evaluating ERP implementation choices on the basis of customisation using fuzzy AHP. International Journal of Production Research, 50(23), pp.7057-7067.

Schniederjans, D. and Yadav, S., 2013. Successful ERP implementation: an integrative model. Business Process Management Journal, 19(2), pp.364-398.

Zhang, J.Q., Zhu, H. and Ding, H.B., 2013. Board composition and corporate social responsibility: An empirical investigation in the post Sarbanes-Oxley era. Journal of Business Ethics, 114(3), pp.381-392.

Erkan, E., Baç, U. and Rouyendegh, B.D., 2012, April. Effects of BPR on ERP Implementation Success and Supply Chain Performance. In International Conference on Information Management and Evaluation (p. 89). Academic Conferences International Limited.

Akeel, H. and Wynn, M.G., 2015, February. ERP Implementation in a Developing World Context: a Case Study of the Waha Oil Company, Libya. In eKnow 2015 7th International Conference on Information, Process and Knowledge Management (pp. 126-131). ThinkMind.

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