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Enterprise Resource Planning (ERP) Systems

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Explained four advantages of ERP within an organization. Provide an example of an organization that has benefited from ERP.

Described four ways how ERP could improve overall Supply Chain Management. Provide an example where ERP has improved the overall SCM.

Explained what three barriers a company would need to overcome to successfully implement ERP into their supply chain. Provide a list of suggestions for overcoming these barriers.

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Interesting set of questions! Let's take a closer look.

RESPONSE:

1. Explain four advantages of ERP within an organization. Provide an example of an organization that has benefited from ERP.

Big companies save money using Enterprise Resource Planning (ERP). Some of the advantages of using ERP systems are as follows:

? The company will have a system that is totally integrated with the ability to make more efficient the workflow and the various processes included.
? Using ERP system will enable sharing of information across different departments within the organization easily.
? There will be obvious improvements in the level of productivity and the efficiency of the organization.
? Another advantage of ERP systems is it has lower costs, better forecasting and tracking of products (http://www.total-erp-sap.com/advantages-of-erp.html).
? One of the essential advantages of ERP is the application that focuses in the accounting of the business. ERP puts together the cost, revenue and the profit information of the sales made in a particular month or year. ERP is also in charge to modify the manufacturing of the product. This is very important since the products that are produced by the company must be tracked and the needed information must be updated whether the company produces high quality products or not. Another very good advantage of ERP is that it can make the changes that are necessary to use to make the organization more competitive in the market (http://www.total-erp-sap.com/advantages-of-erp.html).

EXAMPLE:

Ford Motor Company and Oracle Corporation announced the formation of the AutoXchange, an integrated electronic procurement supply chain to be created and run as a joint venture. In 1999, it was expected to handle Ford's $80 billion in annual purchasing transactions with more than 30,000 suppliers, as well as its total $300 billion extended supply chain (see http://resources.bnet.com/topic/ford+motor+co.+and+oracle+corp.+and+stock.html).

2. Describe four ways how ERP could improve overall Supply Chain Management. Provide an example where ERP has improved the overall SCM.

These techniques are interrelated. ERP could improve overall Supply Chain Management by:

(1) Streamlining the information flow through an integrated system with the ability to make more efficient the workflow and the various processes included.

(2) Providing a consistent database. Increases efficiency by integrating many internal processes in an organization and provide a consistent database (Stadtler & Kilger 2002, as cited in Hastak & Syal, n.d, URL: www.pathnet.org/si.asp?id=1065).

(3) Improving customer service: Increases efficiency and ...

Solution Summary

Four Advantages of Enterprise Resource Planning (ERP) Systems are explained. Four ways how ERP could improve overall Supply Chain Management are discussed with an example where ERP has improved the overall SCM. It also explins three barriers a company would need to overcome to successfully implement ERP into their supply chain including a list of suggestions for overcoming these barriers.

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Production planning and quality management

Scenario:
Manychip, Inc., is a specialty memory chip manufacturer located in Southern California with manufacturing plants located in the United States, Europe, Singapore, and Japan. Additionally, Manychip has branch sales offices located in major metropolitan areas across the globe. The market for Manychip's six key products included original equipment manufacturers of personal computers, cellular telephone manufacturers, electronics distributors, and government organizations. The market environment for Manychip's products is extremely volatile, with fluctuating demand and rapidly changing prices. The company uses short term contracts (less than one month) and spot pricing for irregular customers. Internally, the operation is capital-intensive, with depreciation running approximately $1.2 million per day (depreciation has an impact on revenue streams). The six key products had further specialized components, making the possible line mix total 24 distinct products. Further, the manufacturing process required high manufacturing lead times and various product yields. In the high technology memory arena, product life cycles were dramatically shortened because of rapid obsolescence. To coordinate the manufacturing activity, Manychip has an established process and system that helped optimize resource utilization, improve shop floor efficiencies, and manage customer demand.

Manychip is experiencing 10-15% growth in revenues and volume, primarily tied to increased worldwide demand, product type, and market variables. Most significantly, the company received a major pre-order for a new cellular phone memory chip that's schedule to come out in three months. This pre-order is scaled for up to 10 million units and management is concerned the existing process and system may not be suitably optimized for this order. Additionally, the forecast in sales figures for all six key product lines is higher than it has been in the past. With the increase in volume, management is concerned about the quality management process as well-can the existing processes maintain the highest degree of quality needed?

As a new member of the Production Planning Management staff, you'll be expected to help develop strategies to support the expanded growth plans. Your team faces several fundamental issues. First, are the individual plant layouts conducive to the expanded growth expected by the company? Second, are individual plant layouts optimized for the most efficient performance and lowest cost? Third, is the existing supply chain interaction among all the various components optimized in the same manner individual layouts are expected to be optimized? Finally, your group must consider capacity planning and workflow to ensure the company can meet its contractual obligations with the maximum revenue and profitability.Manychip currently uses information systems developed by the company to conduct production planning. You believe that a fully integrated enterprise resource planning tool or specific production planning software would better suit the company in light of its upcoming increase in production.

Using course materials and other resources, research and identify potential software applications with consideration for the following:

1) Should Manychip use an ERP package or specific manufacturing production planning utilities?
2) What are the advantages and disadvantages of each course of action?
3) Identify the candidate pool of software you considered for selection, select a single product, and justify your reasoning.

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