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ERP isn't without its risk and detractors. There can be disadvantages and pitfalls to it. •
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The very rigid structure of an ERP solution oftentimes makes it difficult to adapt to the specific needs of individual organizations. Because ERP software is enormously sophisticated, there is often a tendency to implement more features and functions for a particular installation than is actuall needed. This drives up costs and may reduce usage if the system proves to be complex to use. The cost to implement and maintain ERP systems is very high, and can challenge ROI calculations. Some departments and users may be hesitant to ag ree to the implementation if they feel they're giving up control of their data by switching from a department application to an enterprise-wide solution.
Advantages
In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Task that need to interface with one another may involve: • • • • •
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design engineering (how to best make the product) order tracking from acceptance through fulfillment the revenue cycle from invoice through cash receipt managing interdependencies of complex Bill of Materials Sign up to vote on this title tracking the 3-way match between Purchase orders o rders (what was ordered), Inventor Usefulinvoiced) Not useful receipts (what arrived), and Costing (what the vendor the Accounting for all of these tasks, tracking the Revenue Revenue,, Cost and Profit on a granular level.Change how a product is made, in the engineering details, and that
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Disadvantages
Problems with ERP systems are mainly due to inadequate investment in ongoing training for involved personnel, including those implementing and testing changes, as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how is used. Disadvantages • •
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Customization of the ERP software is limited. Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage. ERP systems can be very expensive leading to a new category of "ERP light" solutions ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as on e of the main causes of their failure. Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications. Once a system is established, are very high for any one of the You'reswitching Reading costs a Preview partners (reducing flexibility and strategic control at the corporate level). full accesscan withcause a free trial. The blurring of companyUnlock boundaries problems in accountability, lines of responsibility, and employee morale. Resistance in sharing sensitive internal Download Withinformation Free Trial between departments can reduce the effectiveness of the software. Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and co nsolidation into a single enterprise may yield limited benefits. The system may be too complex measured against the actual needs of the Sign up to vote on this title customer.
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Gives Accounts Payable personnel increased control of invoicing payment processing and thereby boosting their productivity eliminating their reliance on computer personnel for these operations. Reduce paper documents by providing on-line formats for quic entering and retrieving information. Improves timeliness of information by permitting, posting daily instead o monthly. Greater accuracy of information with detailed content, better presentatio fully satisfactory for the Auditors. Improved Cost Control Faster response and follow up on customers More efficient cash collection, say, material reduction in delay payments by customers. Better monitoring and quicker resolution of queries. Enables quick response to change in business operations and mar conditions. Helps to achieve competitive advantage by improving its business proces Improves supply-demand linkage with remote locations and branches different countries. Provides a unified customer database usable by all applications. Improves International operations by supporting a variety of tax structure You're Reading a Preview invoicing schemes, multiple currencies, multiple period accounting an languages. Unlock full access with a free trial. Improves information access and management throughout the enterprise. Provides solutionDownload for problems like Y2K and Single Monitory Unit (SMU With Free Trial or Euro Currency.
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the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on granular level.
Change how a product is made, in the engineering details, and that is how it will now b made. Effective dates can be used to control when the switch over will occur from an ol version to the next one, both the date that some ingredients go into effect, and date th some are discontinued. Part of the change can include labeling to identify ver numbers.
Computer security is included within an ERP to protect against both outsider crime, suc as industrial espionage, and insider crime, such as embezzlement. A data tamper scenario might involve a terrorist altering a Bill of Materials so as to put poison in foo products, or other sabotage. ERP security helps to p revent abuse as well.
Disadvantages
Many problems organizations have with ERP systems are due to inadequate investm in ongoing training for involved personnel, including those implementing and testin changes, as well as a lack of corporate policy protecting the integrity of the data in th ERP systems and how it is used. Limitations of ERP include:
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Success depends on the skill and experience of the workforce, including training abo how to make the system work correctly. companies DownloadMany With Free Trial cut costs by cutting trainin budgets. Privately owned small enterprises are often undercapitalized, meaning their ER system is often operated by personnel with inadequate education in ERP in general, suc as APICS foundations, and in the particular ERP vendor package being used. •
•
Personnel turnover; companies can employ new managers lacking education Signinupbusiness to vote onpractices this title that are ou the company's ERP system, proposing changes useful ERP. Not of synchronization with the best utilization of theUseful company's selected Customization of the ERP software is limited. Some customization may involv changing of the ERP software structure which is usually not a llowed.
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ERPs are often seen as too rigid and too difficult to adapt to the specific workflo and business process of some companies—this is cited as one of the main cause of their failure. Systems can be difficult to use. Systems are too restrictive and do not allow much flexibility in implementatio and usage. The system can suffer from the "weakest link" problem—an inefficiency in on department or at one of the partners may affect other participants. Many of the integrated links need high accuracy in other applications to wor effectively. A company can achieve minimum standards, then over time "dirt data" will reduce the reliability of some applications. Once a system is established, switching costs are very high for any one of th partners (reducing flexibility and strategic control at the corporate level). The blurring of company boundaries can cause problems in accountability, lin of responsibility, and employee morale. Resistance in sharing sensitive internal information between departments ca reduce the effectiveness of the software. There are frequent compatibility problems with the various legacy systems of th partners. The system may be over-engineered relative to the actual needs of the customer.
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Benefits of ERP
Download With Trial ERP is truly today an indespensable tool forFree businesses and industries though it difficuly to operate. The biggest advatage of this software is that it facilitates cordinatio amongst different departments. ----------------------------------------------------------------------------------------------------------Advantages of ERP Faster
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Without ERP, a business may turn over its inventory once or twice
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a price on lost business, customers will take their business elsewhere products they want are not available when they need them.
Some manufacturers physically count inventory each month-in some Better inventory each weekend often have an inventory accuracy rate as low as 20%. A accuracy, fewer system can increase inventory accuracy to more than 90%, while re the need for frequent physical audits. For many, a comprehensive ph audits inventory is not only costly in itself, but requires a temporary shutdo business to count, tag and check stock.
Reduced setup Manufacturers often spend anywhere from one to three shifts sett times major pieces of production machinery. An ERP system can improve time by 25% to 80%-from days to a few hours by grouping production jobs together, ensuring coordination of people, machinery, and planning for maximum equipment use and efficient m maintenance to minimize downtime. Optimizing production in this m translates into increased capacity, which means you can make more pr with the same amount of machinery and people, thus increasing reven ROI without having to increase capital expenses.
Higher quality, In some plants, re-work rates, because of unacceptable quality, m between 15% and 40% of production output. The production staff m less re-work You're Reading a Preview realize there is a problem until after the product has been manufacture software withUnlock a strong manufacturing full access with a free trial. component proactively quality issues, providing the information needed to increase pro efficiency and Download reduce or eliminate With Freere-work. Trial Timely revenue collection, improved cash flow
Some companies take up to 90 days to collect on customer invoices. A system can automatically generate a list of late paying custom notifications as needed, and "redflag" customers whose credit should on hold before more products are manufactured or shipped. ERP sy rece give manufacturers the power to proactively examine accounts Sign up to vote on this title before significant problems occur, instead of merely reacting. Not useful Useful up receivable equates to better cash flow, freeing funds for the busi invest in revenue generating assets.
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The Big Bang In this, the most ambitious and difficult of approaches to ER implementation, companies cast off all their legacy systems at once implement a single ERP system across the entire company.
Franchising strategy This approach suits large or diverse companies that do n share many common processes across business units. Independent ERP system are installed in each unit, while linking common processes, such as financial boo keeping, across the enterprise.
This has emerged as the most common way of implementing ERP.
Slam-dunk ERP dictates the process design in this method, where the focus is o just a few key processes, such as those contained in an ERP system’s financia module. The slam-dunk is generally for smaller companies expecting to grow int ERP.
The goal here is to get ERP up and running quickly and to ditch the fanc reengineering in favor of the ERP system’s "canned" processes.
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Advantages and Disadvantages of ERP
Download With Free Trial The advantages and disadvantages of ERP is an interesting Study. The foremo advantage of an ERP system is bringing down the costs and saving the valuable tim which would have otherwise been wasted in procedural maneuvers and unwanted delay Different software programs maintained in the departments were proving to be a gre hurdle. Since ERP is a uniform platform it ensures that there in no discrepancy in th information that is processed. Sign up to vote on this title Industry wise advantages
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Advantages in a corporate entity Sheet Music
The accounts department personnel can act independently. They don't have to be behin the technical persons every time to record the financial transacti Ensures quicker processing of information and reduces the burden of paperwo Serving the customers efficiently by way of prompt response and follow
Disposing queries immediately and facilitating the payments from customers with eas and well ahead of the stipulated dead
It helps in having a say over your competitor and adapting to the whims and fancies o the market and business fluctuations. The swift movement of goods to rural areas and i lesser known places has now become a reality with the use of E
The database not only becomes user friendly but also helps to do away with unwante ambiguity.
ERP is suitable for global operations as it encompasses all the domestic jargons, currenc conversions, diverse accounting standards, and multilingual facilities .In short it is th perfect commercial and scientific epitome of the verse "Think Local. Act Glo You're Reading a Preview
ERP helps to control and data and facilitates Unlock full accessthe withnecessary a free trial. contacts to acquire the same. Disadvantage
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Inspite of rendering marvelous services ERP is not free from its own limitations. ER calls for a voluminous and exorbitant investment of time and money. The amount of cas required would even be looming on the management given the fact that such an outlay not a guarantee to the said benefits but subject to proper implementation, training an use. In the ever expanding era of information theft ERP exception. It is alarming Signisupno to vote on this title note the time taken to implement the system in the Useful NotThese useful means larg organization. amounts of workers have to shun their regular labor and undertake training. This not on disturbs the regular functioning of the organization but also runs the organization in th
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Integration can be the highest benefit of them all. The only real project aim for implementing ERP is reducing data redudancy a nd redudant data entry. If this is set as a goal, to automate inventory posting to G/L, then it might be a successful project. Those companies where integration is not so important or even dangerous, tend to have a hard time with ERP. ERP does not improve the individual efficiency of users, so if they expe it, it will be a big disappointment. ERP improves the cooperation of users.
Efficiency
Generally, ERP software focuses on integration and tend to not care about the daily need of people. I think individual efficiency can suffer by implementing ERP. the big question with ERP is whether the benefit of integration an d cooperation can make up for the loss in personal efficiency or not. Cost reduction
It reduces cost only if the company took accounting and reporting seriously even before implementation and had put a lot of manual effort in it. If they didn't care about it, if the just did some simple accounting to fill mandatory statements and if internal reporting did You're Reading athen Preview not exists of has not been fincancially-oriented, no cost is reduced. Less personnel
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With Free Trial Same as above. Less reporting orDownload accounting personnel, but more sales assistants etc. Accuracy
No. People are accurate, not software. What ERP does is makes the lives of inaccurate people or organization a complete hell and maybe forces them to be accurate (which Sign up to vote on this title means hiring more people or distributing work better), or it falls.
Disadvantages:
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It depends. SAP can be configured to almost anything. In Navision one can develo almost anything in days. Other software may not be flexible. -----------------------------------------------------------------------------------------------------------
SAP ERP Business Benefits
SAP ERP delivers a comprehensive set of integrated, cross-functional business processe With SAP ERP, you can gain the following benefits: •
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Improve alignment of strategies and operations o Run your enterprise in accordance with strategy and plans, accessing the right information in real time to identify concerns early. o Pursue opportunities proactively. o Achieve corporate objectives by aligning workforce and organizational objectives. o Find the best people and leverage You're Reading a Previewtheir talent in the right job at the right time. Unlock full access with a free trial. Improve productivity and insight o Leverage self-services and analytics across your organization. o Improve operational efficiency and productivity within and beyon Download With Free Trial your enterprise. Reduce costs through increased flexibility o Use enterprise services architecture to improve process standardization, efficiency, and adaptability. o Extend transactions, information, and collaboration functions to a Sign up to vote on this title broad business community. Useful Not useful Support changing industry requirements o Take advantage of the SAP NetWeaver platform's latest open, Web-based technology to integrate your end-to-end processes seamlessly
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Eliminate high integration costs and the need to purchase third party software. o Deploy other SAP Business Suite applications incrementally to improve cash flow and reduce costly borrowing. Gain higher ROI faster o Install SAP ERP using rapid-implementation techniques that cost less than half what traditional approaches cost. o Leverage preset defaults and prepackaged versions available for specific industries. Retain top performers o Retain your top performers through clearly defined career and development plans. o Link employees' performance to compensation programs such as variable pay plans and long-term incentives. Provide immediate access to enterprise information o Give employees new ways to access the enterprise information required for their daily activities. o
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The Advantages and Disadvantages of ERP
Download With Free Trial There are a number of powerful advantages to Enterprise Resource Planning. It has bee used to solve a number of problems that have plagued large organizations in the past. A the same time, it is not without a number of disadvantages. Being able to weigh the will allow a company to decide if this solution will properly meet their needs.
It should first be noted that companies that fail to utilize systems such Sign up to vote on this as titleERP may fin themselves using various software packages that may function well with each othe Useful useful not Not In the long run, this could make the company less efficient than it should be.
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altering how a product is manufactured. A dating structure can be set up which can allow the company to be informed of when their product should be updated. This is importan because it will allow the company to keep better track of their products, and it can allo the products themselves to be produced with a higher level of quality. Another are where ERP can be an indispensable tool is the area of security. It can protect a compan against crimes such as embezzlement or industrial espionage.
However, with all the advantages that ERP offers, there are a number of disadvantages a well. Perhaps one of the biggest disadvantages to this technology is the cost. At this time only large corporations can truly take advantage of the benefits that are offered by th technology. This leaves most small and medium sized businesses in the dark. A numb of studies have shown that the biggest challenges companies will face when trying t implement ERP deals with investment. The employees must be continually trained o how to use it, and it is also important for companies to make sure the integrity of the da is protected.
ERP has a number of limitations. The success of the system is fully dependent on how the workers utilize it. This means they must be properly trained, and a number o companies have attempted to save money by reducing the cost of training. Even if company has enough money to implement ERP, they may not be able to successfully u it if they do not have enough money to train their workers on the process of using it. On You're Reading a Preview of the biggest problems with ERP is that it is hard to customize. Very few companies ca effectively use ERP right out ofUnlock the box. It must be modified to suit their needs, and th full access with a free trial. process can be both expensive and tedious. Even when a company does begin changin the system, they are limited in what they can do. Download With Free Trial
Most ERP vendors will not allow the structure of the software to be altered. advantage to ERP is that making the necessary changes to use it may actually make company less competitive in the market. In addition tovote theoncosts Sign up to this titleinvolved implemented ERP and training workers to use it, the ERP vendors may charge addition Useful Not useful license fees, putting a strain on companies that do not have enough resources to pay fo them. The technical support of ERP departments has been questioned, and a number problems could arise due to security, since corporate representatives must give sensitiv
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current platform is a Microsoft Dynamics NAV based one or if you sell apparel instead o plastics, an ERP system can make sure that all of your data is one central location th everyone can access. The logistical advantages behind an ERP based SCM system a that it is designed to reduce costs overall and allow the data flow between si departments or international offices to move smoothly and in real time for bett processing. It can also help with the analysis of design engineering, streamli purchasing functions, managing the basics and advanced functions of bill of material three-way matching of purchase orders, inventory, and costing, reports and all accountin function. The engineering details portion of the ERP system is especially handy companies looking to streamline the current process by either trimming it or making faster and less bulky. It can track a rollover timeline from the old version to the new, te employees when new ingredients are to be used and the old to be discontinued, and eve help businesses determine how they want to label or identify version numbers of the products. One often overlooked advantage of an ERP system is the security features th are built into the software. They are designed to protect the company from industr espionage and other outsider crime as well as insider crime such as embezzlement. The is an improved functionality in the most current ERP systems that implement interna controls to will keep data from being tampered with in addition to the integration of othe security tools that are currently being utilized in today’s market. There is no doubt that i this economic conscience society that organizations of all types want to be able to reduc their manufacturing costs. By streamlining the data flow between departments an Reading a Preview allowing employees to view all You're of the information pertinent to do their jobs, they will b able to provide customers withUnlock quicker answers and waste less time trying to figure th full access with a free trial. answer out, saving the company valuable time and money and allowing the employees work more efficiently. Download With Free Trial
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While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced: Usually many obstacles can be prevented if adequate investment is made and adequate training is involved, however, success does depend on skills and the experience of the workforce to quickly adapt to the new system. • • • • •
Customization in many situations is limited The need to reengineer business processes ERP systems can be cost prohibitive to install and run Technical support can be shoddy ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.
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