Executive summary

This research proposal proposes for the introduction of an ERP system into a hypothetical manufacturing company based in USA. The company produces different types of detergents. For the last few years the company has been in business, it has experienced both manufacturing and distribution challenges. In order to deal with these challenges, the researcher proposes that the company’s top management team should consider integrating its computer system so that employees from different departments can share information. The assumption is that once employees share information; they would be able to respond to changes in business environment. Those in marketing department in particular would be able to capture goods ordered and supply that information to other departments that require such information. By so doing, the company will be able to expand its market and minimize operating cost.

 

Enterprise Resource Planning (ERP) System in Information Management

Introduction

The ABC Company is a hypothetical manufacturing company based in USA. The company specializes in producing different types of detergents. For the last three years that the company has been in business, it has made significant progress in its manufacturing activities. However, in the recent past, the company has experienced manufacturing and distribution challenges due to its manual ordering system. With the manual ordering system, the company allows its retailers and customers to make calls and place orders for the goods they want. Once retailers and customers make calls and place their orders, the company’s trucks distribute goods as per the orders. However, due to changes in demand, retailers often make calls to alter their orders even when company’s trucks leave distribution centers (Hall, 2015). In the worst scenario, retailers end up getting fewer products than they ordered and because of frustration, the company has been losing business rather than gaining it.

This research proposal proposes for the introduction of an enterprise resource planning (ERP) system into the company’s business practices. The proposed ERP system is aimed at enabling the company to capture accurate orders from retailers and customers for efficient production and distribution of its products (Stair, & Reynolds, 2015). The project’s target sponsor is the company’s top management team. This team coordinates all activities that take place in the company. Accordingly, the team will be tasked with authorizing the project once the project has been found to be viable.

The proposed project will involve installing a centralized computer system for capturing data from different departments and putting it into a central position where different employees can access it. Presently, the company does not have such a system. Instead, it has a system that is distinct for each department (Hall, 2015). Although the current computer system does not experience major flaws, it does not enable employees from different departments to share information. Consequently, departments in the company have been operating without linking with one another even when they are supposed to link with each other. This has resulted to frequent complaints from customers due to unfulfilled orders. It has also resulted to misallocation of resources.

Support for strategic goals

The company’s strategic goal for the next five years is to expand its market share while minimizing its operating cost. If the company is to continue expanding its market share as it has been doing in the past without minimizing its operating cost, then it is not likely to achieve its strategic goal. The proposed ERP system will do the following to help the company achieve its strategic goal.

First, it will integrate all activities in the company into a single computer system that will be accessible to every department. Integration of departments into one computer system does not mean that departments will be eliminated. Instead, it means that information from different departments will be centralized for it to be shared by different departments. Currently, each department handles its own information. As a result, unless departments share information on request, they do not share it. This complicates any effort aimed at pursuing a common goal. Given that all departments in the company pursue the same goal, the proposed ERP system will enable these departments to share information. By so doing, the company will be able to pursue its strategic goal (Stair, & Reynolds, 2015).

Second, the proposed system will enable the company to allocate its resources efficiently. This does not mean that the company does not allocate its resources efficiently, but it means that resources will be allocated where needed most. Once this has been done, the company will maximize productivity thereby achieve its strategic goal partly. Third, the company will improve its competitiveness in the market by ensuring that retailers and customers receive products on time. Right now, the company suffers from poor communication thereby it does not deliver accurate orders to retailers and customers. However, once it installs the proposed system, it will improve its communication with retailers and customers. By so doing, it will retain its market share and even expand it because it will be competitive (Umble, Haft, & Umble, 2003). Fourth, the cost of doing business will be minimized through timely and accurate delivery of goods. It will also be minimized through efficient resource allocation.

Fifth, the proposed ERP system will enable the company to constantly monitor changes in business environment and respond accordingly. Currently, the company does not do this right away because marketing department does not share its data with manufacturing department unless asked to do so. Other departments behave in the same manner meaning that pursuing a common goal is a challenge to the company. Once the proposed project is implemented, there will be data sharing among employees from different departments. This will enable those employees to view data that was previously not available to them at the right time and take the necessary steps (Patel, & Vij, 2013). For example, manufacturing department will be able to view the number of units ordered by retailers and customers and determine the number of units it should produce at any given time to meet the demand. The human resource department, on the other hand, will be able to know when to allocate more employees to producing goods to meet demand. This will increase productivity and cut operating cost.

Systematic approach followed

This proposal is a deliberate effort aimed at enabling the company to minimize its operating cost as well as allocate resources efficiently for the pursuit of its strategic goals. In the process of making this proposal, the researcher has followed the following systematic approach to identify the problem. First, the researcher has evaluated the company’s strategic goal for the next five years. Upon evaluating this goal, the researcher established that the company wishes to expand its market share by 35 percent in those five years. One method that has been proposed to do this has been an annual increment of the company’s sales by 25 percent. Another method has been to increase production by the same margin (Parthasarthy, 2007). Looking at the progress the company has made since it launched this program last year, the researcher established that the company is far from achieving this goal.

Second, after establishing that the company is far from achieving its strategic goal, the researcher evaluated what the company has been doing since last year to achieve its strategic goal. Upon evaluating this issue, the researcher established that the company has not been doing anything significant towards this issue. If anything, the company has been reluctant thereby it has continued to experience the same problems it experienced before. This prompted the researcher into looking at the possible causes of the problems. While doing this, the researcher established that majority of retailers and customers complain about the way the company distributes its goods. One striking problem was that the company does not supply its products to retailers and customers on time and when it does, the orders are not the correct ones. In order to deal with this problem, the researcher recommends that the company’s top management team should consider installing an ERP system that would fast track orders from retailers and customers. If the company does this, its manufacturing department would produce the right quantities of products whereas the marketing department would distribute the right products. This would minimize complaints from retailers and customers. At the same time, it would enable the company to grow its market share and increase its production capacity (Leon, 2008).

Third, upon doing all of the above, the researcher has evaluated the viability of the proposed project. The researcher has established that although the installation of the proposed ERP system will require the company to allocate funds towards this project, it will be the best option for the company. This will be the best option because information sharing in the company will be enhanced. Once enhanced, employees will utilize that information to make decisions. By so doing, productivity will be improved (Monk, & Wagner, 2013). At the same time, business practices in the company will be integrated to enhance efficiency. More importantly, the company will maintain its competitiveness in the market by responding to orders placed by retailers and customers on time.

Conducting feasibility study

Before implementing the proposed project, the researcher intends to conduct a feasibility study to ascertain the viability of the project. The focus of this study will be on system and its functional specifications. With regard to system investigations, the researcher will start by documenting a number of ERP systems that have been used in the past. This will involve looking for companies that have used such systems in the past and finding out whether they were successful or unsuccessful. For the successful companies, the researcher will look at what they did to be successful. The focus on these companies will be on the ERP system they used and the strategies they followed while implementing their projects. For the unsuccessful companies, the strategy will be the same, but the focus will be on the factors that contributed to the failure.

Once the researcher identifies the possible ERP systems and the possible pitfalls, the researcher will shift focus to functional specifications of ERP system. As for these specifications, the researcher will be concerned with what the company wants to achieve and the ERP’s specifications that would enable the company to achieve its strategic goal. The researcher will also be concerned with the goodness of fit of the system as well as its scalability. As for goodness of fit, the researcher will evaluate the way a possible ERP system would perform in the company (Hall, 2015). If the system would not fit the specifications, then it would be eliminated from the list of possible ERP systems, and vice versa. While doing this, the researcher will also be concerned about the scalability of the system. This aspect concerns itself with the manner in which the system would perform in the future. If the system would not meet future demands, then it would be eliminated from the list of possible ERP system. On the contrary, if the system would meet future demands, then it would be included in the list of possible ERP systems. The assumption would be that such a system would be scalable (Monk, & Wagner, 2013).

From a managerial viewpoint, only the right ERP systems would be utilized in the proposed project. Those that have not worked in the past would not be utilized in the proposed project. At the same time, only experienced employees and consultants would be considered for installing the system. The inexperienced ones should not install the system to avoid inefficiency.

Implementation

In terms of implementation, the proposed ERP system that will involve computerization and connection of the various departments in the company will follow the following mechanism. First, all employees in the company will be trained how to use the system. The training program will be conducted by the human resource department in conjunction with the various departments in the company (Monk, & Wagner, 2013). This will take place two weeks before the system is installed into the company’s business practices. Although the human resource department will be responsible for the training, respective departments will participate in developing the manuals that will be utilized in the training. This will solve possible challenges that different departments might experience as they implement the new system.

Second, once the training is over and the system is ready for installation, the old system will be switched off and all employees will be expected to use the new system. The new system will not be different from the one used during the training program. As a result, no challenges will be expected from the new system, but the information technology department will avail its employees to various departments to address possible challenges. Third, once the ERP system has been installed into the company’s business practices, all departments will be expected to share information. This means that the marketing department will be supposed to share its marketing information with manufacturing department and other departments. Other departments will be expected to do the same. By so doing, manufacturing department will be able to view the number of orders placed by customers at any given time and produce the right number of products (Forcht et al., 2007). The marketing department, on the other hand, will be able to view the number of products produced at any given time. The human resource department, on its part, will be able to allocate resources appropriately so that operating cost can be minimized.

Risk involved

The fact that the company will switch to a new system of doing business then it is possible that there will be some opposition from employees that might oppose the new move. It is also possible that employees might encounter problems familiarizing themselves with the new system (Umble, Haft, & Umble, 2003). At the same time, it is possible that those mandated with entering information into the system might have more work to do than they had before. More importantly, it is possible that the company might face challenges installing the new system. In order to address these risks, the researcher recommends the following.

Recommendations

1. That the company’s top management team should organize thorough training. With regard to this issue, it should be understood right from the beginning that some employees might encounter problems with the new system. In order to deal with this problem, the researcher recommends that enough time should be allocated for training. The researcher has proposed two weeks for training, but in case this time is not sufficient for training, it should always be extended to facilitate thorough training.
2. That effort should be made to notify employees about the issue way before it is introduced into the company. In this case, the top management team should not be mesmerized by the possible benefits of the new system and forget to notify employees about it. Instead, they should inform employees about this issue way before they introduce it. While doing this, they should ensure that employees understand the benefits of the new system. This would minimize possible opposition from employees thereby deal with some challenges (Forcht et al., 2007).
3. That if need be job specifications for those mandated with entering data into the new system should be reviewed so that they can have ample time for the new job. This recommendation presumes that some employees in different departments might be tasked with updating the system with new information from customers as well as form manufacturing and marketing departments. In such a case, it would be necessary to ensure that such employees would not be burdened to the extent that they would not be able to update the system (Hall, 2015).
4. That all stakeholders in the company should be involved in the change process. Although it might not be possible to collect views from every stakeholder in the company, each department should be represented in the change management process. This means that all departments in the company should be involved in developing the new system. The purpose of doing this would be to have everybody on board so that the new system can be a success.
5. That effort should be made to choose the right ERP system. With regard to this issue, it is highly likely that those tasked with sourcing ERP system might source the wrong one. In such an event, the new system would do more harm than the existing system (Hall, 2015). In order to address such a problem, the researcher proposes that the management team should ensure that the ERP system that will be installed into the company’s business practices will be the right one.

Conclusion

The researcher hopes that once the proposed ERP system is installed into the company’s system the following will happen. First, different departments in the company will share information with one another. Consequently, no single department will keep information to its employees only. Instead, they will share such information with employees from other departments. Second, the company will install the right ERP system. With regard to this issue, the researcher acknowledges the fact that if the company is not careful when securing the system, it might acquire the wrong one. In order to avoid such a problem, the researcher recommends the company to determine the specifications of its system ad what the system should achieve once installed. Third, employees will have ample time for training. Fourth, the above recommendations will be followed as they are. Fifth, the company’s top management team will spearhead the proposed project and promote it among employees. If the above is to happen, then it will be possible for the company to pursue its strategic goal. Otherwise, the company might continue facing challenges pursuing its strategic goal.

References

Forcht, K. et al. (2007). Implementing enterprise resource planning (ERP) for strategic competitive advantage. Issues in information systems, 8(2), 425-429.

Hall, J. (2015). Accounting information systems. Boston: Cengage learning.

Leon, A. (2008). Enterprise resource planning. New Delhi: Tata McGraw-Hill.

Monk, E., & Wagner, B. (2013). Concepts in enterprise resource planning. Boston: Cengage learning.

Parthasarthy, S. (2007). Enterprise resource planning (ERP): A managerial and technical perspective. New Delhi: New Age International (P) Ltd., Publishers.

Patel, K., & Vij, S. (2013). Enterprise resource planning models for the education sector: Applications and methodologies. Hershey PA: Information Science Reference.

Stair, R., & Reynolds, G. (2015). Principles of information systems. Boston: Cengage learning.

Umble, E., Haft, R., & Umble, M. (2003). Enterprise resource planning: implementation procedures and critical success factors. European journal of operational research, 146, 241-257.