The high costs of implementation and the amount of changes involved, which involve training of employers, new equipments, consultants and others, can be considered demerits. However, it is important also point out that the outcomes come in a long term perspective.
1. ERP is a major enabler of modern supply chains, for two reason. Firstly ERP facilitates discipline within the company that operates the system, and drives down transaction costs. Secondly it has a natural by-product (information) that can be shared with SC partners (among others). In the developed world it would be rare to find a company that doesn't use ERP or a derivative.
2. Pros and Cons: Pros are lower transaction costs, better data, faster information flow, one set of numbers, better business processes. Cons would be the pain of selection and implementation, the change management piece, and total cost of ownership.
ERP & SAP systems improve the performance and efficiency of the supply chain. Some of the main attributes like Inventory Control, Inventory Turns, Increase profitability and productivity, Increases demand accuracy and integrate the complete supply chain process.
Limitations to this system are success depends on the skills and experience of the workforce, companies do not provide adequate training, synchronization of the sap system with the current manual system will be difficult and the ERP system might be costlier to install for smaller companies.
Agreed on most all points... however I think we're all missing one important component... data accuracy/integrity. Get to the root of the problem before you even think of ERP. Bad data and ERP simply means you are putting a diamond necklace on a turd.
As a developer/implementer of numerous MRP/ERP programs for from enterprise to small MFG companies, the pros mentioned above are all usually realized and well mentioned, however dependent upon the capabilities of staff. The “you can lead a horse to water but cannot make them drink”, has always played a significant role in its success. if the staff is unwilling to change, learn and most importantly accept their current practices may not be Best Practices (which the implementation of any ERP/MRP system will eventually identify) even your best attempts will not reap full benefits. TOP DOWN driven environment is crucial with the complete and fair analysis of each department resources in their willingness and abilities will go a long way in your success.
During implementation you will always find roadblocks, resistance and sometimes even sabotage in staff’s unwillingness for this type of extensive change. Some feel threatened their job maybe on the line, some feel inadequate as a new high-tech resources comes online, outlining long term deficiencies or improper techniques are in place. Identifying and having the ability to train and lead each scenario in that those with resistance become fully embraced is an art in itself.
The more your staff is familiar with these tool sets, the quicker and most importantly utilization of all its resources is set into place. I have seen staff try to railroad an implementation and the “embracing stages” of implementation took years while a well-educated staff moved almost as fast as its implementation, in fact became beneficial to its developmental streamlining and reducing corrections and the optimization processes overall. The later realized significant team synergy, effeciencies and cost reduction gains years ahead of the others. Where the companies with resisteance experienced; staff issues, broken teams, teams became individual battles, learning curves extended, even loss of staff and moral, mostly do to improper evailuations from the start. You will have staff that will not change or unable to perform upon the new model, holding onto these individuals must be dealt with on a case by case bases, but most importantly, no matter how important they have been to your company, must not be allowed to undermind the companies directives. I seen it all in my years....
TOP Brass will have to overcome the many hurtles they will experience, "staying the course" and not buying into staffs sometimes overwhelming obstacles will find light at the end of the tunnel much quicket and with less employee roadblocks. Instilling the project plan, its timelines and the seriousness of not complying with these plans from the onset, would be my most useful advice, next to surrounding yourself with the best.
Some key benefits of ERP systems, such as SAP, in supply chains are:
• Streamlined and integrated functional areas within the organization and its supply chain
• Enhanced transparency across the supply chain, thereby eliminating information distortions and reducing information delays
• Better forecasting, product design and improved communication
• Supports material, information and financial flows, thereby helping in careful planning and co-ordination
Major demerits of ERP systems, such as SAP, in supply chains are:
• Expensive to implement, difficult to calculate ROI of implementation
• Limited customization options available in ERP, thereby sometimes forcing organizations to adopt standard ERP defined work processes (may not be a best practice) which could lead to erosion of their competitive advantage
• End user resistance to being trained could be a serious impediment to the usefulness of the entire ERP system
• Lack of flexibility in adapting to ever-changing supply chain needs
• Lack of more advanced supporting functionality beyond transactional management
• Difficulty in connecting with non-partner systems
We employ an outside change management company when doing any implementation at a new client. The most important thing to remember is that moving to an ERP system will highlight a lot of indiscretions and fraudulent behaviour by the staff in 90% of all cases. They are thus notably scared to assist with the implementation. As someone that implements systems on a daily basis I can state that we have never implemented and left the company in a worst state than when we arrived. I believe a trusted ERP system is the only way for business to move forward.