The Benefits of ERP in Supply Chain

This article explores the role of ERP in supply chain management and its benefits. It discusses how ERP systems can improve customer service, automate workflow, and reduce switching costs. The article also highlights the importance of digitalization and consumerization of business functions in supply chain management. Case studies of successful ERP implementation in Nike and other multinational firms are presented. The article concludes with recommendations for project managers and multinational firms to select the best supply chain and ERP implementation strategy.

The Benefits of ERP in Supply Chain 0
Title: The Benefits of ERP in Supply Chain
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The Benefits of ERP in Supply Chain 1
Benefits of ES in Supply Chain
The digitalization of the business functionalities from marketing to sales, finance to
operations and human resources has shown high dependencies on Enterprise Resource Planning
(ERP) systems. The ERP and SCM (Supply Chain Management) have become the integral part
of interplay which exists in multinational firms. The ERP as a dominating technology system is
moving towards the next future generations. The influential SCM forces are identified and
studied with interesting aspects of inter-linkage which co-exists between the business and
technology. To address the fundamental implications of ERP on supply chain management have
been intricately explored.
The supply chain management process starts with a customer and integrating of the ES
systems across employee hierarchies.
1. Improved Customer Service-The need of making timely decisions exerts pressure on
firms to implement ERP systems. A case study of successful implementation of ERP
system in organizations has been studied. This is given by Jaehoon Whang, Kijoo Kim
and Moon-Bong Lee (Whang, Lee and Kim, 2018). Typical benefits include adoption of
global standards and identification of critical issues. SAP is an all-inclusive leader of
ERP systems which reports more than 60 percent of multinational firms have
implemented ERP systems and the market is annually grown by 50 percent in past two
decades. The factors which are critical for the implementation of ERP in a firm are-
Customization history, internal communications and role redefinition of IT departments.
For instance-the multinational firms like Dell Computers and Hershey Foods have
undergone complications in implementing the ERP systems. The SAP firm advocates the
need of having a clear and concise goal statement and providing manual training to the

The Benefits of ERP in Supply Chain 2
employees. Another group of companies which have suffered major problems in up-
gradation of ERP systems is Korean companies. The firms need to procure a valid license
and do not miss on any strategic opportunity (Akagic and Hodzic, 2014).
2. The Automation of Workflow-The multinational firms need to recognize the
importance of automated workflow within the different hierarchical systems existing
within an enterprise. A case study on Nike-The ERP and SCM implementation shows a
transition from failure to success. The significance of automated workflow has been
emphasized with relevance to implementation of standardized supply chain software
within the company. The project undertaken by Nike, Inc. was targeted at reducing the
amount if raw materials like rubber amount. The multinational firms had more than 1,
00,000 product varieties and requires a high level of modification and data management.
The Nike Company went ahead with its traditional legacy systems rather than
upgrading as ERP project. The company suffered with inefficiencies in database
management and sales went down. The company needed to determine the complications
arising due to the implementation of CRM and ERP systems. The flaws in the
configuration of ERP system could have been eliminated by adequate testing and third
party approach. The company underwent transition from failure to success in upgrading
the components of ERP systems such as material management, sales and distribution,
procurement management. The company registered increased profit forecasting in next 6
months (Kang and Kim, 2017).
The Role of ERP in Supply Chain Management
A growing number of startups have started reaping the benefits of ERP systems. The
supply chain management involves interaction of firms with numerous suppliers in order to

The Benefits of ERP in Supply Chain 3
procure raw materials for launching the new product into the market. Due to the changing
information technology systems has a major fundamental implication on the integration of ERP
into SCM. With context to amalgamation of business processes with IT systems, the role of ERP
in supply chain management have been studied (Rauth Bhardwaj, 2015).
1. The Digitalization of Business Functions-Innovation-To make an informed decision, the
businesses need to identify the challenges. The Enterprise Resource Planning plays a pivotal
role in reducing the inefficiencies, elimination of wastes and enhancing operational
competency. The business executives need to resort prescriptive analytics model to elucidate
the causes that exists between the supply chain management design and ERP systems (Zhou,
Zhu and Wu, 2014).
2. Reducing the Switching Cost-Augmented Reality- The packaging of a product is a very
time-consuming process. The wholesome process of commoditization of a product and
reducing the transaction cost is being addressed in the markets. Theoretically stated, a buyer
needs to exit the association with the current vendor system and do not change the product
characteristics. The processes can be outsourced in an open market without any changes in
the quality but with a decrease in the price (Reimann and Ketchen, 2017).
3. The ERP Consumerization-Supply Chain-The corporate ERP, IT has revolutionized the
world in a way where the end users are able to direct the efforts to magnify the existing
SCM challenges. Consumer IT has undergone a big change in the past decade and reframing
of the present processes. The vendors can foresee the big potential for consumer IT products
and profound changes in customer retention (Mazzawi, Ismail and Alawamleh, 2018).
The ERP system occupies a dominant position in the markets. With the emergence of
centralized IT models, the multinational firms can exercise control on total spending such as the

The Benefits of ERP in Supply Chain 4
cost of a product. The MNC’s have a strong tradition of mergers and acquisitions. The SCM
mechanism adopted by the MNCs must be aimed at creation of value. With the emergence of
ERP systems into daily lives, business processes are required to be changed. Supply chain
management results from the external and internal processes which must be aligned with the
management by objectives. The Multinational firms are required to engage in adhering IT
protocols when communicating the enterprise project details and course of action as a medium
for exchanging the services.
As a project Manager, selection of best supply chain and ERP implementation strategy
requires a macro view of present systems. The interdepartmental nature of Multinational firms
requires an effective ERP and SCM systems. The end customers must be delivered with better
quality products and greater speed technology systems. Comparison of active targets is possible
only through the right ERP and SCM processes. The workflow processes must be identified and
efficient processes constructed. The ERP systems must ensure to eliminate the differences
through rapid identification of supply chain strategy.

The Benefits of ERP in Supply Chain 5
References
Akagic, A. and Hodzic, E. (2014). Soft computing & increasing efficiency of extracting data
from SAP ERP. Southeast Europe Journal of Soft Computing, 3(2).
Icmrindia.org. (2018). SCM and ERP Software Implementation at Nike: From Failure to
Success|Operations|Case Study|Case Studies. [online] Available at:
http://www.icmrindia.org/casestudies/catalogue/Operations/OPER049.htm [Accessed 23 Sep.
2018].
Kang, M. and Kim, S. (2017). A Study of the Effects of Relational Characteristics as an
Antecedent to SCM Activity and Performance among Taiwanese Manufacturing Companies :
Focused on the Mediating Effects of SCM Activity. International Business Review, 21(4),
pp.167-191.
Mazzawi, R., Ismail, L. and Alawamleh, M. (2018). Value chain and supply chain: which is
more impacted by ERP systems?. International Journal of Services and Operations
Management, 30(4), p.405.
Rauth Bhardwaj, B. (2015). Sustainable supply chain management through enterprise resource
planning (ERP): a model of sustainable computing. The International Journal of Management
Science and Business Administration, 1(2), pp.20-32.
Reimann, F. and Ketchen, D. (2017). Power in Supply Chain Management. Journal of Supply
Chain Management, 53(2), pp.3-9.
Whang, J., Lee, M. and Kim, K. (2018). .
Zhou, L., Zhu, H. and Wu, Z. (2014). Research on the New ERP Supply Chain Management
Model. Applied Mechanics and Materials, 687-691, pp.4466-4469.

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