BCO6603 Enterprise Resource : Business Processes

Introduction

The purpose of the assignment is to analyse the importance of enterprise resource planning and the implications of it in the modern world. A particular topic regarding enterprise resource planning and its concept are identified. Enterprise Resource Planning (ERP) is a management tool used for understanding complex business processes. It is typically used for all management purpose in order to identify the processes that take place in an organisation. The assignment focuses on the characteristics of ERP along with its application in the modern world. The topic for the assignment is the reasons behind the failure of a retail supply chain. Relevant models are identified and recommendations are provided for improving the retail supply chain. In order to complete, the assignment the departmental store Myer is analysed along with its ERP system.

Concept of Enterprise Resource Planning

According to Leon (2014), Enterprise Resource Planning system or ERP is considered as a management system that is mediated by the use of software and technology. ERP stretches its use on the various aspects of a business organisation. Activities related to business are conducted by the application of ERP. It provides an updated view of the techniques to be used for the success of an organisation. Activities such as planning of product, manufacturing, marketing, sales and inventory management and so on are included in the process of ERP. It helps in maintaining a track on the business resources such as a requirement of raw materials, a capacity of production, orders and balance of an organisation. One of the biggest advantages of ERP is the fact that it integrates organisational systems and helps in conducting error-free operations that are useful for the purpose of a business. However, Esendemirli, Turker and Altuntas (2015) stated that the development of ERP system is different from the development of the traditional system. Despite this problem, the use of ERP has increased in every organisation. Large and small organisations utilise ERP in order to establish itself in the market.

Characteristics of ERP

After analysing the role of ERP, the characteristics of the system can be easily identified. The characteristics include:

1. Flexibility-In the modern world, the change in a type of business is done on a regular basis. This is mainly due to the change of rules, regulations, policies and regional laws that continuously change the modern business world (Hoch and Dulebohn 2013). In order to cope up with these changes, it is necessary for every business organisation to remain flexible and adapt to the changes. Similarly, in the context of ERP, this flexibility needs to be maintained concerning the changes in the business organisation. The organisations need to understand the importance of ERP and change the system as per the requirement of the business environment.   
2. Open module-One of the major characteristics of ERP is the fact that the system is an open module network. This signifies the fact a backup system is always available in the case of any technological failure. The error that occurred from one module can be rectified by the use of another module. This can be done by simply visiting the other module rather than opening it up. Certain modules that exist in the ERP system can be opened separately. Modules such as sales management, purchase management, customer relationship management are some of the examples that can be related to the use of open modules.  
3. Comprehensiveness-According to Tarhini, Ammar and Tarhini (2015), ERP needs to be comprehensive in terms of its usage. This is required in order to maintain its useful features in every aspect of the business. The advanced technology can help in coping up with technological changes that take place in the business world. Most of the activities that are carried on in an organisation need to be done by the application of ERP. This can also be used in order to identify the use of ERP and its correct usage in the organisation.
4. Online connectivity-In the modern world, the use of ERP in business is a growing concept. The application of ERP can be best understood with its connection with online portals. The online connectivity of the system can help it to maintain communication with the business organisations. The interaction from one business to other needs to be done on a regular basis in order to understand the application. The online connectivity needs to be done in order to gain competitive advantage. It can also help in maintaining the connection with the customers and identifying the satisfaction of the buyers and sellers.
5. Suitable business practises-According to Chofreh et al. (2014), every business has certain practices that need to be maintained in order to ensure stability and success. The practices are the standards that need to be maintained in order to conduct ethical business by maintaining the laws. For example, a business having an accounting as the main function in an organisation need to follow IFRS system in order to maintain the standards of business. ISO standards are also maintained by businesses that indulge in manufacturing, marketing, purchasing and selling of products. ERP helps the businesses to maintain the standards and keep a record in case of any updates that are made in the standards.  
6. Multiple facilities-In the modern day, flexibility is important in order to maintain stability in the business environment (Jinno, Abe and Iizuka 2017). However, apart from this, the ability to maintain more than one facility is also important for the success of a business. Multiple facilities mean the ability to work in various elements using variables that are unknown in the business sector. For example, a good ERP system needs to have the ability to work in a business environment that have different currencies, standards and provide more than one platform of business.
7. Strategic planning-One of the major application of ERP is the use of the system during strategic planning. This helps in the maintaining comprehensiveness and formulates plans keeping in mind the advantages of the company. ERP can help in this by setting up an online system that is capable of searching for information that can help in the success of the business. Strategic planning is an important aspect of an organisation and the application of ERP in the system can help in managing the required resources of an organisation.
8. Optimization of data-Bansal and Agarwal (2015) stated that optimization of data is an important feature for every business. In order to utilise the resources in an effective manner, it is required that proper records are kept about the resources. This can help to utilise the resources to its full potential. ERP helps to maintain a record of these resources and reduces the optimization of data based on the cost incurred and the risk factor. The utilisation of business resources can be maintained in the business. This is also a strategic management plan that helps in increasing the competitive advantage.  
9. Managing project-Issar and Navon (2016) managing projects need sufficient resources and the ability to maintain communication with every member involved in the project. The application of a good ERP system can help in the collaboration of team during the united effort of completing a project. As seen earlier, the use of ERP in online systems can help in establishing the resources and communication that are needed for a successful completion of the projects. The project process can be tracked with the application of ERP system and rectifications can be made.
10. Automatic functions-Modern organisations use an automatic function that can help in the success of a business. These automatic functions help in measuring the quality of ERP used in the organisation (Fernie and Sparks 2014). A good ERP system can help in maintaining the automatic functions such as transactions, interchange of data and e-Commerce. These functions can help in the proper formulation of data that can help in maintaining the critical accounts in an organisation.   

Reasons for failure of retail supply chain transformation

According to Christopher (2016), a retail supply chain is a process that is involved in managing the supply chain network of an organisation. The supply chain is a critical component that is involved in the retail organisation. This includes the delivery of correct products to the customers on time. The supply chain plays an important part in the outlook of the entire process. However, in the modern world, a transformation is being taken place that creates certain trends in the business. These transformations take into consideration certain factors that play a definitive role in the success of an organisation. However, there have been times when the transformation has failed. This mainly occurred due to the growth of environmental factors that challenge the existence of a business. These factors are essential to understanding the methods that are necessary for regulating supply chain management system in an organisation. The decline of change in the business is one of the prime examples of the failure of transformation in the retail change market. As observed by Stadtler (2015), this failure has created a sense of distress to many businesses that are involved in the retailing market.

Most scholars have tried to identify the reasons behind the failure of such transformation among the retail sector. Some of the reasons that were discovered include the slow progress in the nature of transformation. Monczka et al. (2015) stated that about 70% of the retailers fail due to the slow progress of transformation. In the fast moving world, changes in organisational settings come at a rapid pace. Hence, a business sector like Myer needs to maintain the changes and ensure that it is embraced quickly in order to avoid any competition from the market. The new thinking that is required for the effective implementation of ERP technology lacks in the mind of the people. This creates a problem among the sectors, as the business needs to remain innovative. It has been observed that the some of the retail sectors focus more on the organisational model rather than the use of other models that can transform the context of business (Rushton, Croucher and Baker 2014). The one way to make the ERP work in the transformation of retail sectors is the thought process of the people. The employees of Myer need to understand the fact that organisational change based on supply chain management cannot be done by functional or specific changes.

In the light of this statement, it can be said that retail sectors structure itself differently than most other business organisations. According to Brindley (2017), the manner in which these retail sectors are structured is the main reason behind the failure of supply chain management. The ineffective use of ERP in the supply chain management is because of the lack of target customers and its inability to focus on only one particular method. In comparison to Myers, it can be said that FMCGs and CPGs have a different and successful structure that can implement ERP. This is mainly because of the fact that these sectors despite being retail focus more on the satisfaction of the customers. This creates a need for maintaining records that can help in identifying the responses of the customers. The fulfilling of demand remains in line with the marketing and sales of the products. This can help in the proper functioning of the ERP system as the system can be upgraded keeping in mind the proper utilisation of the systems (Wisner, Tan and Leong 2014).

Hence, it can be said that a comprehensive model of ERP can help in making up the loss for the retail companies. Another important reason for the failure of the supply chain of retail companies is the fact that the flow of production is not systematic. Smith (2015) stated that the wrong production line affects about 50% of the stores. This is mainly because the production line does not have a systematic flow that can help in the proper utilisation of ERP in an organisation. The effective use of an ERP model can help in the controlling of the production line by maintaining proper budgetary schemes in Myers. The next part highlights a suitable model for the implementation of ERP.   

Business model related to ERP

As stated by Ha and Ahn (2014) every organisation sets up a structure that can help the company to excel. An organisation structure is a root for its success. Without a proper structure, the implementation of strategies cannot be done effectively. Similarly, retail organisations also structure itself for the betterment of the production technique and satisfaction of the customers. However, the organisational structure of Myers has come under a lot of criticism. This is mainly because the retail organisation does not implement the use of ERP based on the structure. The importance of customer satisfaction is an important factor for any retail store. The use of the new model of ERP can help in the formulation of organisational models. The structure of Myers can also command the production flow and work flow in the organisation. In this case, it can be said that a pyramid structure can help in the proper definition of roles, define job tasks and outline the report of an organisation in the case of any discrepancies. The use of a proper ERP model can help in the delegation of authority and designing of the organisation structure (Altamony et al. 2016).

In the light of this statement, it can be said that the use of Supply Chain Operations Reference (SCOR) model. The model is based on five levels that can help in the effective application of the ERP system. The first level of the model is based on the planning system. It provides a comprehensive definition of the plans that need to be done in order to make the ERP system effective. In this stage, a company manages to establish its supply chain competitive objective (Kurbel 2016). The first level also includes the sources, method and delivery process that can be used for the effective application of the ERP system in the Supply chain management model. Such a process is used mainly for warehouse management and transportation and delivery infrastructure. This is suitable for an organisation like Myers that has a private transportation facility. The second level involves the effective use of 26 categories that can be possible to implement in a supply chain management. The advantage of the process is that organisations can configure the ideal or actual operations using the process of ERP. This is based more on the source, make and deliver the products. The 26 categories under which the system can be categorised are based depending upon the demands of the customers and the organisational objectives. The delivery of products, purchase order, stocked products is also categorised that can help in future storage of the inventories. According to Seuring (2013), these categories are essential in order to formulate future inventory and stock list Myers.

In order to plan, set and execute the organisational goals, the level three of the model needs to be utilised. This level signifies the essentials of planning and the ways by which goals can be set in the organisation. In order to execute the goals, this level provides a complete overview of the importance of supply chain management in an organisation. Ross (2013) stated that this is done in order to help in improving the supply chain of an organisation and improve the ERP system. This also includes setting up of the benchmark, defining the elements. Identifying the best practice that is suitable for the organisation and the capabilities required for executing the best practices. In this level, Myers can analyse the ways by which the plan can be executed. The final level focuses on the implementation of the actions. This defines a definitive course that is required for implementing actions in the organisations. The improvement of supply chain management is done in order to improve the ways by which ERP system can be installed. Beske and Seuring (2014) observed that the implementation of these actions does not follow a standard protocol. This is because the action implemented in every organisation is unique and is done for the betterment of the production. Thus, it can be said that the implementation of the SCOR model can help in maintaining the ERP system in an organisation.

Recommendation

In order to improve the techniques of Myers in terms of using supply chain management and ERP system, it is recommended that Myers adopt the basic and ensure that three important conditions are analysed. One of the conditions includes the change in organisational structure. The retail organisations need to follow a structure that reflects the effectiveness of supply chain management. The structure of the organisation needs to be such that the use of ERP can be well implemented in the company. Retail organisations that have a supply chain talent and thinking can be effective for success in the future. This also includes the proper identification of buyers. The buyers and sellers in an organisation need to have proper coordination required for the implementation of the ERP system. Another important recommendation is that every transformation that takes place in an organisation need to be done keeping in view the scale and depth required for organisational transformation. The organisation model is a predecessor of the business model that has remained as the fundamental error in any organisational setup.    

Conclusion

Thus, it can be concluded that in the modern day the use of ERP and its implementation is important for any organisation. For retail sectors, the implementation of this process can be used for attaining the goals and objectives of the sector. For a company like Myer, the effective use of ERP system can help in the improvement of the company. It can leapfrog in the ranks of departmental stores in Australia. Thus, the ERP system is an important factor without which the supply chain management cannot be determined.

References

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