8/13/2019 Mis_ch3 Erp Supplement Material-1

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Enterprise Resource Planning

Enterprise resource planning(ERP) is a cross-functional enterprise system that serves

as a framework to integrate and automate many of the business processes that must be

accomplished within the manufacturing, logistics, distribution, accounting, finance, and

human resources functions of a business. or e!ample ERP software for a manufacturingcompany will typically track the status of sales, inventory, shipping, and invoicing, as

well as forecast raw material and human resource re"uirements. igure# illustrates the

ma$or application components of an ERP system.

Producti on

Pl anni ng

Accouti ng

andFi nance

Human

Resources

Sal es,

Di stri buti

on, Order

Management

I ntegrated

Logi sti cs

%ustomer&

Employee

%ompanies are finding ma$or business value in installing ERP software in two ma$or

ways'

ERP creates a framework for integrating other systems and improving customer

service, production, and distribution efficiency.

ERP provides vital cross-functional information "uickly on business performance to

managers to significantly improve their ability to make better business decisions across

the enterprise.

%olgate-Palmolive' he enefits of ERP

%olgate-Palmolive is a global consumer products company that implemented the *+P&R

enterprise resource planning system. %olgate embarked on an implementation of *+P&R to allowthe company to access more timely and accurate data, get the most out of working capital, and

reduce manufacturing costs. +n important factor for %olgate was whether it could use the

softtware across the entire spectrum of the business. %olgate needed the ability to coordinate

globally and act locally. he implementation of *+P across the %olgate supply chain contributed

to increased profitability. ow installed in operations that produce most of %olgates world wide

sales, *+P will be e!panded to all %olgate divisions worldwide by /00#. 1lobal efficiencies in

purchasing-combined with product and packaging standardi2ation-also produced large savings.

efore ERP, it took %olgate 3.*. anywhere from one to five days to ac"uire an order, and

another one to two days to process the order. ow, order ac"uisition and processing combined

takes four hours, not up to seven days. 4istribution planning and picking used to take up to four

days5 today, it takes #6 hours. 7n total, the order-to-delivery time has been cut in half.

efore ERP, on-time deliveries used to occur only 8#.9 percent of the time, and cases

:rdered were delivered correctly 8;.9 percent of the time. +fter R& the figures are 8;.9 percent

and 88.0 percent, respectively.

+fter ERP, domestic inventories have dropped by one-third and receivables outstanding have

dropped to //.6 days from #.6.