Nowadays when businesses are operating in a highly automated business environment they have to adopt any newly formed technologies in order to remain competitive (Al-Mashari, 2000). Enterprise Resource Planning systems (ERP) form part of these new technologies that businesses need to adopt. The nature of ERP systems, their benefits and the problems associated with them will be explained through the answers in the questions that follow.
1. What is Enterprise Resource Planning system and which functional areas of business does it typically support?
Enterprise Resource Planning system is an enterprise-wide information system designed to coordinate all the resources, and information needed to complete business activities such as stock updating, order fulfillment and/or billing. An ERP system is characterized by supporting a variety of business functions such as manufacturing and supply chain management. Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of products and services required by customers (Harlant 1996). Supply chain management spans all movement and storage of stock levels such as raw materials, work in progress and finished goods from the supplier to the consumer.
An ERP system is based on a common database and a modular software design. The common database can allow every department of an organization to store and retrieve information in real time and whenever this information is needed without having to ask each department for the relevant information. The information should be reliable, accessible and easily shared. The modular software design should result in the ability of businesses to choose the modules they need, mix and match these modules so that they can improve their performance. Ideally the data for the various business functions are integrated. In practice the ERP system may comprise... [continues]
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