ERP is an abbreviation for Enterprise resource planning and means the techniques and concepts for the integrated management of business as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of an enterprise. ERP systems serve an important function by integrating separate business functions-materials management, product planning, sales, distribution, finance and accounting and others-into a single application.
However, ERP systems have three significant limitations:
1. Managers cannot generate custom reports or queries without help from a programmer and this inhibits them from obtaining information quickly, which is essential for maintaining a competitive advantage. 2. ERP systems provide current status only, such as open orders. Managers often need to look past the current status to find trends and patterns that aid better decision-making. 3. The data in the ERP application is not integrated with other enterprise or division systems and does not include external intelligence.
There are many technologies that help to overcome these limitations. These technologies, when used in conjunction with the ERP package, help in overcoming the limitations of a standalone ERP system and thus, help the employees to make better decisions. Some of these technologies are:
• Business Process Reengineering (BPR)
• Management Information System (MIS)
• Decision Support Systems ( DSS)
• Executive Information Systems (EIS)
• Data warehousing
• Data Mining
• On-line Analytical Processing (OLAP)
• Supply Chain Management
1. Business Process Reengineering (BPR)
• Business processes are: simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools. We all do them, and at one time or another play the role of customer or supplier.
Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. • And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly.
The most common definition used in the private sector comes from the book entitled, Reengineering the Corporation, a Manifesto for Business Revolution, by MIT professors Michael Hammer and James Champy. Hammer and Champy defined business process reengineering as:
• The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in critical, contemporary measures of performance, such as cost,quality, service, and speed. (Reengineering the Corporation, Hammer and Champy, 1993)
The major emphasis of this approach is the fact that an organization can realize dramatic improvements in performance through radical redesign of its processes. This is in contrast to the notion of streamlining processes in order to achieve a measured level of performance.
• Another aspect to the Hammer/Champy definition is the notion of breakthroughs. This approach to reengineering assumes the existing process is not sound and therefore needs to be replaced. A properly reengineered process will provide quantum leaps in performance, achieving breakthroughs in providing value to the customer.
Even though these definitions focus on different strategies of implementing change, the common element is that the change occurs across the whole process.
• THE BUSINESS PROCESS REENGINEERING
• Business Process Reengineering (BPR) is based on a vision of the future that is...