In the past ten years, a large number of national and international organizations have started to standardize and integrate their processes in one system to manage their key resources more effectively by implementing ERP systems. The integration of business functions and the ready availability of all types of necessary and unnecessary information have paved new ways for the customer approach. ERP systems are part of a generation of information systems which have changed the traditional mass-marketing approach. Add-on modules such as CRM (Customer Relationship Management) enable the collection of detailed information about individuals and the use of this information to tailor products and services to the individual needs of customers. First mentioned by Davis (1987) and consequently elaborated by Pine II (1993) the concept of mass customization emerged. It is characterized by the ability to provide customized products or services through flexible processes in high volumes and at reasonably low costs
When ERP was introduced it enabled organizations to practice new forms of industrial engineering, a shift away from the traditional forms where IT functioned independent of the business objectives (Venkatraman, 2000). The standardization of processes, however, forms quite a rigid system as it does not leave much room for changes in a company. With respect to the changing market and process requirements due to mass customization this rigidity could form a barrier towards process changes since once a company has a ERP system it is bound to vendor updates or costly system customization for integral changes. Mass customization has not known a big bang introduction but rather gradually evolved from changing market requirements. Therefore, its further development is subject to customers´ wishes and lives from the flexibility and adaptability of the technical systems involved. Hence this paper intends to investigate in which way ERP functionalities influence and potentially constraint mass customization. Chapter 2 will explain the research question and the sub questions to be answered in the course of this paper. Also, the methodological approach chosen for this research will be elaborated upon. Chapter 3 deals with the theoretical background of ERP systems and its general functionalities. In chapter 4 the characteristics of process innovation are explained as defined by Davenport. Chapter 5 treats the historical development of mass customization and tries to relate it to the features of process innovation. Consequently, the organizational prerequisites necessary for the functioning of mass customization are elaborated in chapter 6. These findings are then matched with the actual functionalities offered by ERP/SAP systems. The conclusions are given in chapter 7.
The following research question will be answered:
‘Do ERP systems constraint mass customization, and if so in which way?’
In order to reach the core of the research question and come to a well investigated conclusion the following sub questions will be answered:
What are the functionalities of ERP systems?
What is process innovation?
What is mass customization? Up to which extent can mass customization be considered process innovation? -
Which functions are necessary within a company to support mass customization? -
Does SAP (for example) support these functionalities? If not, what (other functionalities) does SAP offer instead?
The topic is approached through a literature research in the field of process innovation as well as in mass customization. Firstly literature will be used to describe ERP systems in the context of their application as an integrator between the different business processes. Also, the functionalities of ERP that form the basis for a smooth handling of daily operations are explained in detail. Secondly, the term...
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