REPORT: PROPOSED ADOPTION OF ERP SYSTEM FOR ALL DIVISIONS
I would like to propose an upgrade of our in-house internal Material Requirement Planning (MRP) mostly used by the Engineers to an ERP system which would encompass sales, account payables, finance, supply chain, invoicing and receiving. Our current system works well internally, however, there are several issues that the MRP cannot address. The MRP doesn’t disseminate information to procurement, sales and finance. Also it doesn’t provide information on inventory levels and late deliveries. It’s therefore difficult to make the necessary changes, which would, commensurate with the rapid changing business environment. In addition, the MRP is manufacturing driven and it is only of advantage to the manufacturing divisions. Even in those divisions, communication and the require knowledge for better forecasting and financial planning are lacking.

The ERP would improve the entire efficiency of the company’s processes. First and foremost, the ERP would enable all the diverse divisions to work as a single unit, provide a key knowledge development and ensure the seamless workflow of processes. As of now, access to information and data retrieval is difficult and cumbersome to analyze. This reduces the production efficiency of employees. With the ERP system all employees would have access to same information and/or data at the same time. Also the ERP has many modules such as inventory, order management, sales, human resource, procurement, warehousing, account payables/receivables and any module of your choice. This would improve productivity rates and each module is well integrated with the other. Finally the system runs on a single platform therefore making it accessible to all divisions across Canada. Overall the knowledge sharing experience would be greatly improved.

The duration of implementation would take 6 months to a year. It is anticipated that by the end of year one all departments would be on the platform.

The implementation would start with a buy-in from top management for their support and commitment of resources. We would also need to sensitize involved stakeholders of the impending changes that seek to change their work culture. This could be done through sharing information on the SharePoint, monthly bulletin, intranet, networks and emails. It’s very important that employees know how aspects of their job would possibly be changing. The success of the system is about the acceptance of the end users not how well the system anticipates to work. This process would minimize employees’ resistance to change. All these could be done in the initial 3 months by the internal ERP team.

Also training for each division could start after the 3 months. How the process works, its benefits and impact on the organization should be explain to employees. In addition, each individual must be trained on modules, which is of prime importance to their daily duties. For instance, all divisions’ procurement staffs should be well trained on the procurement module. Afterwards the cross functional teams should be trained together. This would bridge an understand of how their duties directly or indirectly affect other divisions. A third party, ERP System Consultant would do the above processes and actual implementation would commence at the beginning of the 6-month.
There are numerous advantages of the ERP system. Some of these are; it would be the same software for all departments. Also there is a complete visibility and sharing of information across all divisions. In addition, the ERP is made up of several modules. We can implement the modules, which is of importance to our company. Later on other modules could be added if the need arises. Again the system has an automatic and coherent workflow. Information is transfer to departments and there is a smooth transition and quicker completion for information sharing, search and analysis.

Notwithstanding the above advantages, there are also some disadvantages associated with the ERP system. The cost saving on the system may not be realized immediately. This is a long-term project and initial cost (sunk or pre-transaction cost) prior to implementation would not be recovered. Since the ERP affects the work processes and possibility of changing the company’s culture, it would be a little difficult to totally customize the system to suit all the existing needs of the company. Moreover, the transition of data/information from the in-house system onto the ERP may also be a challenge. Total integration might take a while. Finally, employees might resist change. Change is difficult and naturally humans are resistance to change. Therefore the commitment of all end users is needed.

The system would be maintain through regular evaluations of end user usage complains and difficulties. Also codified information on the usage and system manual should be made available to all and sundry. This could be done through emails, bulletin, SharePoint, email and etc. Since all employees levels of understanding may not be same, some would need further clarification therefore there should also be an expert who could be contacted frequently to resolve issues. In the same spirit, a hotline number could be provided to serve employees during odd hours or days.
I believe the company stands to benefits with the implementation of the ERP system.