Enterprise resource planning in the local manufacturing and distribution business sector

Abstract

Enterprise Resource Planning is the latest phase in over 40 years of evolution of business management techniques and information technology. It is the current generation of resource planning systems which replaces 'islands of information' with a single, packaged software solution that integrates all traditional enterprise management functions such as finance, human resources, and manufacturing and logistics. The main aim of this study is to identify why Enterprise Resource Planning has evolved as a strategic tool as a result of the continuous improvement in the management techniques, analysing the implementation processes and accessing the impact on six large local companies that have implemented an ERP system. ERP can be the means to Business Process Reengineering, increasing flexibility and responsiveness by breaking down barriers between functional departments. Some potential benefits for companies implementing these systems include the reduction of inventory and payroll costs, the elimination of information asymmetries, and the enhancement of inter and intra firm communication and a quicker financial year end close. However, ERP systems have earned the general perception of being exorbitantly expensive to licence and implement. This study highlights the role of the accountant in an ERP environment. The underlying survey shows that where the impact on key performance indicators could be measured, these companies fail to reap the desired benefits for various reasons such as the lack of expertise in using their system but at the same time these companies are building a benchmark for best practices and cost reduction.