ERP Systems: Integration for Enhanced Performance - Essay Sample

Introduction

Globalization and revolution in information technology have dramatically transformed the world over the last few decades. Accordingly, companies have been pressured to grow product assortment, lower costs, enhance product quality, and ensure reliable dates of delivery through effective coordination of production and distribution processes (Monk and Wagner 2012). The Enterprise Resource Planning (ERP) systems developed as an enabling technology integrating different functional information systems (finance, marketing, operations) into a unified set of business applications across the company and hence, allowed for coherent business data processing and cross-functional integration. SAP is an ERP software that supports the integration of business functions within an organization (Lea et al. 2020, p. 163).

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History of SAP

SAP, initially known as Systems Analysis and Program Development) was created in 1972 by five former systems analysts of IBM in Mannheim, Germany. However, the software did not meet the developers’ objective of creating a standard software that could be organized to meet every company’s needs because computer software companies faced similar fundamental business problems, and though they created unique software, the solutions accounting, payroll processing, inventory management, and other business operational areas were related (Bartodziej 2017, p. 43).

While attempting to develop a logistics and materials management system for ICI, a Germany chemical system, Hopp and Platter developed software modules – independent programs that could be bought, installed, and operated individually, but extracting data from a mutual database. Their first software package was System R or R/1. As computer technology evolved, they developed advanced software product R/2 in 1982 to integrate with the advanced mainframe computer. In 1988, SAP developed the R/3 system to capture the opportunity presented by client-server technology. The client-server architecture enabled R/3 to perform in various computer platforms such as Windows NT and UNIX (Hayen 2006). The R/3 system utilized the approach of open architecture, which allows third-party software companies to build add-on software products, incorporable with existing software. Open architecture also allowed companies to incorporate their hardware products, including cell phones and bar-code scanners, with the SAP system. The subsequent releases of R/3 include improved capabilities and features (sStojkic et al. 2016).

SAP Support for Digital Supply Chain

In the current digital economy, customers require products and services quickly delivered and customized to their specifications. With companies taking charge of adapting to customer needs, the implementation of SAP ERP systems plays a crucial part in facilitating fast, intelligent, and nimble digital supply chains (Farahani et al. 2017, p. 157).

SAP helps in transforming the supply chain into a network for demand-focused business planning. SAP provides supply chain performance through monitoring, observing, and reacting in real-time to metrics and alerts under real-time Internet-of-Things sensors integrated into core business functions. With SAP solutions for business planning, companies can develop short and long-term perceptions of foreseeable demand through all channels to minimize running out-of-stock (Hayen 2006).

Additionally, SAP improves the efficiency, speed, and sustainability of the fulfillment and logistics processes. The capabilities of SAP Leonardo for digital logistics improve utilization and minimize costs using real-time fleet management driven by increasing orders to vehicles with existing capacity. Integrated analytics enables managers to undertake planning and scheduling based on real-time data (Draijer 2020, p. 5).

Furthermore, SAP enhances responsiveness to customers with real-time visibility. SAP digital manufacturing solutions integrated with SAP Leonardo offer the innovative applications and technologies required to renovate manufacturing functions digitally and fulfill highly dynamic market needs. The SAP Leonardo solutions help to improve the visibility into the well-being of machinery and equipment well-being to optimize production, eradicate downtime, and accelerate delivery (Farahani et al. 2017, p. 159).

Challenges in Aligning ERP with Industry 4.0

Industry 4.0 refers to the disruptive revolution occasioned by the advancement of the internet of things and cyber-physical systems in logistics and production. ERP solutions are a critical part of the digital business’s backbone. Hence, any business that opts to engage in the fourth industrial revolution must, therefore, acquire an ERP system that is developed to utilize the technology pillars steering Industry 4.0. Irrespective of ERP efficiency in adapting to advancing technology, it faces significant challenges relating to the technical requirements to align with the industry 4.0.

One critical challenge relates to data storage, which needs to be physically distributed and logically simplified. The logical perspective of data storage describes the data model and thereby the database structure, which plays as the core instance for data management in a company. Typically, ERP systems developed on several tables which store central data as condensed data, single entries, and accumulated intermediate results (Foidl and Felderer 2016, p. 126). In advanced ERP systems, the condensed data are established on computation routines, which can only be implemented at predetermined time intervals. This is because of a lack of performance hence storing data that is not up-to-date. The required flexibility in industry 4.0 is only attainable when the planner can access the latest data from all functions of a business. Therefore, ERP is required to develop and implement a simplified data model that facilitates access to the latest, single data set all through and which also apprises upstream results (Akhtar 2016).

The second challenge is that Industry 4.0 requires immediate and integrated data. As businesses interact with other parties, including suppliers and customers, an ERP system should be able to facilitate end-to-end processes and data exchange with external parties. ERP systems have a sustainable horizontal integration, which facilitates a consistent availability of supplier and customer data (Draijer 2020, p. 5). The vertical integration of the execution, control, and planning levels facilitates a flexible control of logistics and production processes. However, ERP systems do not link the vertical and horizontal integrations which are required in industry 4.0 for supporting flexible planning, execution, and control of production. Therefore, it makes it a challenge for ERP systems to align with industry 4.0. Besides being able to connect two different systems together, ERP systems have a slower response time relating to data access. Alongside accessing up-to-date data, planners need to acquire the data in the shortest time possible to supervise and influence the processes of logistics and production (Fahland et al. 2016, p. 6).

Moreover, industry 4.0 requires the efficiency of process steps facilitated by the system, which is adaptive and fast. The performance of system-supported processes contributes meaningfully to production flexibility. Faster data processing under current data helps to accomplish fast response to dynamic needs. ERP systems need to ensure that if there is any change that is crucial to all systems having access to the data should be synchronized. Under such synchronization, business functions can work with up-to-date and consistent data. If that is not the case, there might be a lot of redundancy.

Reference

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