This aim of this report is to discuss the implementation of the ERP system in the company Powepod. The company specialises in the business of vending machines and it provides the customers with the battery packs, charger cables and headphones whenever it is required. This business is based in Queensland and it includes the product development, importing and sourcing, marketing and branding, and business development. A brief discussion of the organisation is provided in this report along with the internal and external environments of operation. The problem that led to the implementation of the new technology is stated in this report. An analysis of the present system and the system design for the proposed system is provided in this report.
The internal environment of the company, Powerpod has strict management who manages the proper functioning of the company and maintain the competitiveness of the market. The employees provide the company with extensive work towards the development of innovative products that helps in gaining advantage over the competitors. The information access is limited to the individual branches of the company as there is not integration of the all the functions of business. Several employees have been hired for maintaining individual systems and this leads to the delay in the service providing to the customers. The external environment of the company can be understood by the market that they are operating in. This company is in the industry where the competition of the businesses are increasing significantly. Several other businesses have implemented the functions of ERP systems and other information systems for integrating the business functions of the companies. Powerpod now intends to integrate all the business processes and maintain any integrated system for enhancing the business processes.
The ERP systems are the software tools of business that permits the companies in the automation of the processes of business, practices and the sharing of the data across the complete organisation and then produce and access the real time information (Ahmad and Cuenca 2013). The major objective of the ERP systems is to obtain the feature of integration of all the departments and the movement of the practical information all through any enterprise in a sole computer system, which fulfils the requirements of the company. The ERP systems are extensively chosen by the organisations of all functions and sizes as the potential benefits of the ERP system is significant to ignore (Harwood 2017). For being increasingly competitive in the modern environment of the businesses, the organisations should establish the best practices of business and then efficiently share the information internally and with the customers, suppliers and the partners.
The benefits that are obtained by any ERP system are the elimination of the inefficiencies of the independent information systems (Powell et al. 2017). With the integration of the flow of information, the ERP system could assist the organisation in managing the supply chain, supply chain, inventory, accounting, customer orders, shipping, receiving, human resources, production planning, and several other business functions. Any information system that performs the enhancement of the planning and the implementation of the business processes could save significant time and costs, improve the allocation of the resources and the enhancement of the services that are provided to the customers (Ram, Wu and Tagg 2014). Hence, the ERP systems could impact significantly in the competitiveness and the profitability of the company. Majority of the ERP systems consists of the distinct modules, which backs the various areas of functions. The modules for these areas are the integration of the financial human resources, accounting, customer relationship management, and the supply chain management and this integration could help in accessing the similar data from any central database (Nour and Mouakket 2013). The companies who are implementing the ERP systems could select the kind of modules that they wish to implement related to the requirements and the systems modularity of these systems provides the companies with the opportunity of beginning to utilise the sections of the ERP beside any other systems for saving the costs. Even though the company is small size company, the implementation of ERP system could help the company in the future as scalability and comprehensiveness is provided by the ERP system (Almajali, Masa’deh and Tarhini 2016). The implementation of the ERP in the early stage of the business could help in enhancing the requirements of the business and there does not exist any requirement of reengineering and the alteration of the working standards and the employees could be trained properly regarding the functioning of the ERP system, which would eliminate the resistance by the employees. As the company has the significantly small amount of the employees, this feature would make the implementation process less time consuming and it could be implemented in minimal cost (Chou et al. 2014).
Advantages of ERP system
The ERP system provides the businesses with the facility of integrating the various business functions and save significant costs of company. Some of the common profits of the ERP system for the company are:
Any ERP system could provide several advantages to the organisation in various ways. Integration of the business functions and the ERP systems is not comprehensive as the information system could reduce the costs as well as increase the costs for the business (Galy and Sauceda 2014). It is commonly observed that the performance of the organisation decreases during the phase of implementation. The reason for this decline can be observed from the viewpoint of the employees. Without the proper training of using the ERP system, the employees cannot perform efficiently using the ERP systems. The major advantage of the ERP system can be considered as the integration of the information across supply chain that leads to the improvement of the performance of operation, reduction of the costs, and the reduction of the inventory. This can be understood by an example as when the improvement of the inventory management happens with the entry of the orders, which permits the immediate access to the inventory, prior order history and the customer credit history (Matende and Ogao 2013). This variety of the information availability provides easier methods of the optimisation of the schedules of production and the levels of inventory, increase in the productivity and all these leads to the satisfaction for the customers.
Even though the implementation of the ERP systems in the organisations helps the businesses in several ways, there are still some disadvantages associated with the ERP systems. The major disadvantage for the small sized businesses is the increase of the costs of technology (Ram, Corkindale and Wu 2013). The overall cost of the implementation of the ERP system could be significantly high. For the big companies, the adoption of the ERP could impact minimally to the company budget but the small sized business like the Powepod could be impacted significantly with the implementation project (Sun, Ni and Lam 2015). It has been observed that the ERP system commonly overtakes the old business procedures and it could be disadvantageous to the small business like Powepod as it would significant time to get used to with the new information system.
This section of the discussion is concerned about the different existing aspects and the scopes for the development in the system present in PowerPod. The information for the assessment of the system at the present state is derived from the discussion and the interviews taken from the stakeholders of the organization. Through the analysis of the present of the organization the areas for further improvement can be identified and the implementation of the ERP system can be done accordingly.
The current system existing in Powerpod needs reorganization by providing proper services to the consumers. In this context, it can be said that the management of the organization does not follow any hierarchy and it has become problematic for the employees in order to reach with their problems to the management. The working procedure of the organization is not following any particular procedures and this is becoming problematic in managing the data and information of the organization. There are various modules in the process of the PowerPod.
Sales process:
The main problem with the sales process is that the data is manually managed so there is a chance of error. Apart from that there is a problem regarding the synchronization of the information in the system. There is no centralized data base to keep the information. In this case, individual employees needs to keep the record of the purchase of electrical appliances along with the records of the consumers. In this situation the sharing of the information become problematic and there is no flexibility in customer relationship management.
Financial management:
PowerPod has assigned the accounting and bookkeeping for the organization to an outside agency. However, the organization is currently facing some problems regarding the outsourcing of the work. It has been found out that there is a lag in keeping the record of the financial information for the organization and circulation of the invoice is not transparent. Apart from that the cost of outsourcing has become expensive for the organization. In this situation PowerPod is planning to manage the financial information and the bookkeeping by itself. In order to do this the organization is planning to implement the ERP system that will merge all the activities of the organization.
Logistics:
The organization needs a systematic approach in managing the logistic activities. There is a need of rationalization in the system. The organization is currently facing the problem between the suppliers of the materials and transportation companies. Apart from that warehousing is not carried out in a proper way. Moreover, there is a problem of managing the account of the cost for the resources and managing the supply chain for the organization.
Development:
In order to develop the system that will able to synchronize the functionalities between different departments in the organization implementation of ERP has been proposed. Selection of the ERP is based on the requirement of the PowePod. For the development of the system, the selection of the ERP vendor is important. At the initial stage the evaluation of the requirements and the identification for the areas of improvement are needed to be done by the management of the organization. This identification will help the organization to select the right ERP system for the organization.
Testing:
Testing phase includes evaluation of the developed system. This will indicate the effectiveness of the system for the organization. The testing can be done through providing the information those are important for the organization. The outcome of the result will indicate the effectiveness of the system. Apart from that the negotiation between the organization and the vendor company providing the ERP solution is important. In case, if the testing of the system does not provide the required result, the organization should inform the matter to the vendor company.
Implementation:
The implementation of the ERP system is dependent on the requirements of PowerPod. After the selection of the right ERP system in the organization, the negotiation between the vendor and the organization is needed to be done. In order to carry out the whole process proper project management team is needed to be formed for the PowerPod. The deployment of ERP system is a project, and the project management team should follow all the steps of the project life cycle. The monitoring and the evaluation of the system is needed to be done through the testing process.
However, for the implementation of the system, there are certain things those are needed to be considered. The negotiation and the communication between the ERP providing vendor and the PowerPod is important. Apart from that there may be a compatibility issues regarding the implementation of the ERP system.
There are certain steps those are needed to be carried out as the post implementation activities in the ERP system.
Review of the implementation:
The review of the implementation can be done after the ERP system is used in the organization. The review can be done by the service providers and core team of the powerpod. This will indicate the effectiveness and the pitfalls of the organization.
Consultant Transitions:
The consulting for the ERP after the implementation is not over , however, it is transferred to the organization. PowePod is needed to understand about the detailed process of using the ERP system and the cost of the ERP implementation after the ERP software is installed for the organization. This can be defined as the knowledge transition process or consultant transition process for the organization.
Maintenance and training:
Proper training is needed to be given to the employees so that they can properly handle the newly implemented system. Efficient handling of the ERP system by the employees will enhance the productivity of the organization. Apart from that maintenance of the system is important for the post implementation period. This can be done by the technical experts in PowePod. In case, if any difficulties are happening in the system the experts can resolve the problem by themselves or they can consult the ERP vendor for the solutions.
The implementation of the ERP system is observed to be a significant investment and therefore a risk management plan is required to be considered (Ptak, and Schragenheim 2016). The project of ERP implementation differs from the common investments on the production as the calculations for the project of the ERP implementation cannot be comprehensive. The project is commonly classified as the investment based on the strategy and the project success cannot be measured in the capital terms rather comparing with the objectives and goals of the project with its actual outcome (Beheshti et al. 2014). Even though the implementation of the information system are considered to the costly investments, it is very difficult to determine the profits from these investments.
A significant consideration is required for the planning of the ERP system that the company wishes to implement. If the realisation of the risks that emerges during the phase of the project, then it could cause significant damage to the business (Garg and Agarwal 2014). The risks that are associated with the selection of the ERP system is provided in the figure.
Figure 1: Risk matrix displaying the risks of the ERP selection phase
The risk of the selection of any unsuitable ERP system is significantly real for Powepod. As the business of the company is just starting to obtain growth, the unavailability of any ERP system could be considered an advantage from the perspective of the change management for the organisation but it can be disadvantageous as it does not have any system for comparing the ERP system. The operations of the company is yet to start at extensive rate and hence it is very difficult to comprehend, which functions of the ERP system would be suitable for the business process of the organisation. It is required to predict the requirements of the business in the future by analysing the business goals and the present business condition. The failure in predicting the accurate business process would give rise to the risk of the ERP system prediction as the implemented ERP system would fail to fulfil the requirements of the business and it would cause significant loss of capital of the company. Even if the prediction has been done accurately regarding the business process of the company, the ERP system implementation could still fail if there are significant changes in the company as it obtains growth and development. Several changes can be caused due to the customers, some other due to competition and some of the changes could be caused to the environment of the politics and economy.
It can be observed that the significant risk in the implementation of the ERP system project could be caused due to the change management and the phase of transition for the employees and how they manage the new information system. Even though the aspect of the change management is not significant for the Powerpod, this could mean that it is not the biggest concern as the employees are not familiar with the procedures of any earlier information system. The commitment and the proper use of the ERP system by the employees is the crucial aspect of the success of the ERP system. This risk matrix displays the risk in the implementation phase for Powerpod.
Figure 2: Risk of ERP system implementation phase
As discussed earlier, this phase of the implementation project does not pose severe threat to the Powerpod and the probability of any unforeseen events is commonly high. The only risk for the company in this phase is the difficulties of some employees to provide effective participation in the implementation phase. The commitment of the employees plays a vital role in the success of the implementation project and even though it would disrupt the normal lives of any employees, it is crucial for the employees to provide active participation in the implementation phase. The responsibility of the company rises during the implementation phase as the management has to execute properly all the daily business process and they also have to manage the planning of the project, project management and the communication. All the participants of the project are required to be informed regarding their duty so that there is not inefficient work by the employees.
There are significant risks associated with the use of the ERP systems. It is commonly recommended to consider and assess the risks in the early stages of the implementation project during the planning process as the mitigation of several risks connected to the usage could be done in the early stages. The utilisation of the ERP system has never been done before by the Powepod Company, it causes significant difficulty in the prediction of the problems that could rise in the company due to the usage of the ERP system. But one technique that could be used by the company for mitigating the problems due to the ERP system usage is the consideration of the problems that might rise in the ERP usage. The risk matrix provides a clear idea of the risks associated with the significant risks connected to the ERP usage in the company, Powerpod.
Figure 3: Risks of the ERP usage in Powerpod.
The advantages of the ERP would not be realised until the utilisation of the system is not done properly. It is vital to execute the proper planning of the processes that are executed but the system for obtaining all the potential benefits of the system. All the connected information must be added in the system for creating the efficient information by the ERP system and it would provide the reliable and accurate material for the purposes of decision making. The aspect of the update of the system could be problematic for the company. As Powerpod is starting this information system at the beginning of the business, the designing of the processes according to the system for eliminating the issue of major modifications.
Conclusion
At last, it could be concluded that the implementation of the ERP system in the company could provide significant business advantage to the company and the implementation of the system could be done efficiently with considering all the risks associated with the ERP system. Any ERP system is a significant investment for a company whether it is small or large. Undertaking of any project of information system implementation requires significant planning, participation and management from all of the divisions of the organisation and it also requires immense support from the senior management. Assessing the business functions of the Powerpod that could be supported by the ERP system project needed extensive evaluation of the present state of the company and predict the benefits that could be gained by the company with the ERP system implementation. The value of the participation and support played a vital role in the implementation phase and the proper use of the information system could ensure the success of the business in the competitive market.
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