Enterprise Resource Planning Solutions for Term Paper

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The SME can then refine the description of the requirements and the formulation of the company's questions to the vendors. Each requirement is ranked according to the risks and opportunities identified by each user group and an aggregate of the data allows the user groups opinions to be consolidated (Krystkowiak et al., 2004).

Finally, Figure 3 below is an OPAL screen that shows how the SME weights each requirement by each user group. According to Krystkowiak and his colleagues, "A synthetic weighting, made by management, is then performed, and comments can clarify the reasons for a management decision. This weighting will enable the creation of the future selection grid of the offers by calculating the importance of each requirement in the score of the future suppliers" (p. 4).

Figure 2. Reusing requirements.

Source: Krystkowiak et al., 2004 p. 3.

Figure 3. Weighting requirements.

Source: Krystkowiak et al., 2004 p. 3.

By using the OPAL tool and the recommendations provided by consultants of a Luxembourg government agency, Prestagaz developed a highly effective call for tenders that resulted in their receiving a large number of responses from potential vendors; fortunately, the OPAL tool even allows for a consolidation and comparison of these responses to determine which vendor and ERP best matches the company's unique requirements based on the input from all of the affected stakeholder. In addition, the OPAL tool has features that allow SMEs to track negotiations with ERP vendors, and synthesize these results for management decision making (Krystkowiak et al., 2004). The results of this initiative were impressive and were found to be far superior than a spreadsheet approach; furthermore, Prestagaz selected the ERP tool that best suited to its specific business requirements.

CMW, United Kingdom. In 2003, as part of the National Action Learning Programme (NALP), one company called "CMW" (the company's name has been disguised), participated in an ERP-based project designed to improve the competitiveness of UK-based enterprises. CMW was founded in 1986, and grew over the years to become one of the largest independent manufacturers in its industry in Europe. At the time, the company's management recognised that its existing approach to practice and performance were not competitive, and despite having the requisite talent and expertise to succeed in its industry, there were no immediate solutions forthcoming from the industry itself (Coghlan & Coughlan, 2003).

In collaboration with NALP, this company examined its operations using an action research approach and launched an ambitious and fundamental overhaul of its organizational structure. The company subsequently adopted modern information management alternatives such as ERP and MIS networks (unidentified in the case study), expanded its use of the electronic transfer of information that increased the quantity of networked information, as well as basic communication system improvements such as e-mail and voice mail (Coghlan & Coughlan, 2003). The results of these initiatives were not immediate but they were impressive; the owner-directors concluded that CMW had finally started moving towards "world class" levels of operations practice that would result in superior performance (Coghlan & Coughlan, 2003).

Northern Digital, Waterloo, Ontario. A case study by Managing Automation (2005) of this company shows that it was founded in 1981 and is headquartered in Waterloo Ontario,

Canada. Today, Northern Digital Inc. (NDI) is a major Canadian supplier of 3D/6D measurement products used in industries such as image guided surgery, robotics, aeronautics and biomechanics; NDI employs 90 workers and has over $20 million in annual revenues (Northern Digital, 2005). The case study reports that NDI's previous information system was constraining, rather than facilitating the accomplishment of its organizational goals; the company was not without its strengths, though. The company had received numerous awards for quality and was ISO9001 registered, but customer service was suffering and order backlogs had reached unacceptable levels (Northern Digital, 2005).

The case study reports that following an analysis of which product and vendor would best suit their needs, NDI selected Intuitive ERP ™ from Intuitive Manufacturing Systems based on factors that directly supported their organizational goals. According to the case study, "Intuitive ERP provided a level of system functionality that could immediately improve inventory management and the expandability and flexibility to support NDI's growth. Equally important was the system's level of ease of implementation and ease of use" (p. 1). Following its implementation of the Intuitive ERP package, NDI experienced continued success in improving inventory management and increasing revenue; inventory turn rates have doubled (a major corporate goal), and are expected to improve even more in the future as the company becomes accustomed to using the new system.

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To date, NDI's revenues have increased from $10 million to over $20 million with little increase in inventory value; furthermore, the company reduced its order cycle time for their flagship product from four months to four weeks, almost an 80% improvement (Northern Digital, 2005).

Red Gold, Orestes, Indiana. This SME is a large, privately held agricultural processing company employing 960 employees throughout the state. Today, the company supplies grocery stores with private-label and brand-name tomatoes using an ERP system purchased in 2000 from I-many, a Portland, Maine-based software provider. According to Laursen, the I-many ERP system allowed Red Gold to improve its tracking of client deductions and cash discounts; furthermore, by linking directly with the terms of the contract itself, the ERP accumulates documentation in an orderly fashion "so that if the company wants to dispute a discount, it has the evidence to do so," a company vice president of finance for the company noted (Laursen, 2002 p. 58).

The SME's former paper-based system was only partially successful in identifying such invalid cash deductions and would only receive its money back infrequently because it was difficult to synthesize the documentation. Following ERP implementation though, Red Gold was able to trace documentation to original invoices in 97% of these cases; consequently, these efficiencies meant that the software paid for itself within a year of purchase (Laursen, 2002). This vendor was selected by Red Gold based on its experience in the food industry and the procedures for tracking and resolving discount and deduction issues offered by the ERP closely matched the SME's requirements. While I-many was cited for its excellent customer support as contributing to the success of this project, the author adds that Red Gold had significant experience in implementing other companywide automated systems that also contributed to its success (Laursen, 2002).

Four Chinese Construction SMEs. This case study examined four SMEs (an architecture-engineering consultancy firm, a property developer and two contractors) following their selection and implementation of ERP packages. The authors note that besides having the choice of ERP applications and vendors, SMEs can also implement ERPs along a continuum of progressive steps, ranging from technologically enabled processes to a complete reengineering of their business process (known as the "clean slate" approach) (Chia & Ling, 2003). According to these researchers: In clean slate re-engineering, the design of the ERP system starts from scratch. First, firms decide how they want to re-engineer their business processes. An ERP software component is then designed to fit the business operations. This approach is relatively more costly than technology enabled approach, but it could meet a company's needs better. Moreover, the firms' best practices could be incorporated into the ERP software. (p. 324). This approach is recommended for SMEs that provide unique value-adding processes to their product or service, as well as those who enjoy substantial resources but less flexibility to modify their existing processes to fit the ERP software requirements (Chia & Ling, 2003).

To identify their constraints and successes in implementing their respective ERP packages, the researchers interviewed senior managers and project leaders on these ERP initiatives and synthesized the following results from the four SMEs:

SME 1. The first company developed its ERP package in-house and elected a clean slate approach because extensive customization of off-the-shelf software would be required to meet its unique business processes; in addition, the SME enjoyed sufficient resources, expertise and the time required o develop the application. As a result, this ERP package was specifically tailored for SME 1 and was therefore exactly suited its needs. This ERP package was used as a 'virtual manager' that assumed responsibility for the document management system of the SME; in this capacity, it oversaw the entire process chain and carried out activities such as filing, tracking of man-hours used, deadlines for reports and drawings and numerous other activities. The SME's CEO described these activities as being repetitive but essential tasks tied to the company's success because the SME is a service-oriented company and its "product" is actually the engineers' expertise. The ERP allowed these engineers to spend more billable time with customers. As a result, "Productivity of the firm increased and this amounted to cost benefits and competitive advantage. The system also incorporated the company's best practices" (Chia & Ling, 2003 p. 325).

SME….....

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