Table of Contents
ERP: What and Why?
Most purchasing and supply management professionals employ some type of automated system or systems in their respective organizations to process purchasing-related information, such as purchase orders, requisitions, request for quotations, and other documents. However, in many cases, the level of information integration and exchange within your business enterprise may be somewhat limited. The system may help you process the information more quickly, but does it extend beyond that? More specifically, how does your inventory and requisitioning system receive signals or input as to what to buy, how much to buy, when it is needed, and so forth? Is there any type of information linkage between your planning and forecasting system (assuming you have such a system) and your inventory or procurement system? Can you electronically link between scheduled/planned work and bills of material, ultimately converting this to a system-initiated materials requirement? Can you track total costs specific to an asset within your organization? Can you seamlessly integrate your purchasing, receiving, accounts receivable, accounts payable, general ledger, manpower management, equipment maintenance, and asset management records? Can you accurately forecast impending equipment failure (predictive maintenance) and the costs associated with owning an asset? These questions lead to the discussion of enterprise resource planning (ERP) systems, how they affect an organization, and how they can be successfully implemented.
Selecting an ERP System
Selecting any new type of software system can be complicated, and ERP systems are no exception. The potential to err in a major system selection and implementation is high, while the likelihood of an error-free selection and implementation is less likely. The goal, therefore, is to minimize decision and application risk by gaining advance knowledge of such processes and events. Gaining additional knowledge is no guarantee of success, but it does reduce the risk of failure.
Implementation: Preparing, Testing, and Going Live
Many organizations will move to an ERP solution as a means to dramatically effect business process change within the organization. As a consequence of buying the system that is selected, new processes will be put in place, especially those associated with inventory, requirements forecasting, inventory issue protocols, stores, purchasing, accounts payable, maintenance planning and scheduling, requisition processing, and routing/approval processes. Additionally, you will implement many practices and processes that did not previously exist associated with electronic timekeeping, predictive maintenance, warranty management, lowering approval authority (empowering the worker), and reducing workflow (routing and approvals).
Edward M. Lundeen, C.P.M., CPIM
Edward M. Lundeen, C.P.M., CPIM, is manager-supply strategy and logistics for Phelps Dodge Mining Company, a subsidiary of Phelps Dodge Corporation, based in Phoenix, Arizona. He has held functional positions as buyer, senior buyer, purchasing supervisor, materials manager, and project manager. Mr. Lundeen holds an MBA from Western New Mexico University. In addition to teaching college-level courses as an Adjunct Professor of Business, he has instructed seminars and workshops on procurement skills, supervisory skills, management, and leadership principles. Mr. Lundeen has also published numerous professional articles on topics such as procurement, automated materials systems, buyer training, logistics, leadership, and management.
The following individuals contributed insights and materials on the structuring, human resources, and training elements of the purchasing and supply organization.
Cathy Martin, manager of supply chain management at BellSouth Telecommunications, Inc. shared her expertise in human resources and organizational alignment. Ms. Martin came to procurement services from the human resources organization where she conducted non-management assessments.
Emily Woods, training and development manager of supply chain management at BellSouth Telecommunications, Inc. Ms. Woods is responsible for development and training programs for supply chain management and provided insights on tools and processes for developing the purchasing and supply professional.
- Donovan, R.M., "Successful ERP Implementation the First Time," Midrange ERP, August 1999
- Lundeen, E.M., "Selecting and Implementing a Client-Server Based Integrated ERP System," 84th Annual International Purchasing Conference Proceedings, NAPM 1999
- Quigley, P.E., "Developmental Decision Making," APICS, The Performance Advantage, October 1998
- Scavo, F., "Letting Ease of Implementation Drive the ERP Selection Decision," APICS, The Performance Advantage, www.apics.org
- Slater, D., "An ERP Package for You…and You…and You…and Even You," CIO Magazine, February 15, 1999
- Travis, D.M., "ERP Selection," APICS, The Performance Advantage, June 1999
- Trepper, C., "ERP Project Management is Key to a Successful Implementation," www.erphub.com, August 1999
FOR FURTHER READING
- Feldman, M.D., "Demystifying the Software Purchase" Purchasing Today®, NAPM, June 1999
- Marion, L., "The Limitations of Extended ERP," Datamation, November 1998
- Dillon, C.K., "Stretching Toward Enterprise Flexibility," APICS, The Performance Advantage, October 1999
- ITtoolbox Portal for ERP
- The ERP Fan Club and User Forum
- ERP Hub
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