The impact of enterprise resource planning systems
The purpose of this research is to investigate the impact of enterprise resource planning systems when integrated into the supply chain management. The study is meant to challenge the ERP vendors to substantiate their claims of benefits enjoyed by organizations from their products in addition to providing evidence of existing benefits of coupling supply chain management and ERP’s. The relevance of three types of software namely; SAP, Oracle and Microsoft Dynamics in this initiative is also addressed with the eventual comparison of the three. In the research, there is collection of data on various aspects of performance of the organizations that use ERP’s in their supply chain management (SCM) system. Collection of data about the software of preference from these companies was also done. Additionally, the reasons why a certain company preferred certain software were recorded.
The results confirm the literature from many scholars who claim that there are several benefits due to the coupling of ERP’s with SCM in a business. Furthermore, it is clear that firms with a longer experience with ERP’s have better performance results within the supply chain. The integration of enterprise resource planning in the supply chain management was also found to reduce the risks involved in the supply system. The research also concludes that SAP has the largest share of the market when compared to Oracle and Microsoft Dynamics in addition to having the longest payback period. Oracle has the longest duration for implementation in addition to having the least number of individuals who are able to enjoy between 81% and 100% of the benefits. Microsoft Dynamics has the smallest market share and the lowest chance to be shortlisted by users. SAP has the highest chance to be shortlisted by users although it has the lowest rate of selection after it has been shortlisted.
By definition, ERP is a software integrated in an organization and consists of several components necessary for the organization to plan, produce, sell, market, distribute, account , manage human resource, manage projects, and do service and maintenance. An organization that implements an ERP is known to have a good information exchange between departments as a result of integration of information in the whole organization. Integration of ERP’s into the supply chain management department of an organization allows it to reduce the dependency on human effort in addition to eliminating scattered and distinct systems. The success experienced by enterprise resource planning in the whole world has captured the interest of researchers from the field of business in addition to those from information technology and information systems departments. Accounting has been said to be the most common business field to implement ERP’s. Since the introduction of ERP’s, the business domain has been revolutionized with the employees being forced to view things in terms of processes that can be integrated. As far as employees are concerned, things have changed on the way accounting, control and production planning is done. As a result of these and more changes due to the introduction of ERP’s, they have now become ideal subject for research by several disciplines from the business field. Researchers from the accounting departments are expected to advice other business disciplines whether implementation of and ERP is worth the money invested towards their implementation.
It was just a few years ago that researchers from accountings discipline started carrying out studies that can prove that ERP’s have a significant financial value. Results obtained from different studies have similar views despite lack of consistency. Due to growth of the number and complexity of services to be provided by a company, the directors are worried about high risks. As a result, the leadership works very hard to make good profits, preserve their starting stock and to ensure growth of the company. The risks involved in the supply chain management were and are very vital to the performance of an organization necessitating the implementation of ERP’s to reduce these risks. The integration of enterprise resource planning within the supply chain management is mainly done to have a large share of the market. This is done due to the fact that the customers are the final section of production process. ERP integration into supply chain management has allowed many companies to have a better and speedy response to customer needs and preferences (Bernhard, Peter & Zoltan, 2013).
Despite the many benefits an organization obtains from the initiative of implementing ERP in supply chain management, there are several reasons why some companies are lagging behind on this the same. The integration requires relatively high cost to start in addition to the high risks involved. The lengthy time involved has also kept many organizations away from this implementation. Research is underway to determine the best software to use in the implementation of enterprise resource planning in the supply chain management. In particular, several studies have compared the performance of SAP, Oracle and Microsoft Dynamics in delivering the desired results.
SAP Effects on Supply Chain Management Performance
Systems Applications & Programs (SAP) is a principal supplier of supply chain management technology which offer integrated and effective business solutions addressing the full supply chain life cycle (Plunkett, 2009). Among the SAP services are (Steinfield, Markus, & Wigand, 2011):
- Supply chain planning and policy.
- Manufacturing excellence.
- Product innovation.
- Life cycle management.
SAP assures a number of bottom-line benefits including (Steinfield, Markus, & Wigand, 2011):
- Reduced operational expenditure.
- Improved financial and operational performance in addition to meeting and improving service targets.
- Minimize inefficiency in the supply chain.
- Increase compliance to quality and regulatory controls through standardized processes.
- Create enhanced and more evident relationships with partners.
- Reduce business risks.
The SAP Supply Chain Management (SAP SCM) module has enabled companies overcome challenges in the following major ways (Wood, 2012):
- Real-time control of the supply chain: Control full access to supply chain data and visibility of such data to collaboratively generate scenarios and model the impacts of particular decisions, factors or options in real time aimed at increasing the revenue from supply chain. Improved visibility to the supply chain process has provided insights into transformations that impact on the completion of product delivery and correctness of the quantity.
- Coordinate the entire international network using true demand variables such as social media, research data, and point-of-sale to determine customer demands and respond immediately to integrate that demand with the planning process.
- Efficient execution of the supply chain: due to increased complexity in supply chain and increasing transportation costs, delivering the perfect order may be difficult. SAP provides the required efficient real-time execution into logistic situations and business forces.
SAP has replaced the predominant approach to planning sales by a waterfall model with an integrated continuous planning that reflect actual events in supply and demand in real time. Supply chains are integrated into a holistic plan to achieve alignment and balancing and drive profitability and market share. SAP has gone beyond normal supply chains to integrating processes, systems and people. Furthermore, SAP software has helped establish new operations as well as sales approaches by combining products, operations, sales, and finance for a complete process of driving business results (Twentyman, 2013). First, it has led to optimization of product profitability, product mix, and customer profitability by involving constraints in the supply chain constraints during the planning process. Secondly, inventory levels have been well managed to leverage working capital while fully satisfying target customers demands. Finally, it has led to fewer shortages of materials through positive transformation of supply strategies and has avoided shortfalls in manufacturing ability and inadequate material supply.
The SAP Advanced Planning & Organization (SAP APO) application has helped businesses to conduct real-time collaborative supply chain scheduling together with their business partners. Knolmayer, Mertens & Zeier (2002) notes that SAP has supported planning processes and decision making in businesses. SAP APO has transformed the major collaborative planning activities including:
- Supply planning rooted in customer needs and availability of supplier material at early stages.
- Transportation planning so as to simplify work processes involving manufacturers or producers and the means or providers of transportation.
- Demand planning founded on time-based primary estimates of retailers and manufacturers
Supply chain is capable of transforming a business to greater heights in growth. Supply chain management has been instrumental in helping many businesses withstand the global economic recession (Knolmayer, Mertens & Zeier, 2002). The more the interest they business focuses on supply chain management, the more the efficiency gained, and the more they trim costs. Today, there are high expectations for control of costs but the limits are still shifting. Therefore, many businesses are focusing on their supply chains so as to back efforts aimed at growing again; this is by attempting to maintain a disciplined expenditure arrangement practiced during the recession while improving on the flexibility required in taking a business to the next step.
SAP analytics has installed businesses with capabilities to plan in real time an integrated model of financials, demand and supply. Instant analysis of complex data at all levels of granularity, dimension and aggregation has never been so easy that strategic management can request for even the most detailed supply chain analytics (Knolmayer & Zeier, 2005). SAP has also facilitated data import both from SAP and external sources. This optimizes product and customer revenue taking into account constraints related to supply and financials. Any business works towards reaping the highest revenue and placing itself at a competitive edge against its rivals though financial constraints are a big challenge. The profitability from optimization of products in the supply chains has enabled businesses to overcome the financial constraints. SAP enables businesses adjust their inventory levels so as to minimize costs and meet target services. Therefore, companies are empowered to administer capacity exploitation to avoid material shortages (Crampton & Rosemann, 2014).
SAP has helped organizations obtain cost data from many sources to achieve a holistic insight of product costs. It has assisted in identification of cost trends to discover unknown costs and optimize product sourcing decisions (Crampton & Rosemann, 2014). This has resulted to reduction of product costs in addition to reduced supply chain risks and improved margins. The manual processes are eliminated and maintenance costs have been substantially reduced.
SAP solutions have helped companies become extremely agile to operate in a volatile global network of suppliers. SAP helps organizations manage their supply chains while satisfying the needed urgency and sensing to respond to changes in real time. This way, the required flexibility is obtained to adapt to changing markets, exploit new opportunities, enhance communication, and improve order rates. Businesses have strengthened their relationships with customers, suppliers and contracted manufacturers all over the world. SAP has led to a customer-oriented real-time orchestrated supply chain. A SAP ability powered by SAP HANA has bridged the practical distribution of finished goods from manufacturer, wholesale, retails, and to consumer. SAP has integrated the process of planning, implementation, orchestration and monitoring of the movement of the products. This has increased the customer demand as multiple levels results to data latency. Decision support is based on real-time analytics to aid in planning and execution such as accuracy, supply projection, stock coverage, and forecasting (Crampton & Rosemann, 2014)).
SAP has maximized visibility traversing the performance metrics across the supply chain in a business. SAP has helped businesses reduce risks and bottlenecks, improve on working capital and identify novel opportunities to achieve measurable results. It has made it easy to leverage the root-cause analysis thus bottlenecks can be easily diagnosed and supply chain issues are easily resolved for optimal business performance. SAP has enhanced responsiveness to supply chain tendencies both in short-term and long-term basis. Supply chain risks have been effectively mitigated by in-depth strategies involving emerging trends. There has been a development of innovative and high-quality supply chain policies and reformed and improved supply chain processes (BinaryStream, 2013). This is from mapping technological concepts in SAP to actual supply chain mechanisms.
SAP has provided services which have transformed businesses through a holistic consulting process that integrates strategic and organizational finest details involving planning and production systems. By this, businesses are able to combine planning-based approaches with a philosophy aimed at lean production. SAP has enabled businesses to devise, design, implement and evaluate supply chain measurement through its tools and methods. Such tools and methods include (Steinfield, Markus & Wigand, 2011):
- SAP focuses on business performance measurements that are loaded with performance pointers to enable adherence to company goals. Consequently, a collection of measures which positively affects the decision making are devised. SAP uses cause-and-effect analysis in measuring performance of the supply chains. The cause-and-effect analysis has enabled businesses to streamline performance indicators so as to focus on only those that will make the supply chains efficient.
- SAP applies a firm top-down approach and vertical consistency and across every supply chain indicator. It starts from the top most corporate goals and objectives derived from the function or corporate policy therefore objectives and performance can be mapped and measured vertically. By this, business departments or divisions are aligned with the overall company’s goals.
- SAP applies industry best practices and frameworks such as APICS in different views of supply chains to enhance definition and selection of suitable performance indicators. Businesses using SAP has therefore enjoyed the benefits of the SAP’s use of experiences from other customer projects as well as from documented best practices and benchmarks. Such benefits have enabled several businesses to adapt to the industrial-wide tested and accepted standards to boost their supply chain experience. In addition, these industry best practices and frameworks have enabled businesses to create automated supply chain performance indicators to employ in specific critical processes.
Knolmayer, Mertens & Zeier (2002) notes that use of SAP in businesses has enabled them to model and simulate optimization of several patterns of supply chain issues. Therefore, companies have been offered a chance to test various opportunities in the supply chain before deciding on which ones should be pursued based on the anticipated benefits and in which order should the opportunities be pursued. The risks attached to each one of the opportunities can easily be determined through simulation and effective mitigation techniques devised.
SAP SCM has enabled businesses to evaluate their primary processes identifying main challenges to restructure future workflows (Knolmayer, Mertens & Zeier, 2002). Therefore, companies have identified potential areas of supply chains that require improvement based on major performance pointers. The outcomes and benefits realized can be correctly evaluated to derive other performance indicators. This way, the businesses using SAP SCM are fully evolving while adapting to various changes in the supply chain environment so as to reap maximum revenues in their pursuits.
SAP SCM has made supply chain processes to become more effective. SAP SCM has enabled suppliers, partners and customers to share the necessary resources and knowledge required in intelligent adjustments to the ever changing markets. Businesses are enabled to replenish their inventory and carry out production on the basis of the actual demand. This is due to the fact that SAP SCM supports the changing synchronization of demand-oriented planning and logistics based on real-time information about supply chain system execution (Knolmayer, Mertens & Zeier, 2002). A business enjoys the analysis service which assesses the potential benefits that can be derived from effective supply chains management; a service that has helped companies maximize the power of SAP to gain the entire business-wide network collaboration and visibility from analytics of the supply chains.
The analytics of SAP SCM has enabled businesses to optimize their business processes and efficiency through a business-oriented architecture. SAP has built a process-driven, organizational and practical concept for building a solution for supply chain management (Wood, 2012).
The SAP SCM has enabled businesses to react quickly to challenges and risks through provision of complete visibility over end-to-end supply chain process which has brought about improved customer service, partner satisfaction and time cycles. The intuitive interface for users has centralized the supply chain data into one repository which has provided much functionality in form of root-cause analysis. This is aimed at preventing or correcting problems and to alert potential problems based on the past data and performance compared to benchmarks, targets and several other benefits (Knolmayer, Mertens & Zeier, 2002).
SAP SCM provides an end-to-end visibility solution to supply chain performance thus organizations have been enabled to define and implement a policy to improve their supply chains (Wood, 2012). Businesses have also developed strategies to implement, manage, measure and monitor their supply chains. Effective supply chain management has enabled many organizations achieve their goals and objectives.
Businesses have been transformed to be more profitable and stable by ensuring their customers and suppliers are satisfied. There is no hindrance from end to end in the supply chain process; it is a smooth transition from the receipt of raw materials to production and to distribution. Wood (2012) asserts that SAP achieves this by integrating the demand and supply processes and prior planning: through sales, spare parts and processes planning in conjunction with best practices in supply chains. Collaboration models involving sourcing, supplier and procurement have enabled businesses to weigh between various course of action to provide means by which supply chain risks can be mitigated.
Further, companies can analyze their supply chain management capacity to support their decision making processes concerning supply chains (Knolmayer, Mertens & Zeier, 2002). This takes many forms including: identification of potential areas for profitable supply chain management, evaluation of potential for improvement, consideration of IT abilities, policy, organization and processes, identification of possible steps to develop the identified potential and proposals for intended processes all aimed at transforming the supply chains. Companies can therefore adequately optimize their supply chains to keep in sight of the maximum benefits that can be obtained thereon.
Supply chains constitutes a natural environment to focus on so as to derive or drive value and to tackle constant cost pressures in addition to meeting other rising challenges (Deloitte, 2014). There exist rigid regulatory controls which have an impact on companies thus they must strengthen quality control and improve visibility. Additionally, while businesses have employed efforts to minimize costs, a lot need to be saved. For many managers, the issue is determining how and where to start. SAP advocates for focusing on smaller ideas to achieve maximum outcomes in a small duration of time. It sees the bigger picture in transforming everything ranging from estimations to planning and to execution. SAP improves the supply chain management to help businesses take tough measures to address these challenges and others. SAP transforms the supply chain management technologically though this transformation is related to business issues (Deloitte, 2014).
SAP has assisted businesses from all industries, several large and successful companies globally in the transformation of the company’s supply chains. SAP Supply Chain Performance Management has leveraged cross-industry benchmarks and best practices to give organizations superior control over their supply chains and ultimate business outcomes (Wood, 2012). SAP has provided techniques to plan for mitigation against risks and disruptions in order to achieve optimized supply chains and eventually realize superior revenues.
Companies are continually challenged by incoherent customer demands and a high expectation to respond to customer needs because the supply chain has become more complicated. The increasingly unpredictable and complex demand and supply creates more pressure on supply chains. Greater revenues are possible if a company is highly responsive to customer expectations which are steadily growing. Today, supply chains are mainly spread out in the global networks resulting to lack of visibility making decision making difficult. Consequently, speed and precise planning and execution are greatly hampered. SAP with its supply chain management modules has improved the way businesses handle their inventory and customers (Bort, 2013). Customers can therefore receive their ordered items on time; companies can adequately respond to customer needs creating a capacity to capitalize on opportunities. SAP goes a long way in reducing the amount of time from planning to execution through real-time data analysis to enhance collaboration across all departments in a business. SAP also has facilitated provision of important business information on demand thus decision making in matters of supply chain management is greatly enhanced.
SAP SCM has enabled organizations to drive constant improvement by assisting them to accurately identify the appropriate supply chain enablers. It has helped businesses to map and align their strategies with their goals through alignment of their supply chains to the performance strategy as well as helping them to measure and analyze their goals and performance. SAP SCM has also affected the supply chain management by setting targets and benchmarks with the best in industry. Performance can be measured through charts, dashboards, reports and other means such as what-if analysis after which collaboration is conducted if SAP SCM analytics necessitates it so as to resolve any gaps in the supply chain performance. This way, a continuous improvement is realized. SAP SCM presents visibility across the process of supply chain while performing real-time root-cause analysis to allow businesses know the relationship between several metrics and how they can affect each other (Steinfield, Markus, & Wigand, 2011). Russell & Taylor (2006)outlines the following four key supply chain enablers: the organizational infrastructure detailing how business and functional units are organized and the way they are coordinated, how technology affects the strategic and operational supply chains, how customers and external businesses such as suppliers and logistics providers are selected and how the underlying relationships are developed and maintained, how responsibilities are designed.
SAP has made businesses rethink their supply chains in areas of responsiveness, collaboration, operations and distribution (Wood, 2012). Businesses can now know and document the demand for every product in the markets on-demand through improved responsiveness. They have built and adjusted their profitable plans across business lines and partners through collaboration. SAP has also made businesses to introduce quick and lean demand and supply processes through enhanced operations and they have moved to on-demand transportation spanning all their distribution centres (Wood, 2012). The benefits of using SAP to advance supply chain processes is depicted in the estimates that it decreases inventory write-off, lowers revenue loss from depletion of stock, increases the time to deliver as well as completeness of the order and decrease cash cycle times. Further, SAP implementation has improved the level of forecast accuracy (Crampton & Rosemann, 2014).
Case study 1: Use of SAP in transformation of the supply chain management
Data visibility and quality issues in the supply chain caused increasing inefficiencies in an international pharmaceutical firm and hampered the company’s ability to conduct effective planning. The company had operations in more than nine countries supported by a set of traditional systems thus it required a solution to address the shortcomings and the core business operations. Implementation of SAP to manage product lifecycle delivered solid data management abilities as well as improved visibility. The legacy information systems had obscured end to end information visibility in the supply chain thus affecting its good delivery of services. Collaborating with business partners became harder and operational costs soared. The resulting set of systems scaled poorly since the firm continually grew. In spite of the company’s successful record, it knew that a new approach would assist manage the supply chain complexities and facilitate continued growth. The implementation of SAP has brought about a new business solution for improved services and operations, better product management, and improved supply chain management as well as collaboration with business partners (Deloitte, 2014).
Case study 2: Implementation of SAP to boost Colgate-Palmolive’s Supply Chains
Colgate-Palmolive Inc. is a company dealing in consumer products and services related to oral and nutrition with revenue of approximately US $ 13.9 billion. It is located in New York and has employed around 36,000 people and has partnership with SAP Consulting. The company had experienced the following challenges and opportunities: shift focus to short-term demand indicators and need to respond fast to unpredicted demand. The objective of the company was to establish replenishment and ordering during downstream demand instead of high-level forecasting. The implementation process was scheduled to take place in the first year and subsequent installation in Italy and Brazil in three to four months. SAP SCM application was aimed at leveraging the existing SAP system to comprehensively support customer and supplier collaboration. The benefits that were realized include: streamlined inventory processes, improved and timely access to all customer data, minimal manual order processing, and planners were enabled to concentrate on analyzing business effects as need to cleanse data was reduced and the company was able to store a large quantity of products in stock when main promotions took place through effective forecasts and planning for promotions (Crampton & Rosemann, 2014).
Oracle Effects on Supply Chain Management Performance
A performance-oriented approach is implemented on a manufacturing enterprise but Oracle yearns to provide a streamlined, effective supply chains (Oracle, 2013). Oracle has enabled enterprises to focus on initiatives that enhance performance to reduce operational and inventory costs while improving customer service through timelier and superior product availability. This execution which is almost flawless is realized by Oracle’s ability to present a crystal-clear visibility to supply chains to determine problems on time and make adjustments in real time to supply chain management. With Oracle, businesses have been able to have on-demand and real time information needed to manage their day to day operational performance: businesses have been enabled to track their most valuable products in terms of profitability, investigate issues with production early before they develop to be critical bottlenecks, determine issues related to product quality, and monitor operational performance to constantly improve customer service and maintain costs (Capgemini, n.d.).
Oracle’s supply chain analytics has enabled businesses to plan on how to produce in the making of production process in order to clarify materials, capacity, and disparities in customer demand, and plan how various changes will affect the other elements of the plan. It has also enabled companies to plan on process of source-to-settle in order to understand how a supplier can well adapt and respond to engineering changes or orders, the quality of products of every supplier, and determine whether a product quality has a negative impact on the final product. In the process of order-to-cash, Oracle has clarified everything ranging from the product promotions that are most effective and with which means to which freight carriers and warehouses possess the highest responsiveness (Capgemini, n.d.). Oracle analytics have also been instrumental in identifying the customers that make their payments on time or as per the dates specified on the invoice. The analytics determine whether disputes related with payments and collections are effectively and efficiently managed, and whether issues with product quality have contributed to the increased payment disputes.
Businesses require an increasing variety of products, a growing number of delivery channels, and a higher reliance on emerging and enhanced technology. Oracle has served the role of technology to help business realize the business need to have an efficient and worthwhile supply chains. In addition, the norm is establishment of cross-functional business activities and has resulted to creation of mutual dependencies and interconnectivities across functions and business lines. Oracle has tackled these complex business pursuits leading to increased overhead costs which have made conventional cost accounting systems outdated. Oracle has delivered Business Intelligence (BI) that goes beyond legacy accounting practices to support strategic decision making. Overhead costs in businesses have been traced on the cause-and-effect basis to provide the actual costs of supply chains and forecasted benefits (Capgemini, n.d.).
Oracle Supply Chain & Order Management Analytics has provided source-based business adapters to dramatically minimize the effort and time required to extract data and transform it from different enterprise systems, such as, legacy SAP or Oracle systems into east-to-use, actionable and integrated insights. The solution has enabled companies to efficiently manage their supply chains, customers and improve performance through (Gerald, King & Natchek, 2001):
- Improved inventory management to handle items that are constantly in the backlog as a result of lack of proper stock levels.
- Effective management of order booking, backlogs and billing.
- Identification of slow-paying customers, reduced days sales outstanding and billing issues through improved cash collections.
- Analysis of discounts, returns, order cancellations and inventory levels.
- Provision of timely order, cancellations, margin, returns and discounts data; reducing the amount of time spent on compilation, reconciliation and consolidation of data from disjointed systems to allow more time to spent on analysis, making decisions and implementation.
Have businesses realized the importance of carrying out cause-and-effect analysis to determine the role of supply chains in their growth and profitability? Are the supply chain processes smooth enough to help businesses gain competitive advantages over their rivals? Armed with Oracle’s profitability and incisive cost analysis, businesses have made quality strategic decisions about their supply chains. Oracle Supply Chain & Order Management Analytics has leveraged the power of real-time and actionable information to enhance the process of decision making and ultimately bring about performance optimization (Gerald, King & Natchek, 2001). More effectively hidden data is unlocked including order management, financial data and supply chain applications to provide extra insights to enable action. Businesses have derived costs and benefits information for specific supply chains based on geographical markets, customers and products. Monitoring of the productivity, efficiency, effectiveness and capacity utilization of supply chain activities has never been that easy without technology. Oracle has provided the supply chain performance power that has ensured that businesses conduct their supply chains in the most efficient and profitable way possible. Today, organizations have invested a lot to enable them achieve an efficient supply chain to ignite a successful collaboration between suppliers, customers and partners and to realize a continual growth.
Oracle have empowered businesses to determine the supply chain and economic impact of operational and strategic decisions in matters of operations, resources, products, suppliers, customers, partners and distribution channel costs. The power to make correct and practical strategic decisions plays an integral role in making a business successful today and in future. Oracle has enabled the strategic managers to make practical decisions regarding the supply chains and their management through real-time information having put into account both internal and external factors. Oracle creates several models from which results are effortlessly obtained without recourse to batch processes (Gerald, King & Natchek, 2001). Oracle uses visual pie and bar charts among other reporting objects to analyze any model towards outcomes obtained. Many dimensions of costs, opportunities, benefits and profitability are examined based on a product and/or customer division. Businesses using Oracle have been enabled to perform trend and variance analysis through concrete research details to realize the forecasted demand.
Oracle PeopleSoft Enterprise Supply Chain Management (OPSESCM) has provided a flexible, synchronized and cohesive solution for the supply chains. This has driven efficiencies in increased revenue and cost savings in the course of the supply chains including the processes in the dimension of order-to-cash and plan-to-produce. Oracle has extended the supply chains of businesses in real time by means of integrating customers, suppliers and partners with their business processes (Gerald, King & Natchek, 2001). This has resulted to a business environment whereby all stakeholders in the supply chain process are coupled as one entity thus significant amount of time and energy is saved and consequently business enjoy cost reduction and improved revenue. Supply chain processes are effortless and take minimal time thus the workforce which was previously tasked with massive manual work is reduced. So does the business-wide costs. Oracle has provided an embedded analytics which has helped businesses track their supply chain performance to adjust to changing business goals, conditions and markets (Oracle, 2013).
Enterprises depend on the reliability of their suppliers while performance enables ones business. Therefore, Oracle has come in to determine better sourcing which goes beyond comparison of supplier prices. A good rating system requires businesses to determine how a supplier affects their overall organization from the packing area to the destination and to the finance and accounting departments after the entire supply chains is complete. Oracle has helped decipher the underlying obstacles towards achieving a clear transition of goods from the supplier all the way to the payment and accounting section (Kanaracus, 2012). Oracle collects critical information from the entire company to offer a full view of suppliers’ performance. Therefore, businesses have used this information to pick the best group of suppliers, negotiate healthier contracts, lower supply disruption and variability, and confidently adjust sourcing policies as business requirements change over time. Business are able to constantly rate and measure every supplier to determine areas where changes to policy would result to better supply chains options and purchasing benefits. Additionally, enterprises have been able to leverage their whole supplier base in addition to purchasing power in order to decide on contract formations (Oracle, 2013). Oracle have presented organizations with an ability to identify critical information and processes from all systems across their business including manufacturing, financial and distribution systems in real time and with a 360 degree view of every supplier’s performance. This way, businesses have boosted their supply chains thus enjoying significant developments. Oracle has enabled businesses to collaborate with their suppliers so as to securely share performance targets, assessments and measures with suppliers. Oracle sends automatic e-mails to all suppliers who score below a specified threshold based on a Key Performance Indicator (KPI). This has helped suppliers understand the way in which they measure their performance to determine accurately how they can adjust their services to meet the changing business environment. Oracle has a predefined set of KPIs from which businesses leverage to obtain the information they need to make strategic decisions (Oracle, 2013).
Oracle has helped businesses to get rid of every weak link that may arise (Oracle, 2013). Businesses are assured that suppliers will deliver on time from schedules that are continually monitored through real-time communication. Oracle has removed the need to wholly rely on actual counts to maintain accuracy by electronically accounting for every piece inventory.
According to Oracle (2013), Oracle PeopleSoft Supply Chain Warehouse has assisted organizations to retain firm control over their supply chains while cutting costs. Coupled with robust analysis and reporting tools and a thorough data repository, Oracle PeopleSoft Supply Chain Warehouse has provided enterprises with an integrated view of their supply chains so they can analyze their performance from procurement and inventory process to manufacturing efficiency and production schedules and appropriately adjust before issues affect their profitability, ability to exploit new opportunities and profitability.
Businesses have been offered a superior foundation for strategic and operational supply chain decisions from seamless and integrated data marts to deliver the measures, maps and models needed to run a cost effective and efficient supply chain (Oracle, 2013). These marts have provided a unified source of data for supply chains’ analysis and reporting. Additionally, these data marts have provided best practices in analysis without need for an entire warehouse implementation. There are marts that are for fulfilling and billing that tracks orders, customers, invoices, logistic transactions and returns to help enterprises evaluate their order-to-cash procedure and ensure timely delivery of high-quality products. Inventory marts have enabled organizations to analyze inventory demand, accuracy, turns and movements so they can cut off excess without jeopardizing their flexibility. Supply chain data mart has enabled businesses to analyze how their actual order purchasing, inter unit transfers, fulfilment, inventory levels, capacity utilization and production have aligned to their supply chain plan to make the necessary adjustments so that they can keep their supply chains running efficiently (Oracle, 2013).
Oracle has enhanced optimization of supply chains to avoid business financial constraints in situations when there is a decline in demand and an increase in inventory levels is experienced. It prepares businesses determine how to mitigate this business cycle of demand pressure while exerting a powerful positive effect on company performance. Oracle provides access to data has enabled businesses to make informed decisions to realize a synchronized and integrated supply chains (Oracle, 2013). Supply chain management entails procurement, sourcing, logistics and conversion management of every flow of materials from suppliers to customers. Oracle integrates all these processes to timely and effectively maximize throughput, eliminate inefficiencies and bottlenecks to ensure that a business delivers products to its customers while meeting all the customer’s needs. Oracle has overcome all the coordination challenges across all supply chain functions to manage these critical business solutions. For companies to survive for a long time and compete successfully, they must have an effective and reliable supply chains to counter the ever growing global economy. If a company cannot match others in terms of efficient supply chains, it will not enjoy a continuous development as it will lose its customers, partners and suppliers. Therefore, this competitive global economy requires a company to have a proper supply chain management for it to remain competitive. Oracle’s SCM includes demand management, sales planning, operations management, product development, and logistics and supply management (Plunkett, 2009). Oracle-based customized transportation management have provided businesses with seamless and integrated solutions to help optimize all and end-to-end routing and planning prior to delivery through a real-time monitoring all the way to their invoicing and auditing on delivery.
Enterprises seek to improve on their supply chain management performance to be more competitive and profitable. An integrated method of supply chain management has helped businesses increase productivity, reduce costs and simplify business processes. Businesses therefore seek to have clear visibility in their supply chains to leverage benefits resulting from smooth flow of materials and end products. Oracle has helped many businesses including some in the Fortune 500 to drive profits from proper management of their supply chains (Oracle, 2013). Businesses have been empowered to meet strict demands while not sacrificing effectiveness and efficiency.
Oracle Supply Chain & Order Management Analytics has delivered extreme customer insights into inventory and order data thus empowering businesses to make superior decisions in every stage in the lifecycle of supply chain management (Rasheed, 2012). By leveraging fact-based and actionable insights, organizations have been enabled to enhance their customer satisfaction and financial performance. Oracle has enabled companies to assess levels of inventory, probable product fulfilment requirements, fast identification of prospective order backlogs and stay above critical day’s sales outstanding challenges. The insights derived from these analytics have delivered actionable procedure to tackle short-term issues as well as strategic inputs to determine how to transform the existing supply chains. Revenues have been maximized through availing enough goods to satisfy customer orders and keeping costs and inventory levels as low as possible. Further, Oracle has provided actionable information needed to carry out intelligent order analysis in relation to periods, products and regions.
Today, companies using Oracle have been enabled to cope with multiple factors that affect the efficiency, timeliness and quality of their supply chains. According to Rasheed (2012), businesses can now cope with:
- Global economic and financial instabilities.
- Pressure to boost their profit margins and revenue.
- Value chain complexities.
- Customer and supplier service demands.
By using Oracle to streamline supply chain management approach, organizations have met demands while safeguarding efficiency, reducing costs and improving customer satisfaction for increased profitability. Oracle has optimized supply chains efficiency through a number of ways including (Rasheed, 2012):
- Deriving an accurate, specific product views through centralized information.
- Distributed order coordination through management of orders across many systems in a single place.
- Delivery of accurate demand-oriented forecasts to achieve greater inventory coordination and control.
- Improved visibility to supply chains.
- Reduced transportation and freight costs.
- Improved logistics while offering flexibility in delivery options.
- Maximized potential of gaining cutting-edge supply chain solutions to derive precise insights to the supply chains by leveraging Oracle system analytics and business intelligence.
Oracle have led to a greater understanding of the potential benefits in terms of competitive advantage that can be derived from optimized supply chains by focusing on effective supply chain performance techniques and processes. Supply chain management optimization is a key factor of competitive advantage in businesses especially manufacturers (Oracle, 2013). In today’s business environments, businesses have devised their supply chains to discover opportunities for reducing costs and to demand and guarantee quality of inputs and timeliness of delivery. The supply chain management have become very critical for greater revenue and profitability thus input quality should be transferred to the end product to increase the willingness to purchase. The sourcing and acquisition of materials and goods has a direct impact on the costs of products thus the outcome.
Unlike industries dealing in goods, service industries cannot adequately describe their strategic impact on greater supply chain management. These are companies that provide IT services, consultancy, and legal services. These companies apply different best practice principles compared to manufacturers since factors such as quality and timely delivery of services cannot be precisely accounted for (Rasheed, 2012). Tactical supply chain concepts commonly practiced in the manufacturing industry such as centralized sourcing and procurement are not completely leveraged in the services industry. There is no direct connection between a service company and the services it offers to its customers unlike in the manufacturing industry. Oracle has brought the economic impact to service industries similar to that experienced in the manufacturing industry in form of an enhanced supply chains. Oracle has achieved this feat by controlling costs and improving the input quality to improve the quality of end products so as to boost the demand of their services. Service industries have direct inputs from their individual supply chains, for example, an insurance company has legal services, externally adjusted claims and external auditors directly affecting the outcome of insurers which can be a main factor in their competitiveness so as to be different from rivals. The timeliness and quality of their consultation services is the driving factor towards competitiveness. Oracle has assisted service industries to ensure that they deliver quality and timely services to meet the dynamic compliance and regulatory needs to avoid reputational risks, fines and be guaranteed of high revenues, profitability and continuous growth. Rasheed (2012) argues that supply chain techniques and processes are maturing in the service industries necessitating strategic and solid supply chain management to achieve the potential to build a competitive advantage. Oracle has presented service industries with the capacity to enhance spending on service sourcing and execution as well as delivery thus improving their supply chains to achieve the same superiority gained by manufacturing industries (Gerald, King & Natchek, 2001).
Oracle Effects on Supply Chain Management Performance: Information Technology
In addition to impacts on supply chain management performance to an organization, Oracle has a great impact on information technology in that it has ():
- Accelerated deployment of supply chain data warehouse from its appliance in business environments. Oracle joins a league of other systems in a business with each system designed to accomplish a specific task.
- Integrated data from many sources to offer business users a whole view of the supply chain management and customer processes.
- Provided key information on inventory and orders.
- Adapted to dynamic internal and external requirements by leveraging existing software investments.
- Reduced the burden on human and IT resources through thorough self-service capabilities (Capgemini, n.d.).
Case study: Use of Oracle at Herbalife Inc.
Herbalife is a leading premier well-being and health company with its headquarters in California, US with retail sales of approximately US $ 1.3 billion. Herbalife had been using product releases but it needed an efficient tool and process to help in prediction of demand for its new products. The company also wanted a single platform to enable plan the supply chains across every product category to enable system-oriented booking and accounting. Herbalife had Oracle applications for planning, inventory and financials. However, Herbalife needed an approach to achieve a superior supply chain management performance. Upon implementation of Oracle Application Release 11.5.9, process complexities were reduced and Herbalife experienced process efficiencies. The better supply chain planning enhanced inventory turns and reduced stock outs. The solution also enabled Herbalife to adhere to harmonized supply chain management practices in areas of procurement, planning and execution. Overall, the supply chain management process including manufacturing, financial accounting, procurement and distribution was streamlined (Infosys Limited, 2014).
Oracle SCM modules has helped enterprises manage their entire flow of materials, services and information from supplier’s raw materials through manufacturing warehouses and factories to the destined customer (Infosys Limited, 2014)). The efficient flow of the processes leading to the end product and distribution of this product to the end client by far improves customer satisfaction and reduces the entire business costs. Furthermore, improved supply chains saves time for strategic and operational management to tackle other demanding business tasks.
Microsoft Dynamics Effects on Supply Chain Management Performance
Today, the supply chain forms the major challenge that ERPs must address effectively and efficiently to realize growth. Luszczak (2012) writes that a poorly functioning and inefficient supply chain has a potential to adversely impact all aspects of a retail business, endangering its success and long-term performance. Microsoft Dynamics has provided full inventory and order transparency throughout the supply chain (Luszczak, 2012). It has helped its users interact accurately and quickly with their supply chain collaborators. Higher cross-enterprise transparency has empowered sales people with integrated and updated information about new products, advertisements, and late-changing orders in production scheduling and customer demand process.
One of the widely used retailing principles is detailed retail and is the cause of the challenge in that it is demanding to determine how to become extra detailed and assess the details to be focused on. Every retailer understands that one of the most important requirements is availing products to its customers. The best and potentially developing organizations can be challenged by manufacturing, selling and distribution processes. The supply chain management determines what a business reaps from its pursuits as it influences customer satisfaction and profitability. Microsoft Dynamics enables business drive change from its business processes by changing the whole method of supply chain management to keep pace and adjust accordingly (Ray, 2010). A poor and inefficiently performing supply chains negatively affects all aspects of a retail business, endangering business success and both short-term and long-term performance.
Microsoft Dynamics enable businesses to be successful and maintain competitiveness by offering enterprise-wide buy-in to excellence of supply chain (Hamilton, 2009). Current performance and processes need to be re-evaluated with existing performance and processes with key trends such as demand planning, price pressures, online collaboration, globalization and complex and shorter product life cycles. Microsoft Dynamics enables enterprises align their supply chains with the business policy to support their businesses with appropriate strategy, technology and organizational processes. To achieve success, enterprises must adopt supply chain superiority as a fundamental source of competency at every level throughout the enterprise and understand that supply chain execution is implemented in several areas since some enterprises recognize only the practical supply chain performance (atBusiness, 2013). Microsoft Dynamics works together with leading enterprises and assists them handle their business issues.
Microsoft Dynamics has transformed many key businesses in consumer products, food and beverage, industrial manufacturing and high tech by causing significant change and impact to retailer’s supply chain performance using five major trends including (Ray, 2010):
- A demand-oriented approach to help retailers create a customer –driven mindset while adhering to high operational efficiency. Demand planning excellence is often as a result of a unified organizational structure. Organizations who possess the right techniques and committed resources invested into demand planning and market forecasts reap better outcomes and derive huge value from their investments. Improved forecasting and demand planning forms an integral role in the supply chain management performance.
- Supply chain management and globalization: today’s business environment is fast becoming entirely global due to improved means of transport and communication. Internet has been a driving force in that a company in US can adequately communicate with a manufacturer in Japan in real time. Improved communications have largely contributed to the dramatic globalization of enterprises while greatly affecting the way businesses are managed in terms of transactions. Supply chain is the area of business which is mainly affected by the global business trends. Microsoft Dynamics has integrated a global supplier and customer base in sourcing, manufacturing, distribution, invoicing, accounting and returns by using existing businesses processes and making them flexible enough to handle this global and ever changing business environment. Retailers have therefore enjoyed a customer base spanning wider geographical areas in a timely manner and effortlessly through efficient supply chain management.
- Global price pressures and competition: internet has greatly changed shopping habits now and in the years to come. E-commerce has opened the world creating a non-geographic retail experience – a retail environment without need to physically visit the store. Traditionally, product features, brand recognition and brand were enough information to differentiate products in the market. The continued commoditization of several products has forced enterprises to seek better ways of distinguishing themselves. Brand equity and product innovation has ceased to allow retailers command higher prices in the market. Microsoft Dynamics enables enterprises to continue competing with commoditized products by making significant cost reductions with a re-designed and efficient supply chain management. It has helped retailers reduce costs and create a more effective value chain to establish a competitive edge for them. Additionally, retailers are now able to look at ways that can offer value-added services required for meeting the demands of complex customers. Therefore, Microsoft Dynamics have enabled retailers to carry out their supply chains in a more effective way to realize cost reduction benefits and gain competitive advantage. Traditional means of product differentiation have been replaced with an effective supply chain management to realize the same benefits.
- Shortened and sophisticated product lifecycles: due to the inclination of the economy towards being more global, compliance and labelling in packaging regulations and requirements have become a critical determinant of success. Observation of local labelling, packaging and compliance to regulations is a key factor in distributing a product in a certain locality. Microsoft Dynamics has offered a foundation to manage product lifecycle and processes to ensure that products are created and targeted for particular markets, are compliant to regulations and well managed. This product management lifecycle has helped enterprises gain abilities to constantly bolster demand through labelling and packaging design and innovation. Microsoft Dynamics have transformed retailers through implementation of optimal product lifecycles to allow them effectively manufacture and distribute their products targeted for consumer preferences and regional promotions.
- Partnerships and integration with suppliers and clients: need for intensive collaboration and integration between suppliers and customers have been necessitated by the ever growing supply chains. Microsoft Dynamics evolve with the developing supply chains to ensure that an enterprise is always covered in the area of sourcing, procurement and logistics and to eliminate hindrances that may come with new supply chains. Collaboration levels goes beyond connecting information systems in business to integrate processes across enterprises that encompass the entire value chain. Microsoft Dynamics performs this collaboration to enhance end-to-end visibility through the entire value chain in order to make improved strategic decisions and ultimately reduce costs related to the value chain. With right techniques, organizational structure and processes in place, collaboration has provided enterprises with vital information necessary to make critical decisions. Microsoft Dynamics analytics has brought about significant analysis and reporting abilities which have enabled businesses to draw tangible conclusions in matters regarding supply chain management. Retailers are more and more conducting their supply chains to gain competitiveness and grow their market share; they are highly spending a lot of energy and time in the supply chain management. Therefore, Microsoft Dynamics usage in businesses can be taken as a driver of supply chain excellence as forward-thinking retailers have widely adopted supply chains as a component of business policy to increase value to suppliers and customers.
The Microsoft Dynamics system has developed vertical solutions to manage the needs of distribution resulting to less complex supply chains. The Dynamics has improved solutions in inventory and transportation optimization, product lifecycle, logistics, replenishment optimization, procurement, manufacturing, e-commerce and collaboration platform. It has helped realize innovative supply chain which has driven cost reductions, met customer expectations and improve services better than ever experienced before. Microsoft Dynamics has sought the appropriate balance for organizational investments, technology and processes to drive a sustainable and improved supply chain performance. Increased investment in supply chains including use of technologies such as Microsoft Dynamics has increased the capacity to achieve essential and sustainable improvements (Ray, 2010).
Hamilton (2009) asserts that Microsoft Dynamics has extremely transformed the supply chain management. It has streamlined the distribution lifecycle and helped gain quick access to correct information leading to reduced input errors. Additionally, automatic sharing of information has substantially reduced the supply chain phases to six for businesses using Microsoft Dynamics. It has also enabled businesses to maintain updated information about stock availability resulting improved accuracy of commitments promised to clients. By linking the flow of information and products through businesses and processes, Microsoft Dynamics have made it possible for everyone to access the information needed. This has resulted to faster delivery of information to support decisions proactively at the most appropriate time in the supply chains. It has also led to provision of required data for planning of demand and automatic stock replenishment resulting to managed inventories, reduced costs, well monitored cycle times and adequate supply chain process traceability. Microsoft Dynamics has offered an integrated business solution with real-time information thus has enhanced communication and subsequently it has strengthened collaboration. Hamilton (2009) notes that Microsoft Dynamics has effectively bridged the whole supply chain by bringing higher transparency and effective connectivity to worldwide supply chains thus empowering organizations to cope with today’s challenges and eventually stand out in the competitive marketplaces.
Microsoft Dynamics has integrated information from businesses and their entire supply chains resulting to synchronized real-time movement of products and improved productivity in distribution processes. This thorough and fully integrated solution has helped businesses to balance between the supply chain demands and improving movement of product in order to grow sales, decrease costs, and increase fill rates. With integrated and strengthened transport execution alternatives, Microsoft Dynamics has helped companies to speed up and simplify their transportation tasks. These have resulted to economical load building, automatic carrier tasks, and generation of quick and compliant documentation to boost efficiency, reduce costs and eliminate errors. Furthermore, it has led to easy tracking of shipments as necessary to preserve end-to-end visibility throughout the distribution and ensure appropriate delivery to achieve customer satisfaction (Microsoft, 2014).
Case study: Implementation of Microsoft Dynamics at World Vision
World Vision is an organization dealing with humanitarian work in over 100 countries with an aim of building a better environment for children through addressing their needs in health, education, economic development, sanitation, hygiene, food, water and agriculture. Every year, World Vision used approximately US $ 300 million in donations and administered many shipments by sea, land and air. An effective and efficient supply chain management is vital to every organization; World Vision opted for Microsoft Dynamics to carry out its supply chain management for its capacity to scale well globally as well as its flexibility. Mongolia has difficult terrain and vast geographical area which are unique supply chain challenges; World Vision implemented Microsoft Dynamics to remarkably enhance the performance of its supply chain which enabled the organization improve its influence on the lives of children (atBusiness, 2013).
Comparison of ERPs: SAP, Oracle and Microsoft Dynamics and how they affect Supply Chain Management Performance
It is intriguing to note that these three leading ERP suites have several differences and more importantly, they share common similarities in a number of ways, for example, the goal of their supply chain modules (Knolmayer & Zeier, 2005). SAP and Oracle are the biggest players in the ERP-run supply chains compared to Microsoft Dynamics. However, all the three have not been left behind by tendencies to incline towards cloud computing. Kanaracus (2012) notes that SAP is targeting its ERP suite for large companies as an on-premise system while Oracle is positioning its main suite for cloud deployment.
The table 1 below compares SAP, Microsoft Dynamics and Oracle using selection rates, benefits realized, implementation cost, and market share among other metrics. It is evident SAP has beaten Oracle and Microsoft Dynamics in the ERP market. However, due to its complexity and detailed nature, SAP takes long to implement. A detailed comparison is shown on the table 1 below.
Table 1: Source (Kimberling, 2013)
The three ERPs have complied with regulatory constraints, customer and supplier initiatives and global standards by supporting supplementary technologies such as bar code readers and Radio Frequency Identification (RFID) among others. Customer demands involving shipment and product tracking and identification with complete, in-built support for RFIDs and Automated Data Collection Systems (ADCS). This has contributed to improved supply chains as there is no need for recourse to implement separate technologies to support such features. Furthermore, businesses can transact beyond their national boundaries as they are not constrained by regulatory requirements. Support for customer initiatives has improved customer as satisfaction leading to a harmonious collaboration in the process of supply chain management performance.
These ERPs have enhanced supply chain collaboration thus have enabled faster passage of new products as well as providing superior services that has raised the level of warranties, after-sales support and supplier-managed inventory. The three ERPs are built so as to fit an enterprise’s supply chain and never the inverse way. They come with a number of other transformational capabilities that has made it effortless for an entire business to collaborate and connect. They are also geared towards helping both strategic and operational managers to make fast and smarter decisions.
The three ERPs generally take long durations of time and a lot of energy to implement than initially expected. This suggests that the personnel involved must have the required expertise to tune these ERPs to fit the organizations’ supply chain for greater performance.
All the three ERPs have helped provide improved end-to-end visibility into the supply chain to enable businesses adapt to changing business environments and manage every bit of supply chain effectively and efficiently. They have enabled organizations gain visibility across dispersed supply, distribution and manufacturing networks. This has enabled them reduce costs, effectively manage inventories, reduce lead times and drive growth by changing the whole supply chain from a product-push approach to a demand-pull orientation. The three ERPs have helped provide improved supply chain visibility which has enabled businesses to enjoy several benefits including (Russell & Taylor, 2006):
- Reduced exposure to risks in the supply chain operations by improving timeliness to understanding unexpected events, delays and changes. This has also enabled quick recovery from supply chain failures through ERP analytics and reporting that outline the best measures to counter such failures.
- Real-time insights into all aspects of products with comprehensive, measurable inventory data sourced from material usage and real production rates. Inventory categorization and related attributes that can be configured including serial numbers and batching has helped companies track their products from production stage to distribution process.
- Advantages of globalization of transportation, logistics and cross-enterprise views on orders which has enable proper planning resulting to more consolidated orders, better selection of best carriers, creation of efficient loads and optimization of delivery routing.
- Modelled contractor abilities to determine outsourcing costs thus helping companies make quick, better and well-versed decisions related to ways of achieving efficient and effective supply chains.
- Reduced response time achieved through configured customized alerts conveyed through e-mails, text message or onscreen to inform the appropriate people of key events and changes that need to be attended to.
- Easily and effectively managed supply chains with thorough traceability of every raw material, components, shipment, and products including lots and serial numbers.
- Improved customer satisfaction whereby customer service and sales personnel deliver quick, extra accurate quotations, information regarding lead times and availability, and reports on order status. Through improved customer service and more accurate information about quotations there is a smooth and quick supply chain experience.
- Reduced capital and time through complete replenishment cycles derived from management techniques and processes including automatic replenishment signals to refine purchasing practices, reduce inventories and implement demand-oriented, timely and dealer-managed catalogues.
Examples of why some companies chose certain ERPs over the other in regards to their supply chain
In matters regarding supply chain management, is SAP the best ERP over Microsoft Dynamics and Oracle or is Oracle the best. Such fundamental questions are easy to answer as the choice for a particular system mainly relies on a company’s ICT facilities and expertise as well as its existing and projected needs.
SAP is severally considered than Microsoft Dynamics and Oracle during company’s’ selection for an ERP. It is not surprising to find that SAP is more often short-listed and by a bigger margin, approximately 35 % versus 24 % and 17 % for Oracle Systems and Microsoft Dynamics respectively. Over recent years, this has been consistent primarily because SAP enjoys brand recognition and a bigger market (Bort, 2013). Moreover, large organizations with global presence and a large capital base have considered SAP to be the ERP of their choice (Kimberling, 2013; Twentyman, 2013). Companies using SAP include (CMU, n.d.):
- 7-Eleven, Inc: it is a convenience store recognized all over the world and with over 5,700 stores in Canada and US.
- Accenture, Inc: it is a global technology, outsourcing and management consulting company. It collaborates with its customers to assist them become high performing businesses by developing solutions to help customers.
- BP: it is part of the largest companies dealing in energy and providing its clients with fuel, energy for light and heat, petrochemicals and retail services. BP has over 28,000 gas stations globally.
Oracle is often selected that Microsoft Dynamics and SAP. SAP enjoys the largest market share but Oracle is selected by many companies than Microsoft Dynamics and SAP. Oracle is not often initially shortlisted compared to SAP making its market share to be lower than that of SAP, implying that Oracle could get a wider market share upon making its way into company’s initial shortlists. Examples of companies using Oracle: Capital Land, Maldives Police, Jackson Hewitt Tax Service and others (Kimberling, 2013).
Microsoft Dynamics takes less time to implement compared to Oracle and SAP therefore it is a choice for many small and medium businesses that have lesser capital and simpler supply chains. Microsoft Dynamics is typically used by less complex and smaller businesses than the Oracle and SAP. SAP and Oracle are mainly implemented by large enterprises that are characterized by complex and longer supply chains. Companies using Microsoft Dynamics include: D&W Dundas & Wilson, Bytes Technology, Metro Bank, LIVERPOOL VICTORIA and others (Microsoft, 2010; KNOWLEDGE CAPITAL ASSOCIATES LLC, 2014).
Organizations consider issues such as whether an ERP offers a fixed price, implementation scope, ease of system integration, upgrade costs, scalability, supply chain complexity and number of users supported. So who is the winner between SAP versus Oracle versus Microsoft Dynamics with regard to supply chain management performance? The answer is never clearly cut even if there is overwhelming data to support one ERP over the others. The choice depends on the business needs for supply chain management, priority and financial capacity of the company that wish to implement an ERP.
As distribution operations become more sophisticated with ever changing consumer needs, electronic and global markets, compliance initiative and several distribution channels, there are perennial challenges of accurately and timely delivery of products. These challenges can be successfully solved in ways that allows competitive advantage to be gained. Such methodologies include use of concrete coordination of enterprise-wide processes through all phases of supply chains and over the whole enterprise. True effectiveness in distribution is required to streamline business processes to allow well-timed access to necessary information in order to move goods at optimal speeds ((BinaryStream, 2013).
Supply chain management is extremely complex. Business managers must seek to gain a comprehensive end-to-end visibility into their business’s supply chain performance and to improve on flexibility to quickly respond to risks and disruptions in order to capitalize on competitive advantage (Russel & Taylor, 2006). Simultaneously, they need to devise ways of identifying and adapting to emerging trends in the supply chain. These demands emphasize the significance of possessing the right software techniques in place to manage risks and improve performance (BinaryStream, 2013). In the real world, these techniques help supply chain personnel align their processes and models with their organization’s primary business policies and provide visibility into supply chain processes.
Every company expecting to achieve tangible benefits from supply chain management performance require an investment an information system. Many companies have taken recourse to ERP suites, for example Oracle, SAP, Microsoft Dynamics and others. These enterprise-wide software implementations encompass the complete supply chain. This implies that the software oversees the entire supply chain process from acquisition of raw materials up to actual selling and warranties. These software suites require a significant cost in terms of complexities, monetary, time and other resources required in the successful implementation to provide optimal supply chain management performance. Among the key success factors to implementation are buy-in by a company’s strategic management and sufficient training of the operational personnel. Every company must evaluate its ICT infrastructure, staff training and expertise, and their supply chain needs to select the best suitable ERP from the many choices that are ever growing. Moreover, companies must consider their financial ability as the ERPs come with different costs in terms of initial licence, personnel training, upgrading, annual subscription and internal expertise required.
Since there is a global inclination of technologies towards non-PCs and internet-based applications, companies must seek to take advantage of internet communications and ERPs with web-based abilities. Remember, those companies that do not seek to move with new and emerging technologies will always remain backward in competitiveness in the current fast growing global economy. Companies can exploit these emerging trends to enjoy real-time communication with their partners, customers and suppliers to improve on timeliness of informational updates which is vital to effective supply chain management.
Generally ERPs helps businesses get additional value from supply chains in the following ways (Russell & Taylor, 2006):
- Optimization of business network through support of their assets, alignment of conversion costs, focusing on valuable clients and synchronizing demand with supply. These are areas where use of ERPs can trigger the difference, value and are not suitable for manual processes.
- Enforcement of compliance and reduce material costs: ERPs enhances sourcing, planning and procurement and offers the capacity to convert data into useful information from where better can decisions can be made. ERP forms a platform for reducing costs and encountering crucial requirements.
- Remove unnecessary operations through complex data collection to enhance reporting abilities so that performance is adequately tracked and to strengthen production scheduling.
- Reduce the amount of time consumed from creation to marketing and pursue particular product innovations: Through integration of product lifecycle there is streamline of the product creation procedure and increased time from production to marketing. ERPs can result to labour savings of approximately 31 % to 49 % and reduce product lifecycle by approximately 50 %.
- Provision of the correct product at right time and place: ERPs enable fast communication of right information throughout the operations and synchronization of logistics and transportation with all critical elements involved in the supply chain. Consequently, the improvements results to related benefits such as increased deliveries and on time, reduce delivery costs, reduce inventory requirements and enhance reverse logistics.
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