Implementing ERP in Manufacturing

O COMPETE EFFECTIVELY IN TODAY’S global business environments, firms must use information technology to support the continuous improvement of business processes. Enterprise resource planning (ERP) is the latest in an evolutionary series of computer tools developed for managing information and organizations. ERP systems are simply integrated information systems. They integrate processes, information, and people across functions, plants, companies, and geographic locations. This permits companywide or enterprisewide communication and coordination, using a common database available in real-time. The potential benefits of using an ERP system include quicker information response time, improved on-time delivery, lower inventory levels, better resource management, and improved interaction with customers and suppliers.1,2 Although many organizations have already installed packaged ERP systems, other companies are still considering the adoption of ERP as the backbone of their information systems. For example, in a recent survey study, Mabert et al.2 reported that close to 44 percent of the firms that responded had installed an ERP system and close to 30 percent of respondents were currently installing or planning to install an ERP system. Another study indicated that 53 percent of large firms and only 9 percent of small/medium firms had installed a packaged ERP system.3 In addition, the study reported that of those firms planning to make a significant investment in ERP within the next two years, 30 percent of the large firms and 87 percent of the small/medium firms currently do not have an ERP system. Although investments in ERP systems and spending for information technology (IT) in general have slowed recently as a result of the depressed economy, some analysts are predicting a recovery in IT budgets in 2003.4–6 According to a recent survey by AMR Research (Boston), ERP will remain the largest component of companies’ applications budget through 2004.6 Also, the greatest growth in core ERP adoption is projected for the midrange and small organization marketplace.7–9 Empirical research addressing ERP implementation issues is rather limited. Most of the research is in the form of personal experiences or case studies.10-14 While case studies are useful in providing detailed descriptions of how and why individual companies have implemented ERP, a broader perspective is also desirable for understanding general trends and issues. Researchers in Europe9 and the United States2 have conducted broader investigations using mail survey methodologies. Mabert et al.2 conducted a survey of U.S. manufacturing firms concerning their experiences with the implementation of packaged ERP systems. The survey included questions about preimplementation issues, implementation experience, ERP system configuration, benefits, and future directions. Van Everdingen et al.9 surveyed midsize companies in Europe and explored issues T