E.R.P. Systems and organization's performance.

Popescu, Luminita ; Popescu, Virgil ; Iancu, Anica 等

1. INTRODUCTION

The Enterprise Resource Planning (E.R.P.) Systems have appeared in mid '60, at the same time the development of the M.R.P. (Material Requirements Planning) technique. These systems, MRP1, used the following parameters: the volume required to be made, based on the clients' firm orders; technological charts; the stocks situation on each article/good; the medium duration of a supplying. Then, at the begging of the '80, the MRP2 (Manufacturer Resource Planning) Systems have emerged, integrating the planning instruments for sales, production, supplies and the necessary of production units, as well as creating some informational situations of economic-financial nature (Popescu, 2007).

Though they come from the production environment, the ERP systems try in the present to cover all the basic functions of an organization, no matter its type.

The ERP represents in essence (Radu et al., 2005):

* an assembly intercorrelated by informatics subsystems meant for the human resources, materials and finance management within an organization;

* an informatics system oriented towards the identification and planning of the necessary resources in order to satisfy the requests of the organization's clients;

* an informatics system with many modules designed to make the main activities in a commercial firm more efficient.

The development process of an Enterprise Resource Planning system is a complex one and is usually accompanied by a redesign of the entire management process, therefore implying significant financial resources and long period of implementation.

The ERP systems are designed on modular concept and facilitate the view of the enterprise as a whole (Brehm & Gomez 2007), covering the next categories of activities:

* the financial-accounting management: automation of the financial-accounting information registration taken from the primary documents, achievement of a complete financial-accounting evidence, the operative monitoring of the enterprises' financial-accounting situation, the automatic print of the informative and synthesis documents.

* the production management: identification of the principal performance indicators and transmitting them to the decision taking factors; the production models' flexibility; information given in real time about the operational indicators; creation of an assisting instrument for the production's planning; calculation of the ante and post production costs.

* the human resources management: the management of the organization's employees personal data; the employees management within the organizational structure; simulation of variants for salary modifications in order to correctly allocating the budget; monitoring the employees' efficiency and evaluating their performances.

* the stocks management: daily actualization of the stocks situation in order to eliminate the phenomena of over stocking or lack of stock; establishing the request for supplying and making the supplies on the base of an optimal model.

* the fix assets management: management of fix assets during the entire utilization period; generating the situations specific for the fix assets; making the history of the fix asset from the chronological point of view from the entry in the patrimony until the exit from it.

2. INFORMATION

By definition, an ERP system is a complex software solution, its elements being integrated in a general platform, for managing the company's resources so to achieve its objectives. These systems achieve in present days the integration of all leadership functions within the organization, starting from the planning, assuring the stock of materials and resources, defining technologies, coordinating the production processes, managing the financial-accounting administration, the human resources, the stocks of finite products but also maintaining the relationships with clients and business partners. Such an ERP system permits to the decision taking factors to make a complete analysis on the achievement of the business plan. Prediction plans, evaluations, presumptions on the industry's evolution tendencies to which the company belongs, qualitative analyses, integration of the new e-business technologies and on-line communications can be made by the simulation options and the flexible and dynamic character of applications.

A major role of the ERP systems is to assist the management in the planning, budgeting and monitoring the company's financial performance, by the mean of control function. Control allows to the management to adjust processes so all things to happen according to the preset scenario and given rules and dispositions (Burdus & Carparescu 1999).

The control process is made of three major elements, coordination, communication and information and implies three stages of execution:

1) Planning and Budgeting. This stage means the alignment of the strategical and operational objectives and generated the plans of action.

2) Monitoring and Analysis. the performance monitoring, the achieved performances analysis and reporting them to the executive management team are included in this stage.

3) Conclusions and Recommendations. This stage include measures for the profit growth, costs decrease and recommendations for strategy adjustments.

The execution of the control function means the processing of very large data volumes, obtaining certain reports and determining some performance measuring indicators or criteria. The processing of of this significant data volume can be done much more easily if the company has implemented an ERP type system.

A control solution signifies the strategical combination of three elements: informatics systems, business processes and human resources. Each of them has an essential role in executing the control because the strategical decisions for the company can be taken based on them.

The organization objectives are evolving from the extension of the market rate to the increase of profitability and services' quality at the same time with the growth of competitiveness and diversity, but also with the increasing exigencies of clients. The decisions to change objectives and evaluate the degree in which they are achieved can be done only with the help of control processes and through the existence of an informational infrastructure able to offer the decisional support based on information and analysis, not on intuition.

Targeted objectives' defining and the results' measurement methods are essential in defining and implementing a control solution. Measurement of an organization performance and establishing the future strategies implies the defining of some synthetic performance indicators to which be able to compare the company's evolution.

3. CONCLUSION

An ERP system is made of a series of modules meant for the various departments of an enterprise: production, finances and accountancy, acquisitions, sales, human resources etc. but the implementation of the system is a difficult process because brings along major changes in the employees' activity, its cost can not be predicted (it depends on the number of subunits that will be administrated by the system, on the number of modules to be installed, on the project's complexity). Besides those expenses, there also the so called hidden costs, that might raise the project's implementation cost:

* The employees' professional training is the most important factor that is underestimated when the ERP system implementation cost is calculated. These expenses have high values, because employees must learn new procedures and processes (Bingi et al., 1999).

* Integration and Testing. The creation and testing of the links between the ERP system and other software components implemented inside the organization is a really slow process, especially when the already existing components are old and there is no support for them from the firm that had produced them.

* Customizing must be avoided as much as possible, because, besides the fact it is expensive, makes more difficult the upgrading of the ERP center when a new version of it is available.

* It has been noticed consequent to the studies made on the organizations that have implemented at ERP type solution that the benefits have not appeared immediately after the system was introduced. In fact, during that period, a decrease of the firm's performances was observed, due especially to the numerous changes that the implementation of an ERP system brings up.

The principal benefits identified by the organizations that have implemented such systems are:

* Reducing the operational costs. Though it has an extremely various nature, the information is introduced only once and is accessible to any module that needs it. Thus, it saves time, resources, the probability to make operational errors is lower and gives access to most recent information etc.

* Facilitating the management of daily operations. The daily decisions are taken on the ground of the information available at that moment. By using the standard reports given by the ERP system, the information are new, coherent and presented intuitively.

* Stocks optimization. There have been signaled major cut backs regarding the fix assets from the stocks in many cases, while the clients satisfaction has grown. This was due to the new instruments of operational and decisional management which allow the control of supplying, delivery, picking, production processes etc. At the same time, the stocks with short expiration terms and slow rotation are kept under control etc.

* Increase the level of respecting orders. By the automation of the chain of taking orders, acquisitions, stocks management, storage management, logistics, the great majority of potential defects that lead to not respecting the orders or delivering unordered goods are eliminated.

* Cash flow improvement. The company controls in a stricter manner the cash flows and the periods of regaining the money by implementing coherent commercial policies and by the easiness with which the specific indicators are obtained, thus imposing a financial discipline to all the factors involved.

* integration of financial information Since there is only a system, there is a single version of the results. It is eliminated therefore the "multiple truths" problem, when each department has its own set of results, analyses and conclusions, that are most often contradictory.

We can say that an ERP system represents a combination between management practices and the technology of information, through which the organization's business processes are integrated within the informatics system in order to achieve some specific objectives.

4. REFERENCES

Burdus, E. & Caprarescu, Gh. (1999). Fundamentele managementului organizatiei (The Basics of Organizational Management), Editura Economica, ISBN 973-590-209-5, Bucuresti

Bingi, P.; Sharma, M. & Godla, J.K. (1999). Critical Issues Affecting an ERP Implementation, Available from: http://carl.sandiego.edu/gba573/critical_issues_affecting_an _erp.htm Accessed: 2008-04-10

Brehm, N. & Gomez, J.M. (2007). Service-oriented Development of Federated ERP Systems, Available from: www.se.uni-hannover.de/semsoa-2007/2007/proceedings/paper6.pdf Accessed: 2008-04-03

Popescu, L. (2007). Schimbari organizational determinate de tehnologia informatiei (Organizational Changes brought up by the Information Technology), Gdndirea Militara Romdneasca, Nr.1, Ianuarie/februarie 2007, pp. 116-120, ISSN 1454-0460, 1842-8231

Radu, I.; Ursaceanu, M.; Vladeanu, D.; Cioc, M. & Burlacu, S. (2005). Informatica si Management. O cale spre performanta (Informatics and Management. A Path toward Performance), Editura Universitara, ISBN 973-7787-59-5, Bucuresti