ERP compatibility on business performance through the inventory system and internal integration

Abstract

The information technology used by companies today is ERP (Enterprise Resources Planning) technology. This study aims to examine the role of ERP compatibility in improving the performance of MM-2100 manufacturing companies. Data is collected at manufacturing companies that have made ERP system adjustments. Data collection was carried out through questionnaires distributed to manufacturing companies, and as many as 78 questionnaires were obtained, which could be further processed. Retrieval of data using questionnaires submitted to the relevant section that has access to company inventory data. Data analysis was performed using the SEM-PLS technique using smart PLS software version 2.0. The results of the study show that ERP compatibility can increase internal information integration and inventory system continuously. However, ERP compatibility has no direct effect on manufacturing performance. Internal integration affects inventory systems and manufacturing performance with coefficients of 0.346 and 0.378, respectively. Internal integration allows other functions to be able to access inventory in the company. The company’s inventory system that is controlled can perform efficiency and effectiveness for the company so that it has an impact on manufacturing performance with a coefficient of 0.766.

Effect of ERP Implementation on Firm Performance Through Information Technology Capability and Inventory Management During the Covid-19 Pandemic

“…Customer orders will be delivered on time, indirectly increasing customer satisfaction, trust, and loyalty (Wei et al, 2017). In addition, conformity in ERP implementation impacts the company's inventory system, namely reducing waiting time for orders to suppliers, determining the number of orders automatically, determining the amount of inventory in realtime, and easy implementation procedures (Sebayang et al, 2021). Its primary focus is tracking raw material inventory and providing inventory reports (Nagpal et al, 2015).…”

“…Its primary focus is tracking raw material inventory and providing inventory reports. ERP implementation on the company's inventory system can reduce waiting times for orders to suppliers, automatically determining the number of orders, determining the amount of inventory in realtime, and easy implementation procedures (Sebayang et al, 2021). In addition, improved performance from ERP is obtained from inventory level management with the separation of related divisions to access inventory data, a clear Standard Operating Procedure (SOP), and the availability of inventory levels for each product .…”

Internal Control of Drug Inventory at the Pharmacy Installation of the Dumai City General Hospital

“…Inventory is a significant part and is one of the most extensive parts of current assets (Sebayang, et al, 2020). Inventory is also the most sensitive asset to damage, theft, and decline in market value.…”