Performance effects of using an ERP system for manufacturing planning and control under dynamic market requirements

Abstract

Enterprise resource planning (ERP) systems have a controversial reputation. Critics say that even if ERP systems may be beneficial for organizations operating in stable conditions, they are surely detrimental to organizations that face dynamic market requirements. This is because ERP systems are said to impose such procedures and constraints on organizations that make business processes inflexible to change. In contrast, proponents argue that the information-processing capabilities of ERP systems are crucial for organizations that face dynamic market requirements and also that the criticized procedures and constraints actually support process reengineering. These two contradictory arguments are often found in practitioner literature, but both of them can also be supported by management theory. The central tenets of the Organic Theory of organization design imply that ERP systems should be detrimental when market requirements change frequently, whereas the principles of Rigid Flexibility Theory suggest that they should be advantageous. In this study, we use cross-sectional data from 151 manufacturing plants to determine which argument is more applicable in the context of manufacturing planning and control. The results strongly favor the use of ERP systems under dynamic market requirements. To facilitate the reconciliation of the two contradictory arguments, we discuss how the results may have been influenced by two contextual factors: the predominantly technical nature of the studied organizational system and the tight interdependence of the studied activities.

Proposed Approach to Develop the Measurement Methods of Accounting Disclosure for Support of the Competitiveness of Business Organizations

“…Known as productive flexibility to the extent permitted by the Economic Unit for customers to influence in the specifications of the products or services performed by. This starts the extent the willingness and ability of economic unity of the change specifications to meet the requirements of the market, and ends the production output Customizing is in accordance with the combination of normative standards that is configured by the Economic Unit, referred to the wide response to customer [12] Mass customization. And to respond to the wishes of the clients in the manufacturing systems as a floppy connected, starts the first limit low levels when the client is unable to request a change in the basic specifications for the product or service, alone the continuing submission to high levels of response, through the design of a product or service to meet the full requirements of the market [13] (Pine & Gilmore).…”

Robust production planning and control for multi-stage systems with flexible final assembly lines

“…Almeder et al (2015) tackle this issue by solving the MLCLSP in two steps: batching and lot-streaming. Albeit enterprise resource planning (ERP) systems are significantly improved in the integration of material and capacity planning (Hvolby and Steger-Jensen 2010), they are still unable to perform satisfactory in a dynamic, uncertain environment (Tenhiälä and Helkiö 2015). To tackle these challenges more efficiently, advanced planning and scheduling systems (APS) combine production planning and scheduling and utilise ERP data to adjust the plans to the actual status of the production system (Fleischmann, Meyr, and Wagner 2005).…”

ERP System versus Stand‐Alone Enterprise Applications in the Mitigation of Operational Glitches

“…Enterprise resource planning (ERP) systems are software packages that provide information support across business functions. The literature reports positive performance effects of using ERP systems (Hendricks, Singhal, & Stratman, ; Karimi, Somers, & Bhattacherjee, ; Seddon, Calvert, & Yang, ; Tenhiälä & Helkiö, ) but also documents widespread practitioner dissatisfaction with their inflexibility (Rettig, ; Lindley, Topping, & Lindley, ; Fauscette, ; Jutras, ). Until recently, this dissatisfaction has had little effect on ERP systems’ prevalence, largely because of a lack of credible alternatives (Jutras, ; Prouty & Castellina, ).…”