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Q1. ERP system can prove to be an effective tool in unorganised sectors and in small scale industries. Justify with examples.

The companies SAP, Baan, Oracle, PeopleSoft, JD Edwards, SSA and QAD and their respective products have not only revolutionised the ERP market but also give it a new dimension. With new technologies and the capability to provide solutions to the small scale industries along with the customer support services have enabled them to penetrate into the small and unorganised sectors. Both the vendors and the customers are benefiting form this highly flexible and cost effective solutions.

ERP market place is crowded with more and more players and competitor entering the market to provide ERP packages that have features and functionality to cater to the needs of businesses in almost all sectors. The ERP vendors spent billions of rupees in research to come up with new ideas that make the packages more efficient and flexible. With the evolution of new technologies, the vendors constantly upgrade their product to make the best and latest advancements in technology available in the market.

For example, SAP is the global market leader in ERPs with approximately 30 to 60 percent of the world market; The company spends a large percentage of its revenue in research and development of new technologies.
IT being the back bone, Enterprise Resource Planning (ERP) covers the techniques and concepts employed for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources, and to improve the efficiency of an enterprise. ERP packages are unified (covering all business functions) software packages that support the above ERP concepts.
In the 90’s, ERP packages were targeted at the manufacturing industry, and consisted mainly of functions for planning and managing core businesses such as sales management, production management, accounting and financial affairs, and so on. However, in the last decade, adaptation not only to the manufacturing industry, but also to diverse types of industry has become possible. With the ever developing and innovating IT techniques, the expansion of implementation and use of ERP packages has been progressing on a global level.
ERP software is intentionally designed to model and automate many of the basic processes of a company. It established an effective link between the various functions of a company from the top level to the bottom level of the hierarchy, with the goal of integrating information across the company, for example, a communication channel is established between the finance department and the shop floor for information sharing,. This software helped in eliminating complex and expensive links between computer systems that were never meant to talk to each other. It also established a faultless and continues flow of information within the company.
Figure shows how information is integrated within an organisation using an ERP system. This system is similar to the pre-ERP system but, in the ERP system all the different departments of an organisation are linked to a centralised system which stores all the information from various departments. Any department at any time can gain access to any required information from another department via ERP or from the ERP database itself.

The manufacturing department can access information form quality management department via ERP system. This shows the flexibility of a system, where independent departments are bonded together as a unit and any two departments can establish communication at ease without depending on any other departments.


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