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Q1. Why are ERP systems said to be flexible? Explain with an example.


Answer:
Installing an ERP system has many advantages – both direct and indirect.
The direct advantages include improved efficiency, information integration for better decision making, faster response time to customer queries, etc.
The indirect benefits include better corporate image, improved customer goodwill, customer
satisfaction, and so on. The following are some of the direct benefits of an ERP system:
• Business Integration
• Flexibility
• Better Analysis and Planning Capabilities
• Use of Latest Technology                                    

Business Integration
The first and most important advantage lies in the promotion of integration. The reason why ERP packages are considered to be integrated is the automatic data updating (automatic data exchange among applications) that is possible among the related business components. Since conventional company information systems were aimed at the optimization of independent business functions in business units, almost all were weak in terms of the communication and integration of information that transcended the different business functions. In the case of large companies in particular, the timing of system construction and directives differs for each product and department/function and sometimes, they are disconnected. For this reason, it has become an obstacle in the shift to new product and business classification. In the case of ERP packages, the data of related business functions is also automatically updated at the time a transaction occurs. For this reason, one is able to grasp business details in real time, and carry out various types of management decisions in a timely manner, based on that information.

Flexibility
The second advantage of ERP packages is their flexibility. Different languages, currencies, accounting standards and so on can be covered in one system and functions that comprehensively manage multiple locations of a company can be packaged and implemented automatically.
To cope with company globalization and system unification, this flexibility is essential, and one can say that it has major advantages, not simply for development and maintenance, but also in terms of management.

Better Analysis and Planning Capabilities
Yet another advantage is the boost to the planning functions. By enabling the comprehensive and unified management of related business and its data, it becomes possible to fully utilize many types of decision support systems and simulation functions. Furthermore, since it becomes possible to carry out, flexibly and in real time, the filing and analysis of data from a variety of dimensions, one is able to give the decision-makers the information they want; thus enabling them to make better and informed decisions.

Use of Latest Technology
The fourth advantage is the utilization of the latest developments in Information Technology (IT). The ERP vendors were very quick to realize that in order to grow and to sustain that growth, they had to embrace the latest developments in the field of Information Technology. Therefore, they quickly adapted their systems to take advantage of the latest technologies like open systems, client/server technology, Internet/Intranet, CALS (Computer-Aided Acquisition and Logistics Support), electronic-commerce, etc. It is this quick adaptation to the latest changes in Information Technology that makes the flexible adaptation to changes in future business environments possible. It is this flexibility that makes the incorporation of the latest technology possible during system customization, maintenance and expansion phases.

As has been stated above, ERP includes many of the functions that will be necessary for future systems. However, undertaking reforms to company structures and business processes, so as to enable the full use of these major features, is the greatest task for companies that will use them. It is necessary to take note that casually proceeding with the implementation of ERP, merely for reasons of system reconstruction or preparation for the year 2000, is likely to result in turning the above mentioned advantages into disadvantages.

ERP packages, if chosen correctly, implemented judiciously and used efficiently, will raise the productivity and profits of companies dramatically.
But many a company fails in this because of a wrong product, incompetent and haphazard implementation and inefficient or ineffective usage.

To work successfully, the ERP solutions need a lot of factors to click. There should be good people who know the business. The vendor should be good and his package should be the one best suited for the. company’s needs.

The ERP consultants should be good. The implementation should be planned well and executed perfectly. The end-user training should be done so that the people understand the system, and the effect of their efforts on the overall success of the program.
The introduction of the ERP system will dramatically change the job descriptions and functions of many employees. Employees who were earlier doing the work of recording information will, overnight, be transformed into decision-makers. For example, in the past an order entry clerk's job was to enter the orders that came to him. With the implementation of a good ERP system, the order entry clerk becomes an action initiator. As soon as he enters the order into the system, the information is passed on to the sales, distribution and finance modules. The distribution module checks whether the item is in stock and if available, the item is dispatched and the information is sent to the finance module. If the items are not in stock, then the manufacturing module is given the information, so that production can start. The customer is informed about the status of his order. If the items are shipped, the finance module prepares the invoice and sends it to the customer.
All these actions take place automatically as soon as the order entry clerk enters the information regarding the order into the system. Thus the order entry clerk is transformed from a data entry operator to a decision maker whose actions can trigger a chain of actions. Many employees find this transformation difficult to accept. If the employees are not given proper training, well in advance, then the systems will fail.

Another factor is the fear of unemployment. When procedures become automated, the people who were doing those jobs become redundant. So it is quite natural to have resistance from the employees. But the same employees can be trained in the new system and can work in more challenging and stimulating environments. For this also, the employees have to be told, in advance, as to what will happen and should be given ample time and training to make the transformation. Without support from the employees, even the best system will fail. So it is very important that the management should take the necessary steps, well in advance, to alleviate the fears of, and provide necessary training to their employees. 

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