Enterprise Resource Planning provides a resource management system to increase the efficiency of business processes (Tarhini, et al., 2015). Accounting Information System is a module of the ERP system that process accounting information to facilitate the decision-making (Ptak & Schragenheim, 2016). Enterprise Resource Planning system provides a centralized system to integrate the accounting information system with the complex business processes. This report will discuss the selection of AIS/ERP system to maximize the efficiency of the flow of complex business processes in manufacturing. The business processes and system requirement will be discussed to develop a procedure for the selection of AIS/ERP system. This report will highlight three different ways that the organizations are utilizing to employ such technologies to increase their efficiency. This report will evaluate the efficiency of the implementation in manufacturing business, and examine the potential risks and their mitigation.
Business process refers to the activities that are carried for the accomplishment of the organizational goals. Business processes are the linked activities of tasks that collectively deliver the product or service (Jeston, 2014). These structured activities are commenced in a defined sequence to meet the objectives. The efficiency of the business process is crucial to improve the overall performance of an organization. The business processes can vary from organization to organization. Each organization defines its business process according to its requirements to increase the agility of system. Enterprise Resource Planning optimizes the business processes by providing a centralized system for the management of activities (Shen, et al., 2016).
The business processes of manufacturing include production, inventory management, costing, accounting information processing, planning, management of customer orders, inventory management, and human resource management, sales and marketing. All these business processes are carried out in a defined sequence to meet the production target (Hammer, 2015). The production includes the assembling of products and assessment of product quality to ensure the delivery of product according to the standards. The costing includes the assignment of cost to each unit. The processing of accounting information includes the collection of accounting data from all units and processing it to generate the financial reports for the decision-makers. The processing of accounting information is the key business process as provides financial information to make decisions for long-term investments.
The management of inventory ensures the supply of raw material for the manufacturing of products. The inventory management includes the management of storage and security of inventory (de Kok, 2018). It also includes the demand forecasting to provide the reliable information to the decision makers. The management of inventory involves the monitoring of medium and long-term demand to formulate an effective strategy. The optimization of inventory is crucial as it constitutes a large proportion of the company’s assets in the manufacturing industry.
The management of customer orders includes the handling of orders from multiple channels. The management of customer orders demands the collaboration of multiple departments. The customer order management is crucial to retain the customers and to increase the customer satisfaction. The customer order management is a challenging task for manufacturing companies as the company has to maintain the supply chain along with fulfilling the orders from multiple channels (Christopher, 2016). The efficient management of customer orders is essential to ensure the efficient execution of the supply chain.
Human resource management includes the planning and optimization of human resource to deliver the services. It is a key business process that is crucial to optimize the resources of the organization and to maximize the productivity. Enterprise Resource Planning system integrates all systems of the organization for the efficient flow of manufacturing business process.
Determination of the system requirements
The objective of manufacturing companies is to maintain the production at the targeted level and to fulfill the customer orders within the due time. To meet the production targets, the manufacturing companies have to make huge investments in inventory to ensure the availability of the raw material. The manufacturing company requires a system that can efficiently manage the inventory. For the efficient flow of the business process, the tracking of production and sales is required. The manufacturing companies require a system that can align the sales and production targets with the inventory and provide concise information to the decision makers for the formulation of strategy.
Accounting Information Processing
The management of accounting information is crucial to provide the reliable financial information to top-management, decision-makers, and investors. It is a challenging task for manufacturing companies to manage the accounting information from different units. The companies require a system that can track all accounting information to generate the financial reports (Simkin, et al., 2014). The system should be capable of providing tracking and processing information, and also supports the accounting functions. The system should process the accounting information according to the accounting and reporting standards. The system of manufacturing companies requires an accounting module that is capable of processing a large amount of accounting information efficiently and with greater accuracy.
Supply chain management
Supply chain management is a complex operation that includes planning and execution a large number of interconnected activities. It demands synchronization of the demand with the supply of the products. The supply chain of manufacturing companies is long and complex and involves multiple parties. It demands the collaboration of all department for the efficient delivery of the products. The manufacturing companies require a system that can coordinate activities of the entire chain and optimize the resources of the organization. The system should be capable of synchronizing the supply of raw material with the management of inventory and distribution of products.
Human resource management
Human resource management is crucial to optimize the resources of the companies. The manufacturing companies require a system that can align the demand for workforce with the supply (Cascio, 2018). A system is required that can track the rapidly changing workforce demand of each department and allocate the human resources accordingly. A centralized system is required that can coordinate the human capital and utilize it effectively to improve the efficiency of the organization.
The manufacturing companies require a system that provides a centralized interface to integrate the inventory management, accounting information processing, human resource management, and supply chain management. The system requires a central database to maintain information collectively for different departments. The system should be capable of integrating all business processes in an efficient manner.
Software and vendor selection
It is essential to analyze the technologies that an ERP software is offering. The technology selection criteria enable the organization to get the desired results of the ERP system. The technology selection criteria are defined on the basis of the technological needs of the organization and the availability of the resources for the implementation. The selection criteria should ensure that the technology is scalable and adaptable. The implemented technology will adapt according to the changing requirements.
The technology should be capable of working in different environments within the same organization. The technology should be user-friendly and entertain the needs of its users. It should facilitate its user with high speed and enhanced functionalities. It should be capable of modification and up gradation according to the system requirement (Harwood, 2017). It should support growing number of users in multiple environments. The technology should have minimum complexities and provide a supportive environment for end-users. It should help the assists the users to meet their objectives within a minimum period of time. It should provide s user-friendly interface for the efficient adoption of technology by the users.
The manufacturing company should decide whether it requires the customized ERP system. The ERP technology selected for the implementation should have maximum compatibility with the existing organizational structure. The company should assess the extent to which it could transform its organizational structure for the adoption of the ERP system. The company should assess the trade-off to adopt the ERP technology.
The cost of the implementation of the ERP should be evaluated to determine the appropriate ERP technology for the manufacturing companies. The ERP technology should offer maximum applications at low cost. There should not be any hidden cost associated with it. The service charges of the ERP software should be evaluated on the basis of features offered by the product. The charges for annual or periodic up gradation of the ERP technology must be accounted for while making the cost assessment. The company should make the decision for the selection of the ERP technology according to the budget allocated for the implementation. Moreover, the company should analyze the reputation and experience of the vendor in the market.
IQMS Manufacture ERP offers a vast range of services that address the challenges of manufacturing companies. The applications of this software include finance and accounting management, management of supply chain, real-time monitoring of inventory, management of human resources, and management of production process. The supply chain management module of this software includes the demand planning, order management, metric reporting and inventory management.
The account management applications of this ERP software includes management of accounts receivable, accounts payable, business intelligence, electronic data interchange, financial reporting, tracking of expenses, invoicing, job costing, purchasing and management of human resources. The production management module offers the activity monitoring, planning, scheduling, quality management, manufacturing monitoring, barcoding, maintenance management, and floor control.
Three ways companies utilize such technologies to improve business efficiency
The growth of the business is accompanied by the increases in the number of business processes. The expansion of business creates a network of interconnected business processes. Eventually, the flow of business process becomes complicated and it becomes challenging for the users to navigate through the complex network of the process flow. It becomes difficult for the decision makers to track the information in the complex network. This increases the time for business operations and decreases the efficiency of the organization.
The companies have been using the ERP technology to automate the business process. The automation of business processes prevents the organization from the cumbersome task of manually managing the business activities. The organizations have minimized the time for business processes and maximized their efficiency (Chang, et al., 2015). The ERP system provides the real-time information that minimizes the complexities involved in the delivery of service. Moreover, the ERP system is flexible and the organizations can utilize its applications according to their requirement.
The time and cost involved in the operation of complex business processes negatively influence the efficiency of the organizations. The expansion of business increases the value added and redundant activities for the accomplishment of goals. It becomes challenging for the decision-makers to track the non-value added activities. The presence of non-value added business activities increases the cost of production. Furthermore, the redundant business activities increase the time and cost of the production process.
The ERP system enables the organization to control the cost of production by identifying and eliminating the non-value added and redundant activities from the business process. The removal of redundant activities reduces the cost of production. The organizations are increasing their efficiency by avoiding the delays and disruptions in the flow of business activities. The ERP system enables the organization to remove the bottlenecks that choke the flow of business of activities. Moreover, the optimization of organizational resources minimizes the chances of periodic wastages.
Analysis of business performance
The management of accounting information and activities in a complex network is a challenging task. The manual management and tracking of accounting information do not provide reliable and accurate information to the decision-makers. Eventually, the decision-makers cannot perform an accurate evaluation of the business activities. This aspect reduces the ability of top management to formulate effective strategies for the company according to the requirements of the system. The ERP system can be used as the analytical tool for the analysis of different performance metrics.
The AIS/ERP system increases the efficiency of accounting activities and provides real-time information for the analysis. The organizations have been utilizing the AIS/ERP system for the effective analysis of the business performance. This system is improving the understanding of decision-makers about the activities of businesses. The organizations are effectively allocating their resources on the basis of analysis. This enables the organizations to evaluate the financial performance and increase their efficiency by adopting the appropriate strategies.
Evaluation of the level of efficiency of technology implementation
The efficiency of the technology implementation is influenced by three factors. The implementation of the ERP system is a complex process that demands partial or absolute change in the organizational structure. The effective change management can increase the efficiency of implementation (Altamony, et al., 2016). The re-engineering of business processes is required to implement the enterprise resource planning technology. The extent to which the re-engineering is required defines the level of efficiency.
The time taken for implementing the ERP system depends on the extent of change required for the implementation. The transformation in the organizational structure can increase the compatibility of the ERP with the system of the organization. The efficiency of the technology implementation can also be limited by the resistance of employees to the change. The taken by the employees to absorb the change can prolong the process of implementation thereby, reducing its efficiency.
The efficiency of the ERP system can only be maximized if the users adequately utilize its applications. The organization ensures the special training of its employees to maximize the efficiency of the ERP system. The commitment of managers also influences the efficiency of the implementation. The managers should be committed and motivate the employees to accept the change.
The level of efficiency of the technology implementation depends on the size and resources of the organization. It is difficult for the organizations with complex business flow processes to absorb the change. The organizations with huge budgets for the implementation of change can achieve maximum efficiency of the implementation process (Hunton, et al., 2015). These organizations can allocate more resources for the transformation in the organizational structure.
The level of the efficiency of the technology implementation can be low to moderate as a large number of challenges are associated with it. The organizations can successfully implement the technology effectively managing the change and adopting measures to mitigate the challenges.
Potential security risks
The cyber-attacks are the potential security risk for the ERP system (Wolden, et al., 2015). The poor configuration of the ERP system compromises the security of the system and makes it vulnerable to the cyber-attacks. Similarly, the unpatched software makes the system outdated and increases the chances of cyber-attacks. Most companies do not patch the ERP system owing to higher complexity level and enable the attackers to fulfill their malicious objectives. The distributed denial of service attacks can shut down the network and cause financial loss.
Most companies are using the cloud to implement the ERP system. The company uses the cloud service provided by the third party for the installation of the ERP system. The utilization of third-party platform for the storage data exposes the company to the risks of security breaches. It increases the chances of the interference of the third party. Any external entity can enter into the system and manipulate the company’s information or use this information for some malicious purposes. Moreover, the ERP systems on the cloud are also exposed to the risks of spyware and malware. The malware can enter into the system of the company and distort the information.
The inadequate administration of the ERP system can increase the chances of the security breach. It is a challenging task for the system administrator to appropriately grant the access of data to the users. In the complex business networks, it is critical to managing the access of data to avoid the security risks. The access to data to unconcerned user poses a serious threat to the integrity of data. Most companies provide the access of data to all users in the system which makes the system vulnerable to the risk manipulation of data.
The risks of cyber-attacks can be mitigated by the periodic up gradation of the ERP system. The companies should apply the patches to upgrade the ERP system. The company should ask the vendor to ensure the deployment of patches regularly. Before the implementation of the ERP system, it should be ensured that the vendor is reputable and trustworthy and pose no threat to the company’ data. The adequate configuration of the ERP system also reduces the risk of cyber-attacks. In the process of the adoption of the ERP system, all vulnerabilities of the system should be considered. After the ERP system is implemented, the configuration of the system should be evaluated.
The external and internal traffic should be monitored continuously to block the suspicious traffic. The firewalls should be installed to minimize the chances of cyber-attacks. The company should allocate budget for the implementation of network filtering system to detect the malware and spyware. The company should not rely on the third party for the installation of the ERP on the cloud. The company should manage its own database for the storage of data and utilize the cloud only as the platform to install the ERP system. The risks of infiltration can be avoided by using cloud infrastructure as a service. The infrastructure as a service empowers the organization for the control of its data and minimizes the interference of the cloud service provider (Mavroeidakos & Vergados, 2017).
The company should adequately administer the access of system to reduce the interference of irrelevant of users. A robust system should be developed for granting the access of information to the end-users. The regular review of authorization rights can ensure the access to data only to the authorized users. A set of restrictions should be designed to limit the access of information. Moreover, the employment of customized applications of the ERP system increases the vulnerability of the system to the cyber-attacks. The organizations should minimize the utilization of customized applications.
This report discussed the process to select and implement the AIS/ERP system to increase the efficiency of the businesses. The first section discussed the business process and system requirements of the manufacturing company. The manufacturing company needs a system that can efficiently manage the inventory, supply chain, accounting information, production process and human resources. The AIS/ERP system can support the accounting activities and facilitates the decision makers to get the true insight into the company’s financial position. The organizations can improve their efficiency of business processed by using the ERP system. It enables the businesses to control the cost of production by minimizing the redundant operations in the business process flow. The ERP system reduces the complexity of business processes and synchronizes the activities of different units. The organizations are using this system to analyze the business performance for the development of effective business strategies. The second section of this report discussed the evaluation of the efficiency of technology implementation. The last section highlighted the security risks associated with the integration of the ERP system. The inadequate configuration and outdated system make the data vulnerable to the cyber-attacks. The inadequate administration of the system also increases the chances of security breaches. The organizations can mitigate these risks by periodic up-gradation of the software and by installing the firewalls and network inspection systems.
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