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Disadvantages Of Enterprise Resource Planning

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Question 1: (a) What is ERP?
Enterprise resource planning (ERP) systems are commercial software systems that can be defined as customizable, standard application software employed for the integrated management of businesses as a whole from the viewpoint of the effective use of management resources to improve the efficiency of an enterprise. ERP systems track business resources and the status of commitments made by the business and give a company a real-time cross-functional view of its core business processes, such as production, order processing, and sales, and its resources, such as cash, raw materials, production capacity, and people.
ERP software is designed to model and automate many of the basic processes of a company, from …show more content…

This shared information enable different departments and function work together (so they don’t work in silos). (b) What are its advantages?
Successful installation of ERP system has both direct and indirect advantages; the direct advantages include enhanced quality & efficiency, information integration for better decision making, faster response time to customer queries, decrease quality cost, reduction of lead-time, one-time shipment, reduction in cycle time, increase flexibility, improved resource utility, use of latest technology and many more. The indirect benefits include better corporate image, customer satisfaction, improved customer goodwill, improved supplier performance etc. (Alexis Leon 1999, Page 132)
Let us look at some of these advantages/benefits briefly:
Direct Advantage
1. Enhanced Quality & Efficiency
ERP create a framework for integrating and improving internal business processes thereby, helping to improve the quality and efficiency of customer service, production, distribution, …show more content…

Customer Satisfaction
When customers’ requirements for a product or service are met, then the customer is said to be satisfied, the degree of satisfaction of the customer can be determine through the features that the customer consider important to him or her, the response time to their request and whether the product or service is of quality standard, all this is possible with the latest developments in information technology by the ERP systems which in a long run will improve customer satisfaction.
2. Improved Supplier Performance

The capability of the supplier to deliver required raw materials or other component needed for production is very critical to the success of an organization. ERP systems provide vendor management and procurement support tools designed to coordinate all aspects of the procurement process and the features in the ERP will enable the companies to realize all these benefits.

Question 2: Explain common functionalities of ERP packages?

The following are common functionalities of an ERP System which are grouped together and refer to as ERP modules:
Financial accounting: This includes the following:
 General

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