Satisfaction with ERP Systems in Supply Chain Operations

Abstract

A key reason for implementing an enterprise resource planning (ERP) system is the ability it provides an organization to synchronize and automate the flows of material, information and cash through the supply chain. Viewed from this perspective ERP systems can be seen as an enabling technology to achieve better supply chain integration, which should result in better decision making and improved financial performance. Yet much of the debate regarding the value of ERP systems focuses on their implementation costs and the corresponding difficulty measuring the benefits generated by these projects. The significant level of total global spending on ERP systems—estimated currently at $253.7 billion —provides the motivation behind this study. We seek to understand how effective these systems are in providing the information needed by decision makers in production and operations management roles. This is a necessary step in determining what benefits can be achieved by these systems. To do this we developed surveys through a compilation of several pilot interviews with plant managers and production supervisors in various industries. For both of these management roles, functional areas under their responsibility were identified and questions were formulated to assess: (1) the usefulness of various functionalities of the ERP system within the manager’s functional area and the manager’s opinion of the effectiveness of the ERP system in that area, and (2) the manager’s opinion of ERP performance in a functional area and his/her overall satisfaction with the ERP system. We used Partial Least Squares (PLS) methodology to analyze the responses from the survey. The results indicate that the majority of plant managers use ERP systems in manufacturing, cost control, inventory & logistics activities and in reporting, as if they were still using MRPII (Manufacturing Resource Planning) systems. They do not seem to be making use of the additional capabilities that ERP systems have over and above those found in MRP II systems. Production supervisors appear to be using ERP systems more evenly across their areas of responsibility. For production supervisors, as in the case of plant managers, reporting is the area where ERP performance has the highest impact on overall satisfaction of the user with the ERP system. Finally, the results indicate that there are several avenues for improvement in the way the current ERP systems support daily operations of these professionals, most notably in the area of analytics and providing better business intelligence.