Enterprise Resource Planning for Competitive Advantage
Enterprise resource planning and lean can work together to improve operations management and enhance the competitive advantage of a firm. Lean operations emphasize the need to reeducate wastage as much as possible. One of the ways of reducing waste is to eliminate WIP. Davim explains that work in progress tends to increase the overall cost of operations because of the need for more workers to handle stock. The more raw materials stay in stores, the higher the chances that they can be destroyed or stolen. ERP can help address the problem by providing instant information needed to make purchase information. It enables a firm to create a stock ordering system and inventory management that is in line with JIT as demanded in lean operations. It means that the company will only order products needed for a specific period and avoid excess purchases.
The system requires close coordination between the marketing department, production department, the finance department, the procurement unit, and the transport department. Information should be relayed in real-time to ensure that these activities run smoothly. ERP will facilitate improved joined-up thinking and decision-making on quality management. With the help of an integrated IT system, the market research unit will provide its findings on the emerging expectations of customers.
The information will be available to all the departments of the firm to facilitate the process of making the right decisions on areas of operation that need to be adjusted. When it comes to the supply and demand of products or services, both ERP and lean can help in improving management capacity. According to Elbardan and Kholeif, the effectiveness of the management in the current competitive business environment is defined by its capacity to use limited resources to deliver maximum value for customers, which is the fundamental principle of lean. Such a high level of effectiveness can only be achieved through the integration of information. For instance, the demand in the market may fluctuate depending on various market forces. In the United Kingdom and other parts of the world, COVID19 has affected business operations in almost all industries. As the government plans on easing movement restrictions, companies must understand how the demand for their products will fluctuate.
The information should be made available to the relevant departments so that they can make appropriate decisions on when to stock-specific materials needed for normal production. Used effectively, both lean and ERP can help lower the cost of operations, increase productivity, and enhance the profitability of a company. As such, it is advisable for both large corporations and small entities to consider ways of embracing the two concepts in their operations.