Today, technology is playing an increasingly important role in how businesses operate. More and more businesses are abandoning traditional approaches in favor of technology-driven processes that deliver better outcomes. Enterprise resource planning systems are among the technologies that are revolutionizing business operations. Thanks to these systems, firms are able to integrate all their processes and functions, thereby leveraging the power of modern technology for success. The ERP systems and the impact that they have on businesses is the focus of this paper. Driven by the purpose of shedding light on how ERP systems have transformed business operations, the paper focuses on five common business processes, their corresponding organizational elements and how each has witnessed improvement thanks to the adoption of ERP systems.
Business Processes
There are five common business processes. In this section, an overview of each process is provided.
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The Finance Process
The finance process is undoubtedly one of the most critical functions that underlie organizational performance and success. Essentially, this process is concerned with the allocation of monetary resources to the different departments, functions and processes in a business. The main purpose of this process is to ensure financial integrity, accountability and to promote the stability of the organization while spearheading the optimal exploitation of resources (Roehl-Anderson, 2010). It is rather difficult to determine the functions that kick-start the finance process. The difficulty arises from the fact that the process is rather complex and is involved in nearly all aspects of the operations of a business. However, in most case, the finance process starts when a new operation or function that requires the management of financial resources begins.
There are a number of components that constitute the finance process. Budgeting, financial management and the management of investments are among these (“Function of Finance”, 2010). The official responsible for the financial process needs to prepare budgets through which they allocate funding for various business operations and programs while ensuring that all monies are spent responsibly. Additionally, the finance process is also concerned with ensuring that the funds from investors and shareholders are spent prudently. Taxation, mergers and acquisitions and financial risk management are other functions related to the finance process (“Function of Finance”, 2010). It is worth noting that decision making and planning are other components that make up the finance process (Kokemuller, 2017). All these functions are critical as they enable the finance process to fulfill its purpose of promoting accountability and responsible spending.
The Procurement Process
The procurement process is yet another aspect of business operations whose significance cannot be overstated. Basically, this process involves obtaining the resources, tools, personnel and technologies that a firm requires for its operations (Pinto & Morris, 2007). The basic purpose of the procurement process is to shield the business against operational disruption caused by inadequate supply of required resources and materials. The procurement process starts with operational procurement planning (UNGM, 2012). This planning enables the business to develop a general outline of the procurement process.
As is the case with the finance process, the procurement process is rather broad and therefore composed of various functions and components. Supplier selection and evaluation, negotiation, induction and integration are some of the essential components (“The Procurement Process”, n.d). Through the procurement process, the business identifies suppliers from whom it acquires the resources needed for its operations. A rigorous selection process is then used to determine the supplier who is best placed to meet the company’s procurement needs. The procurement process also involves negotiations over such issues as price and the resources that the supplier will deliver. One should understand that the delivery of the procured products or services does not mark the end of the procurement process. This process also involves the integration of the supplier into the business operations.
The Fulfillment Process
Most firms are involved in operations which require them to deliver products to their customers. The fulfilment process enables these firms to ensure smooth and quick product delivery (Jiang, 2017). Essentially, through the procurement process, a company oversees the movement of products from its facilities into the hands of customers. Thanks to the fulfilment process, companies are able to secure and sustain the confidence of their customers. When a firm delivers orders in good time, it essentially makes it clear that it is committed to excellent customer service. The receipt of inventory marks the beginning of the fulfilment process (Markus, 2017). It is only after it has received the product that the client has ordered that a company can initiate the fulfilment process.
There are a number of essential functions that combine to form the procurement process. The main functions are inventory management, transport and logistics and returns management (Markus, 2017). Inventory management allows firms to confirm that they have in stock the product for which the customer has placed an order. Furthermore, this function challenges companies to ensure adequate supplies of products. Through the logistics and transport processes, a firm delivers the products from its premises to the customers. The returns management function makes it possible for the firm to handle any products that customers have sent back. For example, thanks to this function, the company is able to properly receive defective products.
The Inventory and Warehouse Management Process (IWM)
The inventory and warehouse management process (IWM) is indeed vital for business success. At its core, this process pursues the purpose of facilitating the order fulfilment process. Thanks to IWM, firms ensure that all the required resources and products are in place to support order fulfilment. Given the fact that it involves a wide range of operational functions, it is difficult to establish the starting point of the IWM process. However, it can be argued that in most cases, the process begins when the firm purchases inventory.
The purchase of inventory is only the beginning of the IWM process. There are numerous other components that make up this process. Order management, shipping, inventory management, receiving and purchasing are just some of the basic components of IWM (“Warehouse Management Process”, n.d). Each of these components serves a critical purpose. For example, whereas shipping allows firms to deliver products to customers, order management enables the company to determine the product that the customer wants. The different components function together seamlessly to promote smooth business operations.
The Manufacturing Process
It can be argued that the manufacturing process is the backbone of business operations. The purpose of this process is to facilitate the creation of products. Through the manufacturing process, a company transforms raw materials into finished products that are ready for the market. Research and development marks the start of this process (Wagner, 2017). As they undertake research and development, firms are able to determine the needs of the market and ensure that the manufactured product directly responds to this need.
The research and development function is among the main components of the manufacturing process. As already stated, this function provides companies with insights into market needs and informs the design and manufacture of the product. In addition to research and development, the process also involves the establishment of an assembly line (Wagner, 2017). This line is made up of different workers and equipment which perform different tasks that ultimately result in the manufacture of a finished product. Labelling and packaging are other aspects of the manufacturing process.
Organizational Elements
The five processes discussed above call for the involvement of different divisions and elements of an organization. The table below offers an overview of the elements involved in each process.
| Process | Finance | Procurement | Fulfilment | IWM | Manufacturing |
| Divisions |
Finance: The finance division maintains overall oversight over all financial issues. Administration: The top leadership of the business sets the goals and visions that the finance process aims to accomplish. |
Finance: to obtain the required products and resources, the finance division has to allocate funding and ensure that monies are spent as stipulated. Operations: the operations division identifies the products, services and equipment that are to be procured so as to enhance its function. Logistics: once procured, the logistics division proceeds to move the product, service or equipment to the firm’s premises. |
Logistics: the logistics division facilitates the transport of the products to the customer. Operations: the operations department delivers the product to the logistics division for transport to customer. |
Logistics: the logistics division procures and delivers the required inventory. |
Finance: this division provides the funding and other resources needed for the manufacturing process. Logistics and Operations: these divisions join forces to ensure raw materials are available and to deliver the finished products to the market. |
Role of ERP Systems
In the introductory section, ERP systems were identified as among the technologies that are fueling business success. One of the ways through which these systems promote success is by enhancing the five processes discussed above. By adopting ERP systems, companies boost the efficiency and effectiveness of the processes. Among the benefits that ERP systems deliver to businesses include streamlined processes, identifying flaws and how they can be fixed, promoting compliance with relevant regulations and laws, and keeping costs down (‘ERP Software”, n.d). These benefits affect each of the five processes. For example, whereas the finance, logistics and IWP processes benefit from lower costs, the manufacturing process is improved through flaw detection and correction. Improved customer management is another benefit that is witnessed across the different process. Procurement benefits immensely from ERP systems. For example, among other things, the systems provide firms with insights, risk management and the establishment of supplier networks (“Network and Spend”, n.d). Combined, these benefits result in massive improvements in the procurement process. Overall, ERP systems improve all the business processes and for this reason, firms should be aggressive in their integration of these systems into their operations.
In closing, all businesses desire growth. However, only few are able to accomplish this objective. Such technologies as ERP systems hold the key to sustainable business growth. It has been established that when they embrace these systems, firms witness massive improvements across all of their divisions and processes. Fulfilment, finance, procurement, IWM and manufacturing are among the common business processes which benefit from ERP systems. These processes are complex as they involve various functions and operations. If they truly wish to enhance these processes, firms should incorporate technologies into how they function.
References
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United Nations Global Marketplace (UNGM). (2012). Chapter 3: procurement process. UNGM. Retrieved May 20, 2019 from https://www.ungm.org/Areas/Public/pph/ch03.html
Wagner, N. (2017). What is a manufacturing process? Biz Fluent. Retrieved May 20, 2019 from https://bizfluent.com/facts-7417479-manufacturing-process-.html
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