Enterprise Resource Planning (ERP) is defined as programmable software that integrates all the components or entities of business through cohesion of information and data systems. The software is flexible enough and comprises of numerous loopholes that allow the creation of data based relationships between various entities in a business or organization, say sales and accounting. Fundamentally, the approach shown displays a principle in which all the transactions made by the sales department of an organization, are saved in a clause in the system, accessible by the accounts department (Ellen & Bret, 2013). Therefore, the sales and accounting entities of the business can make use of this information in both decision-making and calculation of its business worth. This approach would be appropriate for all companies given that they are all profit-driven, and sales oriented. Each company has to calculate its profits from the sales through its accounting body. As a matter of fact, organizations and business corporations must develop a convenient way to integrate sales and accounting to ensure that results conform. For example, Toyota Company has an independent sales and accounting department. Its sales team has to deliver information to the accounting department for calculation of profits (Baltagi, 2005). Hence, each company will find this principle handy in the integration of information between its departments.
As sales forecast and inventory are the primary sources for the whole evaluation program, it is significant to establish how this information is collected. With the use of an ERP, a noticeable difference exists between a company that employs this principle and one that doesn’t. Fundamentally, an ERP reduces the influence of the organization’s political interactions on the accuracy of the collected data. This is because an ERP makes the sales and accounting (the main sources of this information) not only integrated, but also distinct from other entities of the whole business. Therefore, decisions unique to only sales and accounting can be made without any external influence like that of the organization’s political interactions. Any decision-making process will only include the information from a common database shared by both entities. As such, the perceived influence by organizational politics is greatly reduced (Diamond, 1991)
The aggressive competition currently experienced in business has necessitated new product introductions and modification. Consequentially, the demand of product environment is more and more changing into forms that are harder to explain. For instance, coordination has become not only a simple limitation for most corporate business units, but also a general way that they can be characterized. This emanates from the fact that their operations are distributed both regionally and organizationally to reach more suppliers and more complex distribution channels. Manufacturing companies can respond to the increasing demand for new products in a number of ways such as by increasing the capacity or inventory buffers, though a number of industries are finding the viability of this option to be decreasing.
Production processes in most companies can be classified according to the demand waveform of sales and other related processes. The third possible option is to enhance amalgamation between manufacturing, sales demand, and marketing which may automatically boost the amount of information available in the external environment. However, the operations management research is still left with the sole responsibility of scrupulously investigating the significance of ERP in meeting manufacturing, sales demand, and marketing integration. From the empirical sales demand, manufacturing and marketing literature review, this material depicts that manufacturing, sales, demand, and marketing interdependence is an significant source of uncertainty.
In a comparative context with other means of coordination, inconsiderable attention has been paid to the role of information system in facilitating the SDM and M (Sales demand, Manufacturing and Marketing) interface. Much of the research on SDM and M suggest that the greater the uncertainty, the greater the value of SDM & M integration. The method of coordinating sales demand, marketing, and manufacturing will always differ from intellectual, regional, and organizational perspectives due to geographical reasons. As a matter of fact, one which is used currently may not necessarily be used in the future due to challenges of day-to-day changes in technology and competition.
In conclusion, a comparative analysis of the book’s perspective and that of the research conform in terms of integrating the functional entities of business through either IS or ERP. The books explanation can be adopted as a principle to highlight how system integration can be used to create inter-dependency between business entities. Essentially, the example with sales and accounting account for a virtual example that can be replaced with any two entities as far as enterprise client computing is concerned. As a matter of fact, the principles describe behind these two methods of business entity integration are virtually the same. Both systems uphold the virtue of interdependence of the numerous entities in the business. For instance, United Grain Grower Enterprise in Canada can integrate its enterprise entities for the purpose of managing its risks. Such a step would unite the ideas propagated by both the principles of IS and ERP.
References
Baltagi, H. (2005). Econometrics Analysis of Panel Data. John Wiley and Sons.
Collier, P. (2009). Fundamentals of Risk Management for accountants and managers: Tools and Techniques. Oxford: Jordan Hill.
Diamond, D. (1991). Debt Maturity Structure and Liquidity Risk. Quarterly Journal of Economics , 709-737.
Ellen, M., & Bret, J. (2013). Concepts in Enterprise Resource Planning. Boston: Cengage Learning.
Nasrat, A. (2013). Managing Enterprise Risk. International journal of Contemporary Business Studies , 1-90.
Saunders, A., & Cornett, M. (2006). Financial Institutions Management: A Risk Management Approach. New York: McGraw-Hill.
