CONCEPTUAL FRAMEWORK DESIGN FOR THE DEVELOPMENT OF AN ENTERPRISE RESOURCE PLANNING SYSTEM FOR SMALL AND MEDIUM ENTERPRISES IN SOUTHEAST ASIA A Thesis Submitted to the Faculty of Graduate Studies and Research In Partial Fulfillment of the Requirements For the Degree of Master of Applied Science In Industrial Systems Engineering University of Regina By Punnamee Sachakamol Regina, Saskatchewan, Canada November, 2005 Copyright 2005: Punnamee Sachakamol Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CONCEPTUAL FRAMEWORK DESIGN FOR THE DEVELOPMENT OF AN ENTERPRISE RESOURCE PLANNING SYSTEM FOR SMALL AND MEDIUM ENTERPRISES IN SOUTHEAST ASIA A Thesis Submitted to the Faculty of Graduate Studies and Research In Partial Fulfillment of the Requirements For the Degree of Master of Applied Science In Industrial Systems Engineering University of Regina By Punnamee Sachakamol Regina, Saskatchewan, Canada November, 2005 Copyright 2005: Punnamee Sachakamol Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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CONCEPTUAL FRAMEWORK DESIGN FOR THE
DEVELOPMENT OF AN ENTERPRISE RESOURCE PLANNING
SYSTEM FOR SMALL AND MEDIUM ENTERPRISES IN
SOUTHEAST ASIA
A Thesis
Submitted to the Faculty of Graduate Studies and Research
In Partial Fulfillment of the Requirements
For the Degree of
Master of Applied Science
In Industrial Systems Engineering
University of Regina
By
Punnamee Sachakamol
Regina, Saskatchewan, Canada
November, 2005
Copyright 2005: Punnamee Sachakamol
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
CONCEPTUAL FRAMEWORK DESIGN FOR THE
DEVELOPMENT OF AN ENTERPRISE RESOURCE PLANNING
SYSTEM FOR SMALL AND MEDIUM ENTERPRISES IN
SOUTHEAST ASIA
A Thesis
Submitted to the Faculty of Graduate Studies and Research
In Partial Fulfillment of the Requirements
For the Degree of
Master of Applied Science
In Industrial Systems Engineering
University of Regina
By
Punnamee Sachakamol
Regina, Saskatchewan, Canada
November, 2005
Copyright 2005: Punnamee Sachakamol
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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NOTICE:The author has granted a nonexclusive license allowing Library and Archives Canada to reproduce, publish, archive, preserve, conserve, communicate to the public by telecommunication or on the Internet, loan, distribute and sell theses worldwide, for commercial or noncommercial purposes, in microform, paper, electronic and/or any other formats.
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The author retains copyright ownership and moral rights in this thesis. Neither the thesis nor substantial extracts from it may be printed or otherwise reproduced without the author's permission.
L'auteur conserve la propriete du droit d'auteur et des droits moraux qui protege cette these.Ni la these ni des extraits substantiels de celle-ci ne doivent etre imprimes ou autrement reproduits sans son autorisation.
In compliance with the Canadian Privacy Act some supporting forms may have been removed from this thesis.
While these forms may be included in the document page count, their removal does not represent any loss of content from the thesis.
Conformement a la loi canadienne sur la protection de la vie privee, quelques formulaires secondaires ont ete enleves de cette these.
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UNIVERSITY OF REGINA
FACULTY OF GRADUATE STUDIES AND RESEARCH
SUPERVISORY AND EXAMINING COMMITTEE
Punnamee Sachakamol, candidate for the degree of Master of Applied Science, has presented
a thesis titled, Conceptual Framework Design for the Development of an Enterprise
Resource Planning System for Small and Medium Enterprises in Southeast Asia, in an oral
examination held on November 24, 2005. The following committee members have found the
thesis acceptable in form and content, and that the candidate demonstrated satisfactory
knowledge of the subject material.
External Examiner: Dr. Lisa Fan, Department of Computer Science
Supervisor: Dr. Liming Dai, Faculty of Engineering
Committee Member: Dr. Amr Henni, Faculty of Engineering
Committee Member: Dr. Muhammad Ayub, Faculty of Engineering
Chair of Defense: Dr. Andrei Volodin, Department of Mathematics and Statistics
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UNIVERSITY OF REGINA
FACULTY OF GRADUATE STUDIES AND RESEARCH
SUPERVISORY AND EXAMINING COMMITTEE
Punnamee Sachakamol, candidate for the degree of Master of Applied Science, has presented
a thesis titled, Conceptual Framework Design for the Development o f an Enterprise
Resource Planning System for Small and Medium Enterprises in Southeast Asia, in an oral
examination held on November 24, 2005. The following committee members have found the
thesis acceptable in form and content, and that the candidate demonstrated satisfactory
knowledge of the subject material.
External Examiner: Dr. Lisa Fan, Department of Computer Science
Supervisor: Dr. Liming Dai, Faculty of Engineering
Committee Member: Dr. Amr Henni, Faculty of Engineering
Committee Member: Dr. Muhammad Ayub, Faculty of Engineering
Chair of Defense: Dr. Andrei Volodin, Department of Mathematics and Statistics
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Abstract
The Enterprise Resource Planning (ERP) system is one of the most widely
accepted systems in the management of manufacturing enterprises. Despite the
advantages of ERP systems, the existing ERP systems do not as of yet provide a clear and
successful management tool for small and medium sized enterprises (SMEs), especially
for SMEs in Southeast Asian countries. Also, the ERP systems do not provide convenient
and easy implementation for these SMEs. This research aims at identifying the strategic
and operational requirements of SMEs in the Southeast Asia region on the basis of the
existing quantitative and qualitative research, which have been shown to influence
Information System and Information Technology adoption in SMEs. The weaknesses of
the existing ERP systems in relation to their implementation in Southeast Asian SMEs
are evaluated and analyzed. The characteristics of the SMEs in this region are
investigated with the SMEs' specific requirements for higher flexibility, lower
hierarchical management, modular structure, and comprehension of the SMEs' short- and
long-term plans. A strategic change framework that emphasizes the proper
implementation of an ERP system in Southeast Asian SMEs and meets the requirements
of the SMEs is developed, including the establishment of a Novel ERP system (NERP)
for Southeast Asian SMEs. A comparison of NERP with the existing ERP systems is
performed. The application of the research results in the ERPs in SMEs in Southeast Asia
is also included in the present research.
I
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Abstract
The Enterprise Resource Planning (ERP) system is one of the most widely
accepted systems in the management of manufacturing enterprises. Despite the
advantages of ERP systems, the existing ERP systems do not as of yet provide a clear and
successful management tool for small and medium sized enterprises (SMEs), especially
for SMEs in Southeast Asian countries. Also, the ERP systems do not provide convenient
and easy implementation for these SMEs. This research aims at identifying the strategic
and operational requirements of SMEs in the Southeast Asia region on the basis of the
existing quantitative and qualitative research, which have been shown to influence
Information System and Information Technology adoption in SMEs. The weaknesses of
the existing ERP systems in relation to their implementation in Southeast Asian SMEs
are evaluated and analyzed. The characteristics of the SMEs in this region are
investigated with the SMEs’ specific requirements for higher flexibility, lower
hierarchical management, modular structure, and comprehension of the SMEs’ short- and
long-term plans. A strategic change framework that emphasizes the proper
implementation of an ERP system in Southeast Asian SMEs and meets the requirements
of the SMEs is developed, including the establishment of a Novel ERP system (NERP)
for Southeast Asian SMEs. A comparison of NERP with the existing ERP systems is
performed. The application of the research results in the ERPs in SMEs in Southeast Asia
is also included in the present research.
I
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Acknowledgements
First and above all, I am extremely appreciative of Dr. Liming Dai, my
supervisor, and his excellent supervision during the course of this research. Without his
inspiration, this research could not have been successfully completed.
Thanks to Dr. P. Piamsomboon for providing knowledge about Enterprise
Resource Planning development and programming.
I am grateful to the Faculty of Graduate Studies and Research and the Faculty of
Engineering at the University of Regina for providing the financial support and facilities
for my study.
Finally, I would like to thank my mother, father, brother, S. Lisawadi, and my
friends. Without their help, encouragement, and emotional support, this work could never
have been accomplished.
II
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Acknowledgements
First and above all, I am extremely appreciative of Dr. Liming Dai, my
supervisor, and his excellent supervision during the course of this research. Without his
inspiration, this research could not have been successfully completed.
Thanks to Dr. P. Piamsomboon for providing knowledge about Enterprise
Resource Planning development and programming.
I am grateful to the Faculty of Graduate Studies and Research and the Faculty of
Engineering at the University of Regina for providing the financial support and facilities
for my study.
Finally, I would like to thank my mother, father, brother, S. Lisawadi, and my
friends. Without their help, encouragement, and emotional support, this work could never
have been accomplished.
II
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Post Defence Acknowledgements
I would like to also profoundly thank the external examiner Dr. L. Fan for her
diligence and highly valued comments on the thesis. In addition I am thankful to the chair
of the defence Dr. A. Volodin for agreeing to be present at my defence on such short
notice. He was perfectly in command of the defence process and his insightful
contribution is greatly treasured. I would also like to express my gratitude to my
committee members, including Dr. A. Henni and Dr. M. Ayub, for their insightful
suggestions, which were helpful for improving the thesis work.
III
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Post Defence Acknowledgements
I would like to also profoundly thank the external examiner Dr. L. Fan for her
diligence and highly valued comments on the thesis. In addition I am thankful to the chair
of the defence Dr. A. Volodin for agreeing to be present at my defence on such short
notice. He was perfectly in command of the defence process and his insightful
contribution is greatly treasured. I would also like to express my gratitude to my
committee members, including Dr. A. Henni and Dr. M. Ayub, for their insightful
suggestions, which were helpful for improving the thesis work.
Ill
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Table of Contents
Page
Abstract
Acknowledgements II
Post Defence Acknowledgements III
Table of Contents IV
List of Tables VIII
List of Figures IX
List of Acronyms XI
Chapter 1 Introduction 1
1.1 Background 1
1.2 Research issue 2
1.3 Research objectives 3
1.4 Scope and limitations 5
1.5 Outline of the thesis 5
Chapter 2 Research Background 7
2.1 Definition of the Enterprise Resource Planning system 7
2.2 The evolution of ERP Systems 8
2.3 Advantages, disadvantages, and the implementation of an ERP system 9
2.3.1 Advantages of an ERP System 9
2.3.2 Disadvantages of an ERP System 11
2.3.3 The Implementation of an ERP system 12
IV
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Table of Contents
Page
Abstract I
Acknowledgements II
Post Defence Acknowledgements III
Table of Contents IV
List of Tables VIII
List of Figures IX
List of Acronyms XI
Chapter 1 Introduction 1
1.1 Background 1
1.2 Research issue 2
1.3 Research objectives 3
1.4 Scope and limitations 5
1.5 Outline of the thesis 5
Chapter 2 Research Background 7
2.1 Definition of the Enterprise Resource Planning system 7
2.2 The evolution of ERP Systems 8
2.3 Advantages, disadvantages, and the implementation of an ERP system 9
2.3.1 Advantages of an ERP System 9
2.3.2 Disadvantages of an ERP System 11
2.3.3 The Implementation of an ERP system 12
IV
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2.4 Criteria of ERP framework development 15
2.4.1 Integration of the System 15
2.4.2 Data Integration 16
2.5 ERP System development and implementation decision framework 16
2.5.1 Replacement of the existing system 17
2.5.2 Will the ERP system support the reengineering effort? 17
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Inventory Module
The inventory module has been categorized into 4 main parts: issuing, receiving,
stock adjustments, and current inventory. Product Issuing and Raw Material Issuing will
occur when the customer orders the products with the quantity existing in the warehouse,
and the production department requests raw material to produce the products as required
by Sales Order, respectively. The Product and Raw Material receipt modules will be
activated when the production department finishes producing the products and delivering
to the warehouse, and the supplier has delivered the requested raw material to the
company. Most of the company's inventory management will rely upon the computer
system; however manual stock adjustment should occur at least once over a certain
period of time, and therefore the product stock adjustment and raw material stock
adjustment will take place when the manual inventory count happens. Finally, Current
Inventory is the user interface that shows the current quantity of both the products and the
raw material that the company has in their warehouse. The current inventory interface
displays useful information for the company, including serial numbers, names, initial
costs, quantity on hand, quantity on order, dynamic reorder points, and order quantity.
79
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Inventory Module
The inventory module has been categorized into 4 main parts: issuing, receiving,
stock adjustments, and current inventory. Product Issuing and Raw Material Issuing will
occur when the customer orders the products with the quantity existing in the warehouse,
and the production department requests raw material to produce the products as required
by Sales Order, respectively. The Product and Raw Material receipt modules will be
activated when the production department finishes producing the products and delivering
to the warehouse, and the supplier has delivered the requested raw material to the
company. Most of the company’s inventory management will rely upon the computer
system; however manual stock adjustment should occur at least once over a certain
period of time, and therefore the product stock adjustment and raw material stock
adjustment will take place when the manual inventory count happens. Finally, Current
Inventory is the user interface that shows the current quantity of both the products and the
raw material that the company has in their warehouse. The current inventory interface
displays useful information for the company, including serial numbers, names, initial
costs, quantity on hand, quantity on order, dynamic reorder points, and order quantity.
79
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.14 P unl tir.t Issue
User 6 : -admin
Date )asst S Save
ProdUCUSsUer kc,
Product I Note I
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User p : min*
Product Name
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Requimtions Form
Raw Material Issuer I
Raw Material I Note 1
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Raw Withal 0 Raw Materiel Name WA.* 1 Note ReA1-04013 Leap LA EA 3.0 Ralt ats••' EA 34I RaM•00131.5- ElitikArShoft 6A, 303 ReA4-00010 BIllieterrillie IIAC' RIO Reif-000W gertrad !MM.. EA V Reet41001e: 44 EA la 1444-0001,9 -1,4 -/05ciew EA :so 6elAboor20 Black'Oet 'EA. 3D R64013021 6444A44144y Ek 3.0
Implementation $6,000 $12,400 $32,000 $20,000 $140,000 Very Low
First Year Cost $9,840 $24,800 $84,000 $44,000 $278,000 Very Low
Ongoing Cost $3,840 $12,400 $52,000 $24,000 $138,000 Very Low
Cost (3 years) $17,520 $49,600 $188,000 $92,000 $554,000 Very Low
Web-based Yes Yes No Yes Yes Yes
Financials Yes Yes Yes Yes Yes Yes
Supply Chain Yes Yes Yes Yes Yes Yes
Operation
SystemNo No No No No No
Cost of Database
Management
System included
No No No No No Yes
Table 5.1 Comparison between existing ERP systems and the NERP system
Another major contrast can be seen in the features of the software. The NERP
system consists of every basic feature required by SMEs in Southeast Asia, including
order entry, sales, purchasing, inventory, information tracking, customer management,
vendor management and scheduling. In spite of these features, NERP does not have the
same high level of complexity for each feature that the existing ERP vendors have. The
101
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NERP system does not focus primarily on a few modules of the software, like Intacct,
which only focuses on financial and supply chain modules. Nor does it purchase software
packaged by other vendors and integrate it with its own software, like Axis. It also does
not consist of sophisticated modules, like Oracle. The NERP system is more similar to
OpenPro and NetSuite in terms of available modules; however, NERP is much cheaper
than NetSuite and has an easier graphical user interface than OpenPro.
The most important difference between these five types of ERP software and the
NERP system is found in the software's architectural design. These five existing ERP
systems have designs based on North American SMEs, which have different
characteristic requirements, software requirements, and user requirements than Southeast
Asian SMEs, as was stated in an earlier section of this research.
5.2 Data analysis
Using a survey and questionnaires, 50 people in five selected SMEs in Southeast
Asia, have been asked questions that are used to determine important factors in
developing and evaluating the integrated manufacturing computer system for SMEs.
These responses have been graded on a scale of 1 to 5, where 5 means that the function is
extremely important to the software, and the feature works incredibly well in the
software. 1, on the other hands, means it is not at all important to the software, or else
that the feature works very weakly in the software. Table 5.1 shows the results of the
survey.
From the results shown in Table 5.2, the number of males and females responding
to the survey is very similar, being 46% and 54%, respectively. As can be seen clearly in
102
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NERP system does not focus primarily on a few modules of the software, like Intacct,
which only focuses on financial and supply chain modules. Nor does it purchase software
packaged by other vendors and integrate it with its own software, like Axis. It also does
not consist of sophisticated modules, like Oracle. The NERP system is more similar to
OpenPro and NetSuite in terms of available modules; however, NERP is much cheaper
than NetSuite and has an easier graphical user interface than OpenPro.
The most important difference between these five types of ERP software and the
NERP system is found in the software’s architectural design. These five existing ERP
systems have designs based on North American SMEs, which have different
characteristic requirements, software requirements, and user requirements than Southeast
Asian SMEs, as was stated in an earlier section of this research.
5.2 Data analysis
Using a survey and questionnaires, 50 people in five selected SMEs in Southeast
Asia, have been asked questions that are used to determine important factors in
developing and evaluating the integrated manufacturing computer system for SMEs.
These responses have been graded on a scale of 1 to 5, where 5 means that the function is
extremely important to the software, and the feature works incredibly well in the
software. 1, on the other hands, means it is not at all important to the software, or else
that the feature works very weakly in the software. Table 5.1 shows the results of the
survey.
From the results shown in Table 5.2, the number of males and females responding
to the survey is very similar, being 46% and 54%, respectively. As can be seen clearly in
102
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the table, most of the companies participating in the survey are small- (1-10 employees)
and medium-sized (11-50 employees), and 80% of the companies have a turnover of less
than US $2.0 million. The major market area of these companies is local, occasionally
reaching the international level.
Factors Quantity Percentile Sex
Male 23 46 Female 27 54
Total 50 100.0 Number of Employees in Companies
1-10 20 40 11-50 30 60 51-250 0 0
Total 50 100.0 Company's Turnover (US$)
$0.1-0.5 M 10 20 $0.5-1.0 M 20 40 $1.0-2.0 M 10 20 Over $2.0 M 10 20
Total 50 100.0 Market Area
Local 20 40 Regional 10 20 National 10 20 International 10 20
Total 50 100.0 Table 5.2 General information of the participants
Satisfaction Level Averag Description 1 2 3 4 5
1.00-1.49 1.50-2.49 2.50-3.49 3.50-4.49 4.50-5.00
Much below average (MBA) Below average (BA)
Average (A) Above average (AA)
Much above average (MAA) Table 5.3 Relationships between satisfaction level, average score, and description
103
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the table, most of the companies participating in the survey are small- (1-10 employees)
and medium-sized (11-50 employees), and 80% of the companies have a turnover of less
than US $2.0 million. The major market area of these companies is local, occasionally
reaching the international level.
Factors Quantity PercentileSex
Male 23 46Female 27 54
Total 50 100.0Number of Employees in Companies
1-10 20 4011-50 30 6051-250 0 0
Total 50 100.0Company’s Turnover (US$)
$0.1-0.5 M 10 20$0.5-1.0 M 20 40$ 1.0-2.0 M 10 20Over $2.0 M 10 20
Total 50 100.0Market Area
Local 20 40Regional 10 20National 10 20International 10 20
Total 50 100.0Table 5.2 General information of the participants
Satisfaction Level Average Description1 1.00-1.49
1.50-2.492.50-3.493.50-4.494.50-5.00
Much below average (MBA)2 Below average (BA)3 Average (A)4 Above average (AA)5 Much above average (MAA)
Table 5.3 Relationships between satisfaction level, average score, and description
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System Overall Specification Factors Current NERP
Mean 3.63 4.56
Std. 0.89 0.51
Avg. AA MAA
P-value
0.01 1. Adaptability
2. Flexibility Current 3.38 0.96 A NERP 4.31 0.70 AA 0.01
3. Overall Cost Current 3.81 1.17 AA NERP 4.69 0.48 MAA 0.004
4. Efficiency of Internal Business Current 4.06 0.77 AA Processes NERP 4.69 0.48 MAA 0.000 5. Ease of use Current 3.69 0.79 AA
NERP 4.56 0.51 MAA 0.000
Total Current NERP
3.71 4.56
0.75 0.48
AA MAA 0.000
Table 5.4 Overall system satisfaction comparison between the existing system and NERP
As can be apprehended from the results in table 5.4, users have higher satisfaction
with the NERP system than with the existing system for every factor. The average
satisfaction level for the existing system is only just above average, while it is much
above average for the NERP system.
Table 5.5 illustrates the extent to which the different factors proposed have
affected the current software and Novel ERP software implementation and evaluation in
the five SMEs in Southeast Asia. For the current system column and the Novel ERP
system column the results represent how effectively these features can be used in the
software.
For the accounting module and function, the existing system can perform much
better than the NERP system, due to the fact that the NERP system does not focus much
on the financial and accounting methods of the companies. This is because that
information is very private and varies from company to company.
104
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S\stem Overall Specification Factors Mean Std. Avg. P-value1. Adaptability Current
NERP3.634.56
0.890.51
AAMAA 0.01
2. Flexibility CurrentNERP
3.384.31
0.960.70
AAA 0.01
3. Overall Cost Current 3.81 1.17 AANERP 4.69 0.48 MAA 0.004
4. Efficiency of Internal Business Current 4.06 0.77 AAProcesses NERP 4.69 0.48 MAA 0.0005. Ease of use Current 3.69 0.79 AA
NERP 4.56 0.51 MAA 0.000
Total Current 3.71 0.75 AANERP 4.56 0.48 MAA 0.000
Table 5.4 Overall system satisfaction comparison between the existing system and NERP
As can be apprehended from the results in table 5.4, users have higher satisfaction
with the NERP system than with the existing system for every factor. The average
satisfaction level for the existing system is only just above average, while it is much
above average for the NERP system.
Table 5.5 illustrates the extent to which the different factors proposed have
affected the current software and Novel ERP software implementation and evaluation in
the five SMEs in Southeast Asia. For the current system column and the Novel ERP
system column the results represent how effectively these features can be used in the
software.
For the accounting module and function, the existing system can perform much
better than the NERP system, due to the fact that the NERP system does not focus much
on the financial and accounting methods of the companies. This is because that
information is very private and varies from company to company.
104
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Software and Module Expectation Factors
N Min. Max. Mean Std. Avg.
1. Accounting Current NERP
50 50
3 3
5 5
4.29 3.85
0.69 0.62
AA AA
2. Customer and Supplier Current 50 3 5 3.87 0.61 AA Relations NERP 50 3 5 4.24 0.66 AA
3. Information Management Current NERP
50 50
3 3
5 5
3.99 4.24
0.75 0.66
AA AA
4. Intuitive System Current NERP
50 50
3 3
5 5
3.12 4.24
0.62 0.66
A AA
5. Inventory Management Current NERP
50 50
3 3
5 5
4.18 4.34
0.64 0.73
AA AA
6. Manufacturing and Logistics Current NERP
50 50
3 3
5 5
4.01 4.12
0.62 0.70
AA AA
7. Personal Productivity Current NERP
50 50
3 3
5 5
3.44 4.06
0.66 0.83
A AA
8. Openness Current NERP
50 50
3 3
5 5
3.26 4.06
0.62 0.43
A AA
9. Sales Current NERP
50 50
3 3
5 5
4.02 4.06
0.79 0.43
AA AA
10. Time Current NERP
50 50
3 3
5 5
3.82 3.78
0.73 0.58
AA AA
Total Current NERP
50 50
3 3
5 5
3.8 4.1
0.67 0.63
AA AA
Table 5.5 Software and module satisfaction factors, comparing the existing system and the NERP
system
The manufacturing module, sales module, and software response correspondence
time have the same satisfaction level for both systems. A possible reason behind this
similarity is that manufacturing varies in every company, and sales transactions occurring
in SMEs are mostly from regular customers with small orders. Given that SMEs may
have limited hardware, manpower, and financial capabilities, the software corresponding
time is mostly based on hardware performance and human expertise.
This comparison of the results of the current system and the Novel ERP system
prove that beginning with the conceptual framework design, these five SMEs in
105
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Software and Module Expectation Factors ' N Min. Max. Mean Std. Avg.
1. Accounting CurrentNERP
5050
33
55
4.293.85
0.690.62
AAAA
2. Customer and Supplier Current 50 3 5 3.87 0.61 AARelations NERP 50 3 5 4.24 0.66 AA
3. Information Management CurrentNERP
5050
33
55
3.994.24
0.750.66
AAAA
4. Intuitive System CurrentNERP
5050
33
55
3.124.24
0.620.66
AAA
5. Inventory Management CurrentNERP
5050
33
55
4.184.34
0.640.73
AAAA
6. Manufacturing and Logistics CurrentNERP
5050
33
55
4.014.12
0.620.70
AAAA
7. Personal Productivity CurrentNERP
5050
33
55
3.444.06
0.660.83
AAA
8. Openness Current 50 3 5 3.26 0.62 ANERP 50 3 5 4.06 0.43 AA
9. Sales Current 50 3 5 4.02 0.79 AANERP 50 3 5 4.06 0.43 AA
10. Time Current 50 3 5 3.82 0.73 AANERP 50 3 5 3.78 0.58 AA
Total Current 50 3 5 3.8 0.67 AANERP 50 3 5 4.1 0.63 AA
Table 5.5 Software and module satisfaction factors, comparing the existing system and the NERP
system
The manufacturing module, sales module, and software response correspondence
time have the same satisfaction level for both systems. A possible reason behind this
similarity is that manufacturing varies in every company, and sales transactions occurring
in SMEs are mostly from regular customers with small orders. Given that SMEs may
have limited hardware, manpower, and financial capabilities, the software corresponding
time is mostly based on hardware performance and human expertise.
This comparison of the results of the current system and the Novel ERP system
prove that beginning with the conceptual framework design, these five SMEs in
105
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Southeast Asia have found that the Novel ERP system is better than their existing system
in most ways. With a higher satisfaction mean of 4.1 for the NERP system over a mean
of only 3.8 for the existing system, there is at least one system that can satisfy the needs
and requirements of these SMEs in Southeast Asia
Platform Specification Factors
N Min. Max. Mean Std. Avg.
1. Local Area Network 50 3 5 4.38 0.62 AA 2. Web-based 50 3 5 4.31 0.79 AA 3. Mobile Device 50 2 5 3.02 0.83 A
Total 50 .2.67 5 3.90 0.75 AA Table 5.6 Platform choices for the development of an ERP system
As can be seen in Table 5.6, users agree that the Local Area Network (LAN)
connection and a Web-based server are very important for the manufacturing system.
However, if the application can be operated via a mobile device, the satisfaction level
increases to above average. Although there are currently limited resources, sizes, and
technology, the mobile device applications are slowly growing in Southeast Asian SMEs,
and will play an important role in the future development of the system.
Our Novel ERP system has been created using the Java programming language
combined with MySQL database programming. Both of these computer languages are
free of charge, open source and popular with expert software developers. Also, Java
applets-or the applications that are created in Java-can easily operate in a web-based
platform, server/clients platforms, single stand desktops and a combination of all three.
These features of Java and MySQL make the Novel ERP system capable of running in
most supported platforms free of charge.
Table 5.7 shows a comparison of the organizational and cultural factors of the
existing systems and the NERP system developed based on our framework. This
106
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Southeast Asia have found that the Novel ERP system is better than their existing system
in most ways. With a higher satisfaction mean of 4.1 for the NERP system over a mean
of only 3.8 for the existing system, there is at least one system that can satisfy the needs
and requirements of these SMEs in Southeast Asia
Platform Specification Factors N Min. Max. Mean Std. \vj».
1. Local Area Network 50 3 5 4.38 0.62 AA2. Web-based 50 3 5 4.31 0.79 AA3. Mobile Device 50 2 5 3.02 0.83 A
Total 50 2.67 5 3.90 0.75 AATable 5.6 Platform choices for the development of an ERP system
As can be seen in Table 5.6, users agree that the Local Area Network (LAN)
connection and a Web-based server are very important for the manufacturing system.
However, if the application can be operated via a mobile device, the satisfaction level
increases to above average. Although there are currently limited resources, sizes, and
technology, the mobile device applications are slowly growing in Southeast Asian SMEs,
and will play an important role in the future development of the system.
Our Novel ERP system has been created using the Java programming language
combined with MySQL database programming. Both of these computer languages are
free of charge, open source and popular with expert software developers. Also, Java
applets-or the applications that are created in Java-can easily operate in a web-based
platform, server/clients platforms, single stand desktops and a combination of all three.
These features of Java and MySQL make the Novel ERP system capable of running in
most supported platforms free of charge.
Table 5.7 shows a comparison of the organizational and cultural factors of the
existing systems and the NERP system developed based on our framework. This
106
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framework can greatly increase the centralization and reengineering processes of these
companies by conducting research on the most necessary business fundamental processes
required for SMEs, and centralizing them with the same front-end software for every user
connected to only one database server. Also, with the same software being used by every
user, the routine work performance can easily be increased. On the other hand, the NERP
system cannot make major improvements in responsiveness to the market, level of
production automation, and top management support, due to the fact that they require
time to display their full potential, and have only been given two weeks for a trial run.
Organizational and Cultural Factors
N Min. Nlay. Mean SW. AN g.
1. Centralization Current NERP
50 50
3 3
5 5
4.38 4.94
0.62 0.75
AA MAA
2. Responsiveness Current NERP
50 50
3 3
5 5
4.31 4.34
0.79 0.74
AA AA
3. Work Routines Current NERP
50 50
3 3
5 5
4.25 4.56
0.58 0.73
AA MAA
4. Level of Production Current 50 3 5 4.14 1.23 AA Automation NERP 50 3 5 4.10 0.95 AA
5. Top Management Support Current NERP
50 50
3 3
5 5
4.06 4.00
0.66 0.62
AA AA
6. Reengineering Current NERP
50 50
3 3
5 5
3.73 4.25
1.22 0.62
AA AA
Total Current NERP
50 50
3 3
5 5
4.15 4.36
0.85 0.74
AA AA
Table 5.7 A comparison of organizational and cultural factors of the existing system and NERP
Satisfaction N Min. Max. Mean Std. Avg. 1. Satisfaction with NERP 50 3 5 4.51 0.52 MAA 2. Usefulness of NERP in future development
50 3 5 4.70 0.65 MAA
Total 50 3 5 4.60 0.58 MAA Table 5.8 Satisfaction with the NERP system in 5 selected SMEs in Southeast Asia
107
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framework can greatly increase the centralization and reengineering processes of these
companies by conducting research on the most necessary business fundamental processes
required for SMEs, and centralizing them with the same front-end software for every user
connected to only one database server. Also, with the same software being used by every
user, the routine work performance can easily be increased. On the other hand, the NERP
system cannot make major improvements in responsiveness to the market, level of
production automation, and top management support, due to the fact that they require
time to display their full potential, and have only been given two weeks for a trial run.
Organizational and Cultural Factors N Min. Max. Mean Std. Avg.
1. Centralization CurrentNERP
5050
33
55
4.384.94
0.620.75
AAMAA
2. Responsiveness Current 50 3 5 4.31 0.79 AANERP 50 3 5 4.34 0.74 AA
3. Work Routines Current 50 3 5 4.25 0.58 AANERP 50 3 5 4.56 0.73 MAA
4. Level of Production Current 50 3 5 4.14 1.23 AAAutomation NERP 50 3 5 4.10 0.95 AA
5. Top Management Support Current 50 3 5 4.06 0.66 AANERP 50 3 5 4.00 0.62 AA
6. Reengineering Current 50 3 5 3.73 1.22 AANERP 50 3 5 4.25 0.62 AA
Total Current 50 3 5 4.15 0.85 AANERP 50 3 5 4.36 0.74 AA
Table 5.7 A comparison of organizational and cultural factors of the existing system and NERP
Satisfaction N Min. Max. Mean Std. Avg.1. Satisfaction with NERP 50 3 5 4.51 0.52 MAA2. Usefulness of NERP in future development 50 3 5 4.70 0.65 MAA
Total 50 3 5 4.60 0.58 MAATable 5.8 Satisfaction with the NERP system in 5 selected SMEs in Southeast Asia
107
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Table 5.8 shows that the level of satisfaction with the NERP system is well above
average. The same goes for the usefulness of the NERP system for future development
and improvement of Southeast Asian ERPs for SMEs. The participants in the survey very
much appreciated the NERP system, and believed that it could be improved to better suit
their needs.
Modules N Min. Max. Mean Std. Avg.
1. Sales Module 50 3 5 4.41 0.51 AA 2. Purchasing Module 50 3 5 4.06 0.83 AA 3. Inventory Module 50 3 5 3.94 0.75 AA 4. Production Module 50 3 5 3.75 1.00 AA 5. Transaction Reminding Module
50 3 5 4.50 0.76 MAA
6. Q* and ROP Calculation 50 3 5 4.63 0.52 MAA 7. Initial and Profit Cost Analysis
50 3 5 4.05 0.60 AA
8.Production Scheduling and Estimation
50 3 5 4.33 0.71 AA
Total 50 3 5 4.21 0.71 AA Table 5.9 Satisfaction level for each module and function in the NERP System
Table 5.9 shows the satisfaction level for each function and module in the NERP
system. As can be seen from this table, the two functions that users appreciated the most
were the transaction reminding module, and the calculation of the dynamic Q* and ROP.
Some employees stated that they could easily check the trend of their inventory by
looking at the Q* and ROP numbers. Some stated that the consistency, accuracy, and
speed of the data flow were visibly increased with the activation of the transaction
reminding module. The two lowest satisfaction level modules were the production
module and the inventory module. These low satisfaction levels occurred because of the
differences and uniqueness of the production operations of each company, which includes
their inventory of stock.
108
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Table 5.8 shows that the level of satisfaction with the NERP system is well above
average. The same goes for the usefulness of the NERP system for future development
and improvement of Southeast Asian ERPs for SMEs. The participants in the survey very
much appreciated the NERP system, and believed that it could be improved to better suit
their needs.
Modules N Min. Max. Mean Std. Avg,1. Sales Module 50 3 5 4.41 0.51 AA2. Purchasing Module 50 3 5 4.06 0.83 AA3. Inventory Module 50 3 5 3.94 0.75 AA4. Production Module 50 3 5 3.75 1.00 AA5. Transaction Reminding Module 50 3 5 4.50 0.76 MAA
6. Q* and ROP Calculation 50 3 5 4.63 0.52 MAA7. Initial and Profit Cost 50 3 £ 4.05 0.60 AAAnalysis8.Production Scheduling and Estimation 50 3 5 4.33 0.71 AA
Total 50 3 5 4.21 0.71 AATable 5.9 Satisfaction level for each module and function in the NERP System
Table 5.9 shows the satisfaction level for each function and module in the NERP
system. As can be seen from this table, the two functions that users appreciated the most
were the transaction reminding module, and the calculation of the dynamic Q* and ROP.
Some employees stated that they could easily check the trend of their inventory by
looking at the Q* and ROP numbers. Some stated that the consistency, accuracy, and
speed of the data flow were visibly increased with the activation of the transaction
reminding module. The two lowest satisfaction level modules were the production
module and the inventory module. These low satisfaction levels occurred because of the
differences and uniqueness of the production operations of each company, which includes
their inventory of stock.
108
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5.3 Comparison of estimation and practice
There are different categories that can be pointed out as being theoretically
influenced by a Novel ERP System. These categories are: Accounting, Costs,
Manufacturing and Logistics, Customer and Supplier Relations, Information
Management, and Organization and Culture. These are also the same areas in the study
through which five SME companies in Southeast Asia measured their expectations of the
ERP System. The expectations of the five companies vary between and within the
categories. Manufacturing and Logistics are the categories for which Company A and D
had great expectations. On the other hand, Company E was concerned with the effects in
the category of Costs.
The analysis shows that the significance of each of the six aspects differs between
the original estimation and actual practice. In the Accounting category, the empirical
data reveals that Financial Reports is the aspect of which a majority of the responding
SME companies in Southeast Asia had high expectations. This is principally due to the
integrated nature of the system, and the elimination of multiple and redundant data and
sources. SMEs also wanted to make it easier to receive reports from the system, and to
have the reports present more accurate figures. In the category of Costs, most SMEs in
Southeast Asia expected an effect on Administrative Costs. This is primarily due to the
expectations that administrative work would be more effective using a Novel ERP
system. For example, in the case of Company C, the company was struggling with the
problem of controlling the volume and timing of discounts given to customers of the
company. Also, the company had difficulty logging and monitoring the discounts given
to customers, which was a large administrative cost for the company. Upon the
109
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5.3 Comparison of estimation and practice
There are different categories that can be pointed out as being theoretically
influenced by a Novel ERP System. These categories are: Accounting, Costs,
Manufacturing and Logistics, Customer and Supplier Relations, Information
Management, and Organization and Culture. These are also the same areas in the study
through which five SME companies in Southeast Asia measured their expectations of the
ERP System. The expectations of the five companies vary between and within the
categories. Manufacturing and Logistics are the categories for which Company A and D
had great expectations. On the other hand, Company E was concerned with the effects in
the category of Costs.
The analysis shows that the significance of each of the six aspects differs between
the original estimation and actual practice. In the Accounting category, the empirical
data reveals that Financial Reports is the aspect of which a majority of the responding
SME companies in Southeast Asia had high expectations. This is principally due to the
integrated nature of the system, and the elimination of multiple and redundant data and
sources. SMEs also wanted to make it easier to receive reports from the system, and to
have the reports present more accurate figures. In the category of Costs, most SMEs in
Southeast Asia expected an effect on Administrative Costs. This is primarily due to the
expectations that administrative work would be more effective using a Novel ERP
system. For example, in the case of Company C, the company was struggling with the
problem of controlling the volume and timing of discounts given to customers of the
company. Also, the company had difficulty logging and monitoring the discounts given
to customers, which was a large administrative cost for the company. Upon the
109
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implementation of a Novel ERP system, Company C expected that the system would
streamline not only the administrative work of the company, but also their business
operations. It would also provide the company with tighter financial control.
In the Manufacturing and Logistics categories, Company A and Company B
expected effects on Purchasing Management, Warehouse Management, Production
Planning, Production Flexibility and Order Management. SMEs saw the possibility to
create a more efficient process within this category, due to the integrated approach of the
Novel ERP system. For example, for Company A, in the areas of purchasing and order
processing, the data entered is sorted by category and by department. The company
expected that such meticulous and thorough categorization would allow sales, purchasing
and orders to be tracked easily upon the implementation of the Novel ERP system. The
company also expected to have easy data access, which would be crucial in ensuring the
efficiency and transparency of the company.
SMEs in Southeast Asia had fewer expectations in the other categories, including
Customer and Suppliers Relations, Information Management and Organization, and
Culture.
5.4 Respondents' perspectives on Enterprise Resource Planning and what is
expected in the future
The researcher asked the respondents about their opinions regarding the
Enterprise Resource Planning market and what they could anticipate in the future.
Respondents expressed hopes that Enterprise resource planning would attempt to
integrate all departments and functions across a company into a single computer system
110
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implementation of a Novel ERP system, Company C expected that the system would
streamline not only the administrative work of the company, but also their business
operations. It would also provide the company with tighter financial control.
In the Manufacturing and Logistics categories, Company A and Company B
expected effects on Purchasing Management, Warehouse Management, Production
Planning, Production Flexibility and Order Management. SMEs saw the possibility to
create a more efficient process within this category, due to the integrated approach of the
Novel ERP system. For example, for Company A, in the areas of purchasing and order
processing, the data entered is sorted by category and by department. The company
expected that such meticulous and thorough categorization would allow sales, purchasing
and orders to be tracked easily upon the implementation of the Novel ERP system. The
company also expected to have easy data access, which would be crucial in ensuring the
efficiency and transparency of the company.
SMEs in Southeast Asia had fewer expectations in the other categories, including
Customer and Suppliers Relations, Information Management and Organization, and
Culture.
5.4 Respondents’ perspectives on Enterprise Resource Planning and what is
expected in the future
The researcher asked the respondents about their opinions regarding the
Enterprise Resource Planning market and what they could anticipate in the future.
Respondents expressed hopes that Enterprise resource planning would attempt to
integrate all departments and functions across a company into a single computer system
110
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that could serve all of the different departments' particular needs. Moreover, the ERP
system would automate the tasks involved in performing a business process, such as
order fulfilment, which involves taking an order from a customer, shipping it, and billing
it. Respondents also explained that with ERP, when a customer service representative
takes an order from a customer he or she would have all of the information necessary to
complete the order.
The most broadly deployed ERP systems worldwide, not just in Southeast Asia,
are those which track financial data. They include applications such as a general ledger,
accounts receivable, and several others. SMEs in Southeast Asia, including Companies
A, B, C, D, and E are trying to improve and streamline their finance and accounting
applications, attempting to make them more flexible, more tightly integrated, and more
functionally complete. The respondents were able to cite relevant points regarding the
relevance of ERP systems. Respondents explained that human resource applications such
as payroll, personnel and applicant tracking systems are extremely important in today's
ERP market in Southeast Asia. Moreover, SMEs in Southeast Asia are realizing that
their employees represent their most significant assets, and they are investing more than
ever into the systems in order to help them provide better service and more flexible
programs for these employees. As a result of this process, the study found that the
management reporting functions which focus on areas such as hiring trends and turnover
analysis are taking on greater importance in the process of managing small and medium
enterprises in Southeast Asia.
Most of the respondents explained that their company looked to Enterprise
Resource Planning software in order to streamline their business process, increase
111
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that could serve all of the different departments’ particular needs. Moreover, the ERP
system would automate the tasks involved in performing a business process, such as
order fulfilment, which involves taking an order from a customer, shipping it, and billing
it. Respondents also explained that with ERP, when a customer service representative
takes an order from a customer he or she would have all of the information necessary to
complete the order.
The most broadly deployed ERP systems worldwide, not just in Southeast Asia,
are those which track financial data. They include applications such as a general ledger,
accounts receivable, and several others. SMEs in Southeast Asia, including Companies
A, B, C, D, and E are trying to improve and streamline their finance and accounting
applications, attempting to make them more flexible, more tightly integrated, and more
functionally complete. The respondents were able to cite relevant points regarding the
relevance of ERP systems. Respondents explained that human resource applications such
as payroll, personnel and applicant tracking systems are extremely important in today’s
ERP market in Southeast Asia. Moreover, SMEs in Southeast Asia are realizing that
their employees represent their most significant assets, and they are investing more than
ever into the systems in order to help them provide better service and more flexible
programs for these employees. As a result of this process, the study found that the
management reporting functions which focus on areas such as hiring trends and turnover
analysis are taking on greater importance in the process of managing small and medium
enterprises in Southeast Asia.
Most of the respondents explained that their company looked to Enterprise
Resource Planning software in order to streamline their business process, increase
111
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productivity, reduce costs and distribute shared information across the enterprise. In
addition, the availability and reliability of the ERP environment has become critical to
business productivity and success in this new era. According to the respondent, the new
services that SMEs will have to deliver in order to be competitive and productive in the
future are management skills, specific business knowledge, e-business knowledge, and
outsourcing capabilities.
On the other hand, when the researcher asked some experts about the process of
the ERP system, they said that in order to understand the function of ERP, the ERP
developer must understand the problems they are designed to solve. Respondents
explained that every SME collects, generates, and stores vast quantities of data. In most
companies, however, that data is not kept in a single database. Instead, the information is
spread across a large number of computer systems. According to the respondents,
maintaining these different systems leads to large costs for storing and rationalizing
redundant data, as well as reformatting data from one system for use in another. The
respondents explained that if a company's sales and ordering systems cannot
communicate with its production system, then its productivity and customer
responsiveness will suffer. In addition, if its sales and marketing systems are
incompatible with its financial systems, then management is left to make significant
decisions based on character rather than a detailed understanding and recognition of
product and customer profitability.
All five of the SMEs in Southeast Asia that were interviewed and participated in
the study also saw their ERP acquisition and implementation from a technical point of
view. In most cases, the companies had old systems which they wanted to replace. The
112
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productivity, reduce costs and distribute shared information across the enterprise. In
addition, the availability and reliability of the ERP environment has become critical to
business productivity and success in this new era. According to the respondent, the new
services that SMEs will have to deliver in order to be competitive and productive in the
future are management skills, specific business knowledge, e-business knowledge, and
outsourcing capabilities.
On the other hand, when the researcher asked some experts about the process of
the ERP system, they said that in order to understand the function of ERP, the ERP
developer must understand the problems they are designed to solve. Respondents
explained that every SME collects, generates, and stores vast quantities of data. In most
companies, however, that data is not kept in a single database. Instead, the information is
spread across a large number of computer systems. According to the respondents,
maintaining these different systems leads to large costs for storing and rationalizing
redundant data, as well as reformatting data from one system for use in another. The
respondents explained that if a company’s sales and ordering systems cannot
communicate with its production system, then its productivity and customer
responsiveness will suffer. In addition, if its sales and marketing systems are
incompatible with its financial systems, then management is left to make significant
decisions based on character rather than a detailed understanding and recognition of
product and customer profitability.
All five of the SMEs in Southeast Asia that were interviewed and participated in
the study also saw their ERP acquisition and implementation from a technical point of
view. In most cases, the companies had old systems which they wanted to replace. The
112
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respondents explained some of the reasons for changing the system, particularly the wish
to acquire a completely integrated system like the ERP program. This was needed in
order to achieve quicker information flow, and to be able to develop the company's
processes and eliminate the capacity problem with the old system of ERP, the difficulty
in getting any meaningful and significant business information, a lack of functionality
and flexibility, and the difficulty in maintaining the older ERP system. These are only a
few of the factors which respondents shared regarding their reasons for changing
systems.
The researcher also thought that it would be interesting to know what kind of
advantages the companies expected to have with the ERP system. According to the
respondents, one of the many expected advantages is an integrated system that would
help the company avoid extra work. The company would only have to place the data into
the central ERP database rather than entering data first into the financial system and then
into the MRP system. Another point is that through an ERP system there would be a
faster flow of information, and it would also decrease inventory times. Interestingly, the
ERP system has the advantage of decreasing IT costs, because the vendors and not the
company itself offer systems development. In this situation, this decrease in IT costs
proves more effective and successful for the company in the long run. Respondents also
explained that ERP has the advantage of being better control of the company. This
means that by being able to monitor one of the company's information flows at a time,
the ERP system enables a general view of the company's information flow.
The respondents also illustrated some of the effects of implementing an ERP
system. According to the respondents from Southeast Asian SMEs, the implementation
113
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respondents explained some of the reasons for changing the system, particularly the wish
to acquire a completely integrated system like the ERP program. This was needed in
order to achieve quicker information flow, and to be able to develop the company’s
processes and eliminate the capacity problem with the old system of ERP, the difficulty
in getting any meaningful and significant business information, a lack of functionality
and flexibility, and the difficulty in maintaining the older ERP system. These are only a
few of the factors which respondents shared regarding their reasons for changing
systems.
The researcher also thought that it would be interesting to know what kind of
advantages the companies expected to have with the ERP system. According to the
respondents, one of the many expected advantages is an integrated system that would
help the company avoid extra work. The company would only have to place the data into
the central ERP database rather than entering data first into the financial system and then
into the MRP system. Another point is that through an ERP system there would be a
faster flow of information, and it would also decrease inventory times. Interestingly, the
ERP system has the advantage of decreasing IT costs, because the vendors and not the
company itself offer systems development. In this situation, this decrease in IT costs
proves more effective and successful for the company in the long run. Respondents also
explained that ERP has the advantage of being better control of the company. This
means that by being able to monitor one of the company’s information flows at a time,
the ERP system enables a general view of the company’s information flow.
The respondents also illustrated some of the effects of implementing an ERP
system. According to the respondents from Southeast Asian SMEs, the implementation
113
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of the ERP system has had positive and negative effects. With regards to the positive
effects, respondents explained that it is much easier to buy an existing system than to
develop the company's own system. Moreover, there have been a lot of complaints over
the years that ERPs take too long to implement. Some respondents, however, assert that
this depends upon the ERP system that the company wants to implement. In today's
modern world, the vendors have developed methods and other means by which to shorten
the time of implementation. The respondents also explained that the cheap development
cost is also a positive result of the implementation of an ERP. Before, the ERP vendors
put about 5-15 percent of their revenues into their Research and Development department
into order to develop a system that would be equally good, but very costly. Through the
implementation of an ERP system there would be safe cost estimations. In other words,
to invest in an existing system makes it easier to estimate the total cost of the system and
its implementation. If the company develops its own system, it is difficult to estimate
how much the company will spend or invest in the system.
The previous sections of this thesis suggest that ERP systems must be
harmoniously integrated with the firms' business functions. This means that building
ERP systems alone does not guarantee success. Users must be trained and supported
before the technology is accepted and implemented. According to some respondents in
the study, based on their experiences of maximizing benefits and minimizing the risks, it
is important to: (1) get senior support; (2) work with the staff to develop a detailed list of
requirements for what is needed in ERP; (3) train and re-train staff; and (4) know the
processes. Respondents also pointed out that not understanding the basic process
produced a less than effective set of performance measures. In addition, respondents also
114
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of the ERP system has had positive and negative effects. With regards to the positive
effects, respondents explained that it is much easier to buy an existing system than to
develop the company’s own system. Moreover, there have been a lot of complaints over
the years that ERPs take too long to implement. Some respondents, however, assert that
this depends upon the ERP system that the company wants to implement. In today’s
modern world, the vendors have developed methods and other means by which to shorten
the time of implementation. The respondents also explained that the cheap development
cost is also a positive result of the implementation of an ERP. Before, the ERP vendors
put about 5-15 percent of their revenues into their Research and Development department
into order to develop a system that would be equally good, but very costly. Through the
implementation of an ERP system there would be safe cost estimations. In other words,
to invest in an existing system makes it easier to estimate the total cost of the system and
its implementation. If the company develops its own system, it is difficult to estimate
how much the company will spend or invest in the system.
The previous sections of this thesis suggest that ERP systems must be
harmoniously integrated with the firms’ business functions. This means that building
ERP systems alone does not guarantee success. Users must be trained and supported
before the technology is accepted and implemented. According to some respondents in
the study, based on their experiences of maximizing benefits and minimizing the risks, it
is important to: (1) get senior support; (2) work with the staff to develop a detailed list of
requirements for what is needed in ERP; (3) train and re-train staff; and (4) know the
processes. Respondents also pointed out that not understanding the basic process
produced a less than effective set of performance measures. In addition, respondents also
114
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identified the fact that managing information about the processes was a key success
factor. Indeed, understanding business processes is crucial to organizational success.
From this analysis, understanding the conceptual fundamentals of a process or a system
can be accomplished through the integration of an ERP system and its concepts into a
business school curriculum, and, in turn, industry must adopt a more process-oriented
approach in its ERP training programs.
Companies should not lament the cost of their investment, as the skills and
capabilities they acquire during the ERP installation process will allow them to improve
their ERP applications incrementally.
According to the respondents, it is necessary to revisit the business' reasons for
needing an ERP system in order to see where further efficiencies and savings can be
realized. Initiatives include refining the system, searching for nice-to-have features,
analyzing captured data, and extending uniformity. James and Woods (2000) suggest four
initiatives for achieving competitive advantage: sell-side e-commerce, electronic
procurement, continuous-relationship marketing, and supply chain optimization.
Since the overall implementation and maintenance of ERP faces major obstacles,
it would indeed be helpful if SMEs would concentrate more on: (1) profiling the solid
business functional gains and methods to determine the success of their business; (2)
appointing accountability and authority for these goals and; (3) securing that the entire
management is dedicated together in reaching for the identified goals. Because the
successful implementation of ERP depends partly, if not wholly, on the level of skills of a
company's personnel, it is of utmost importance that companies allot time and money to
115
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
identified the fact that managing information about the processes was a key success
factor. Indeed, understanding business processes is crucial to organizational success.
From this analysis, understanding the conceptual fundamentals of a process or a system
can be accomplished through the integration of an ERP system and its concepts into a
business school curriculum, and, in turn, industry must adopt a more process-oriented
approach in its ERP training programs.
Companies should not lament the cost of their investment, as the skills and
capabilities they acquire during the ERP installation process will allow them to improve
their ERP applications incrementally.
According to the respondents, it is necessary to revisit the business’ reasons for
needing an ERP system in order to see where further efficiencies and savings can be
realized. Initiatives include refining the system, searching for nice-to-have features,
analyzing captured data, and extending uniformity. James and Woods (2000) suggest four
initiatives for achieving competitive advantage: sell-side e-commerce, electronic
procurement, continuous-relationship marketing, and supply chain optimization.
Since the overall implementation and maintenance of ERP faces major obstacles,
it would indeed be helpful if SMEs would concentrate more on: (1) profiling the solid
business functional gains and methods to determine the success of their business; (2)
appointing accountability and authority for these goals and; (3) securing that the entire
management is dedicated together in reaching for the identified goals. Because the
successful implementation of ERP depends partly, if not wholly, on the level of skills of a
company’s personnel, it is of utmost importance that companies allot time and money to
115
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
train them, in order to equip them with the technical capabilities needed to support the
ERP system.
116
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
train them, in order to equip them with the technical capabilities needed to support the
ERP system.
116
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Chapter 6
Conclusion and Future work
6.1 Conclusions
This research contributes to the existing research on ERP systems and how they
can be improved so that they may be effectively implemented by Southeast Asian SMEs.
The quest for improved ERP software packages has been ongoing, which evidently
shows the need for more efforts towards enhancing the characteristics of the software
packages. This research attempts to discover the features that may make an ERP system
work better for SMEs in Southeast Asia. Moreover, the research seeks to contribute to the
literature by outlining the features of SMEs in Southeast Asia, as well as the strengths
and weaknesses of ERP characteristics used in existing ERP systems. The research posits
that it is time for ERP developers to take into consideration the peculiarities in company
size and uniqueness of operations and management in different cultural environments.
Based on the survey and analyses performed in the research, it is conclusive that
most of the time, small and medium enterprises cannot afford the cost of ERP software
packages available in the market. Furthermore, it has been noted in the survey feed-back
that the complexity of using the existing ERP software packages has caused many SMEs
to fail in implementing the program. All of these problems pose a challenging research
area for researchers and engineers in the areas of ERP system development: to provide an
architectural design for ERP software that is affordable, simple, and corresponds to the
problems presented by SMEs in Southeast Asia. With the data and information collected
in the research, the researcher deems that one of the problems with the existing ERP
117
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Chapter 6
Conclusion and Future work
6.1 Conclusions
This research contributes to the existing research on ERP systems and how they
can be improved so that they may be effectively implemented by Southeast Asian SMEs.
The quest for improved ERP software packages has been ongoing, which evidently
shows the need for more efforts towards enhancing the characteristics of the software
packages. This research attempts to discover the features that may make an ERP system
work better for SMEs in Southeast Asia. Moreover, the research seeks to contribute to the
literature by outlining the features of SMEs in Southeast Asia, as well as the strengths
and weaknesses of ERP characteristics used in existing ERP systems. The research posits
that it is time for ERP developers to take into consideration the peculiarities in company
size and uniqueness of operations and management in different cultural environments.
Based on the survey and analyses performed in the research, it is conclusive that
most of the time, small and medium enterprises cannot afford the cost of ERP software
packages available in the market. Furthermore, it has been noted in the survey feed-back
that the complexity of using the existing ERP software packages has caused many SMEs
to fail in implementing the program. All of these problems pose a challenging research
area for researchers and engineers in the areas of ERP system development: to provide an
architectural design for ERP software that is affordable, simple, and corresponds to the
problems presented by SMEs in Southeast Asia. With the data and information collected
in the research, the researcher deems that one of the problems with the existing ERP
117
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
software is due to its standardized design, which lacks the particularities that could
resolve ERP adoption and implementation problems in SMEs in Southeast Asia.
A new ERP system called NERP is developed in the present research. The
development of the NERP system in this thesis is based on an extensive review of
existing literature, studies of unique characteristics of the companies, an investigation
into the companies' requirements, and the data collected through the surveys and
questionnaires. to develop a framework. The framework of a NERP system in this thesis
can serve as a guideline for ERP system development for management software, in this
case being applied to small- to medium-size companies in Southeast Asia. The statistical
technique involved in the calculation of the safety stock is used to optimize the initial
cost and replenishment quantity of the products, while the free programming languages
are used to optimize the cost of implementation. Evaluation of the NERP system that was
developed is performed on the basis of the surveys and feedbacks following actual
installation and usage of the system at the companies' sites. The responses of the SMEs
are positive towards the cost, framework, modules, and application of the Novel ERP
system developed.
Accomplishments of the present research can be concluded as follows:
o The main problems of implementing the existing management and manufacturing
software in SMEs in Southeast Asian countries as well as the specialty needs of
the SMEs for integrated manufacturing software (ERP), are identified through the
detailed analysis of a comprehensive systematic survey.
o An ERP conceptual framework is developed on the basis of in depth analysis of
the data collected from the survey. As well, the key implementation success
118
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
software is due to its standardized design, which lacks the particularities that could
resolve ERP adoption and implementation problems in SMEs in Southeast Asia.
A new ERP system called NERP is developed in the present research. The
development of the NERP system in this thesis is based on an extensive review of
existing literature, studies of unique characteristics of the companies, an investigation
into the companies’ requirements, and the data collected through the surveys and
questionnaires, to develop a framework. The framework of a NERP system in this thesis
can serve as a guideline for ERP system development for management software, in this
case being applied to small- to medium-size companies in Southeast Asia. The statistical
technique involved in the calculation of the safety stock is used to optimize the initial
cost and replenishment quantity of the products, while the free programming languages
are used to optimize the cost of implementation. Evaluation of the NERP system that was
developed is performed on the basis of the surveys and feedbacks following actual
installation and usage of the system at the companies’ sites. The responses of the SMEs
are positive towards the cost, framework, modules, and application of the Novel ERP
system developed.
Accomplishments of the present research can be concluded as follows:
o The main problems of implementing the existing management and manufacturing
software in SMEs in Southeast Asian countries as well as the specialty needs of
the SMEs for integrated manufacturing software (ERP), are identified through the
detailed analysis of a comprehensive systematic survey,
o An ERP conceptual framework is developed on the basis of in depth analysis of
the data collected from the survey. As well, the key implementation success
118
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
factors that can be used in evaluation and further development of an ERP system
for SMEs in Southeast Asia are specified. This provides a guideline for
framework design in developing a customized and suitable ERP system for
Southeast Asian SMEs.
o The new ERP system, NERP, which is based on a review of existing literature, a
revision of existing ERP system packages, and the survey's data analysis is
established. The NERP system shows high flexibility, suitability and satisfaction
according to the feedback from representatives of the Southeast Asian companies
that implemented the NERP system.
o The NERP system can be used as an integrating manufacturing software and
management software for inexperienced users, and can also be used for
monitoring and managing inventory and stocks. The system provides users with
appropriate recommendations for decision making based on the priority of the
tasks users have to perform before proceeding to next process.
o A Web application server and platform are introduced and implemented in the
NERP system. The NERP system can therefore be operated in both a web-based
environment and a workstation environment. This provides significant advantages
for the users of NERP since it equips the system with high flexibility and allows
the system to run without an Internet Service Provider. This reduces the cost of
operation. Nevertheless, the system can also be run via a Local Area Network
(LAN) connection, which is connected through a server for the storage of
databases. On the other hand, web application offers competitive advantages to
the customers and suppliers. With the web application, the users may perform
119
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
factors that can be used in evaluation and further development of an ERP system
for SMEs in Southeast Asia are specified. This provides a guideline for
framework design in developing a customized and suitable ERP system for
Southeast Asian SMEs.
o The new ERP system, NERP, which is based on a review of existing literature, a
revision of existing ERP system packages, and the survey’s data analysis is
established. The NERP system shows high flexibility, suitability and satisfaction
according to the feedback from representatives of the Southeast Asian companies
that implemented the NERP system,
o The NERP system can be used as an integrating manufacturing software and
management software for inexperienced users, and can also be used for
monitoring and managing inventory and stocks. The system provides users with
appropriate recommendations for decision making based on the priority of the
tasks users have to perform before proceeding to next process,
o A Web application server and platform are introduced and implemented in the
NERP system. The NERP system can therefore be operated in both a web-based
environment and a workstation environment. This provides significant advantages
for the users of NERP since it equips the system with high flexibility and allows
the system to run without an Internet Service Provider. This reduces the cost of
operation. Nevertheless, the system can also be run via a Local Area Network
(LAN) connection, which is connected through a server for the storage of
databases. On the other hand, web application offers competitive advantages to
the customers and suppliers. With the web application, the users may perform
119
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
paperless orders, access from off site, and stay in contact with remote suppliers.
The users are allowed to choose either workstation or web applications on the
basis of needs and budget.
o A comparison between NERP and the existing ERP system in the market, taking
into account the cost, implementation, operation system, database management
system, and modules is carried out. Even though the NERP system is small and
has less complex software than other ERP systems on the market, it has the
essential efficient and most needed modules for SMEs in Southeast Asia. This has
been well supported by the SMES who implemented NERP.
o As indicated in Chapter 4.6 and Appendix C, the user interface of the NERP
system is clear and user-friendly enough to guide the user through the whole
company's process. Also, it helps the users to carry out further development or
refinement of the system.
6.2 Recommendations for future work
In the future, it is essential to further validate the model for the Novel ERP system
for Southeast Asian SMEs which is presented in this research. There are many more
validation techniques that can be used to test and validate the framework. Furthermore,
additional case studies, company feedback, suggestions, and more companies cooperating
in the project are essential factors in obtaining stronger evidence and a more suitable ERP
system for SMEs in Southeast Asia.
There are an increasing number of developments in the field of Enterprise
Resource Planning using an internet-based technology, server/client technology and
120
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
paperless orders, access from off site, and stay in contact with remote suppliers.
The users are allowed to choose either workstation or web applications on the
basis of needs and budget,
o A comparison between NERP and the existing ERP system in the market, taking
into account the cost, implementation, operation system, database management
system, and modules is carried out. Even though the NERP system is small and
has less complex software than other ERP systems on the market, it has the
essential efficient and most needed modules for SMEs in Southeast Asia. This has
been well supported by the SMES who implemented NERP.
o As indicated in Chapter 4.6 and Appendix C, the user interface of the NERP
system is clear and user-friendly enough to guide the user through the whole
company’s process. Also, it helps the users to carry out further development or
refinement of the system.
6.2 Recommendations for future work
In the future, it is essential to further validate the model for the Novel ERP system
for Southeast Asian SMEs which is presented in this research. There are many more
validation techniques that can be used to test and validate the framework. Furthermore,
additional case studies, company feedback, suggestions, and more companies cooperating
in the project are essential factors in obtaining stronger evidence and a more suitable ERP
system for SMEs in Southeast Asia.
There are an increasing number of developments in the field of Enterprise
Resource Planning using an internet-based technology, server/client technology and
120
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
hybrid systems, and the effectiveness of the ERP system can be increased using such
technology. The system allows users to access available information quickly and share
their knowledge on the Internet. Also, the system helps users locate and obtain
information on the Web by taking commands from users. Several sources support hybrid
platform technology. Huuptmann (1999) introduces the integration of existing
manufacturing software with mixed-media databases using large databases of text,
images, videos, and audio files on the server to provide information to users.
The typical network dependent type of solution is to create one huge database
server at the main office, and share the data throughout all the regional and retail offices.
The advantage of this system is that it is possible to easily share information with other
"connected" users in an integrated fashion. However, there are many downfalls to this
type of solution; for example, it is expensive to create and maintain, and if the main
server were to go down, the entire division would be paralysed until the connection was
re-established. A new idea to be considered for future research is that all of the
information should be securely stored at each satellite office so that in the event of a
server disconnection, the work flow will not be affected. Each satellite office can
continue working efficiently while the affected office (or user) runs autonomously. This
is great for offices that are forced to connect via a slow Internet connection, or for outside
sales staff that have to leave the network to do their jobs. Once the disconnected office or
user reconnects, the broken link will then automatically synchronize and be updated.
Additional modules such as forecasting, scheduling, and job design should be
added to the system for more effective results. The forecasting module would enhance
inventory management, estimation of quantity replenishment, calculation of cost, and
121
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
hybrid systems, and the effectiveness of the ERP system can be increased using such
technology. The system allows users to access available information quickly and share
their knowledge on the Internet. Also, the system helps users locate and obtain
information on the Web by taking commands from users. Several sources support hybrid
platform technology. Huuptmann (1999) introduces the integration of existing
manufacturing software with mixed-media databases using large databases of text,
images, videos, and audio files on the server to provide information to users.
The typical network dependent type of solution is to create one huge database
server at the main office, and share the data throughout all the regional and retail offices.
The advantage of this system is that it is possible to easily share information with other
“connected” users in an integrated fashion. However, there are many downfalls to this
type of solution; for example, it is expensive to create and maintain, and if the main
server were to go down, the entire division would be paralysed until the connection was
re-established. A new idea to be considered for future research is that all of the
information should be securely stored at each satellite office so that in the event of a
server disconnection, the work flow will not be affected. Each satellite office can
continue working efficiently while the affected office (or user) runs autonomously. This
is great for offices that are forced to connect via a slow Internet connection, or for outside
sales staff that have to leave the network to do their jobs. Once the disconnected office or
user reconnects, the broken link will then automatically synchronize and be updated.
Additional modules such as forecasting, scheduling, and job design should be
added to the system for more effective results. The forecasting module would enhance
inventory management, estimation of quantity replenishment, calculation of cost, and
121
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
evaluation of demand. A job design module would evenly distribute the work force
throughout the entire production process. Also, better algorithm, logic, simulation and
calculation for the production scheduling would definitely help to increase the efficacy of
the production order arrangement.
Even in situations where everything follows a perfect plan and design, an element
of uncertainty is always present. Therefore, some uncertainty management tools should
be added to the design of this system, as well as to the calculation of the demand and
operation process. Fuzzy logic algorithm, roughly set algorithm, and genetic algorithm, to
name a few, are great examples of uncertainty tools whose addition could be considered
in further research.
122
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
evaluation of demand. A job design module would evenly distribute the work force
throughout the entire production process. Also, better algorithm, logic, simulation and
calculation for the production scheduling would definitely help to increase the efficacy of
the production order arrangement.
Even in situations where everything follows a perfect plan and design, an element
of uncertainty is always present. Therefore, some uncertainty management tools should
be added to the design of this system, as well as to the calculation of the demand and
operation process. Fuzzy logic algorithm, roughly set algorithm, and genetic algorithm, to
name a few, are great examples of uncertainty tools whose addition could be considered
in further research.
122
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
References
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Avai, C.S.S. (1998). Technology Architecture Choices for Enterprise Financial Systems. Government Finance Review, 21-24.
Ballou, R.H. (2004). Business Logistics/Supply Chain Management. 5th ed. Pearson Prentice Hall Publications.
Bancroft, N., Seip, H., and Sprengel, A. (1998). Implementing SAP R/3: How to Introduce a Large System into a Large Organization. (2nd ed.) Manning Publications.
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Avai, C.S.S. (1998). Technology Architecture Choices for Enterprise Financial Systems. Government Finance Review, 21-24.
Ballou, R.H. (2004). Business Logistics/Supply Chain Management. 5th ed. Pearson Prentice Hall Publications.
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Booth, P., Matovsky, Z., and Wieder, B. (2000). Integrated information systems (ERP- systems) and accounting practice. The Australian Experience. Paper presented at the 3rd European Conference on Accounting and Information Systems. Munich, Germany: 27-28 March.
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Gable, G. and Stewart, G. (1999). SAP R/3 Implementation Issues for Small to Medium Enterprises. Paper presented at the Fifth Americas Conference on Information Systems, Milwaukee, Wisconsin.
Gartner Group. (2000). A Report on the ASEAN ERP Markets. Gartner Dataquest Group, Inc.
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Holland, N. (2005). ERP Software - Run your entire business. Centresource Technology and Business (RSS), 2005.
Huff, P. (1999). Are there differences in liquidity and solvency measures based on company size? American Business Review 17 (2), 96-106.
Huin, S. F. (2004). Managing deployment of ERP systems in SMEs using multi-agents. International Journal of Project Management 22(6), 511-517.
Hunton, J.E., McEwen, R.A., and Wier, B. (2002). The reaction of financial analysts to enterprise resource planning (ERP) implementation plans. Journal of Information systems 16(1), 31-41.
IDC (1998). Worldwide Software Forecast Summary (1998-2003). International Data Corporation, Framingham, MA.
Ives, B., Hamilton, S., and Davis, G.B. (1980). A framework for research in computer- based management information systems. Management Science 26, 910-934.
James, D. and Wolf, M. (2000). A Second Wind for ERP. The McKinsey Quarterly: 100- 107.
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Khurana, I. (2000). Restructuring and firm value: The effects of firm profitability and restructuring purpose. Journal of Business, Finance and Accounting (November/December): 1107-1130.
King, J.L. and Kraemer, K.L. (1984). Evolution and organizational information systems: an assessment of Nolan’s stage model. Communications of the Association for Computing Machinery 27(5), 466-475.
Kirchmer, M. (1999). Business process oriented implementation of standard software: how to achieve competitive advantage efficiently and effectively. Berlin etc.: Springer.
Klaus, H., Rosemann, M., and Gable, G. (2000). What is ERP? Information Systems Frontiers 2(2), 141-162.
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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Kumar K. and Van HJ. (2000). ERP Experiences and Evolution.
Kumar, V., Maheshwari, B., and Kumar, U. (2002). ERP Systems Implementation: Best Practices in Canadian Government Organizations. Government Information Quarterly 19(2), 147-172.
Langenwalter, G.A. (2000). Enterprise Resources Planning and Beyond; Integrating Your Entire Organization. The St.Lucie Press/APICS Series on Resource Management.
Lee, A. S. (2000). Researchable directions for ERP and other new information technologies. MIS Quarterly 24(1).
Levis, J. and Von, S.P. (1994). Lessons Learned from Three Implementations: Knocking Down Barriers to Client-Server.” Information Systems Management 11(3), 15-22.
Li, C. (1999). ERP packages: what's next? Information Systems Management 16(3), 31- 36.
Lodh, S.C. and Gaffikin, M.J.R. (2003). Implementation of an integrated accounting and cost management system using the SAP system: a field study. European Accounting Review 12(1), 85-121.
Marinos, T., Zahir, I., O’Keefe, R.M., and Ray, J.P. (2001). ERP Problems and Application Integration Issues: An Empirical survey. HICSS.
Markus, L. M. and Tanis, C. (2000). The Enterprise Systems Experience - From Adoption to Success. In R. Zmud (Ed.), Framing The Domains of IT Management Research: Glimpsing The Future through The Past 173-207. Cincinnati, Ohio: Pinnaflex Educational Resources.
McVittie, L. (2001). Buckle up: Implementing ERP takes time and Patience. March 2001. Available at www.networkcomputing.com.
Mennel, A. (2002). The Effect of Training on ERP Acceptance: an Empirical Study. Unpublished thesis, University of Maastricht.
Miranda, R. (1999). The Rise of ERP in the Public Sector. Government Finance Review 9-17.
Momentum Software. (2003). Process Driven Organization. ProcessDriven.org.Retrieved 08 January 2005. Available at http://www.processdriven.org/nrocess driven organization.html
Mustafa, Y. and Mejabi, O. (1999). An Approach for Developing Flexible MRP Systems. Information Systems Management 16(2), 58-63.
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Neville, M. (2004). ERP has moved on. Paper presented at eWorld Manufacturing and Supply Chain, June.
Newell, S., Huang, J.C., Galliers, R.D., and Pan, S.L. (2003). Implementing enterprise resource planning and knowledge management systems in tandem: fostering efficiency and innovation complementarily. Information and Organization 13, 25- 52.
Nolan, L.R. (1979). Managing the crisis in data processing, Harvard Business Review 57(2), 115-126.
O’Leary, D.E. (2002). Knowledge management across the enterprise resource planning life cycle, International Journal of Accounting Information Systems 3,99-110.
PA Consulting Group. (1999). PA Value Mining—What happened to the business value of the ERP-system? PA Consulting Group—Research Report.
Parr, A. and Shanks, G. (2000). A model of ERP project implementation. Journal of Information Technology 15(4), 289-304.
Pitturo, M. (1999). How Midsize Companies Are Buying ERP. Journal of Accountancy 188(3), 41-48.
Poston, R. and Grabski, S. (2000). The Impact of Enterprise Resource Planning Systems on Firm Performance. Paper presented at the 21st International Conference on Information Systems, Brisbane, Australia.
Quattrone, P. and Hopper, T. (2001). What does organizational change mean? Speculation on a taken for granted category, Management Accounting Research 12,403—435.
Reck, L. (2000). Information systems outsourcing announcements: Investigating the impact on the market value of contract granting firms. Journal of Information Systems 14(2), 22-35.
Recklies, D. (2001). Small Business: Size as a change or Handicap. Retrieved 20 May 2004. Available at http://www.themanager.org.
Ross, J. and Vitale, M.R. (2000). The ERP revolution: surviving vs thriving. Information Systems Frontiers 2(2), 233-240.
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129
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Scapens, R.W. and Jazayeri, M. (2003). ERP systems and management accounting change: opportunities or impacts?—a research note. European Accounting Review 122(1), 201-233.
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Scapens, R.W. and Jazayeri, M. (2003). ERP systems and management accounting change: opportunities or impacts?—a research note. European Accounting Review 122(1), 201-233.
Scott, J. E. (1999). The FoxMeyer Drugs’ Bankruptcy: Was it a Failure of ERP? AMCIS99 223-225.
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Xu, H., Nord, J. H., Brown, N., and Nord, G. D. (2002). Data Quality Issues in Implementing an ERP. Industrial Management & Data Systems, 102(1), 47-58.
Yi, Hyong. (2002). ERPs: The Promise and the Peril. The Public Manager 31(4), 55-62.
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Appendix A
Questionnaires
Questionnaire#
Questionnaire for the study of experience in Enterprise
Resource Planning System involvement and knowledge.
If you have experience with an ERP system please skip to question #7; otherwise, please answer questions #1-6.
1. What are the types of software currently employed in your company? 2. Are they integrated as a whole or individually? 3. What are their main features and functions? 4. What are the license fees for the software? 5. What is the implementation cost of the software? 6. How would you rate the ease of use of your software? 7. What Enterprise Resource Planning (ERP) System do you employ? 8. When did you decide to invest in an ERP? 9. What were the motives behind the ERP investment? 10. Who was involved in making this decision, and which organizational levels were
involved? 11. Did you consider alternative solutions? 12. Does your ERP system suit what your company needs? 13. Have company processes been changed in order to fit the ERP system? 14. Has the market position of the company been affected by the ERP
implementation? 15. Why did your company adopt an ERP system (or anything related)?
a. Process Integration b. Resolve order processing issues c. Hardware and software obsolescence d. Resolve data duplication and inconsistencies e. Reduce stock/inventory excess
16. Why has your firm not invested in an ERP system? a. High costs b. Unsecured transactions c. Uncomfortable to use and learn d. Friction with the supply chain network
132
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Appendix A
Questionnaire#,
Questionnaires
Questionnaire for the study of experience in Enterprise
Resource Planning System involvement and knowledge.
If you have experience with an ERP system please skip to question #7; otherwise, please answer questions #1-6.
1. What are the types of software currently employed in your company?2. Are they integrated as a whole or individually?3. What are their main features and functions?4. What are the license fees for the software?5. What is the implementation cost of the software?6. How would you rate the ease of use of your software?7. What Enterprise Resource Planning (ERP) System do you employ?8. When did you decide to invest in an ERP?9. What were the motives behind the ERP investment?10. Who was involved in making this decision, and which organizational levels were
involved?11. Did you consider alternative solutions?12. Does your ERP system suit what your company needs?13. Have company processes been changed in order to fit the ERP system?14. Has the market position of the company been affected by the ERP
implementation?15. Why did your company adopt an ERP system (or anything related)?
a. Process Integrationb. Resolve order processing issuesc. Hardware and software obsolescenced. Resolve data duplication and inconsistenciese. Reduce stock/inventory excess
16. Why has your firm not invested in an ERP system?a. High costsb. Unsecured transactionsc. Uncomfortable to use and learnd. Friction with the supply chain network
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e. Lack of internal resources f. There are other projects in progress g. Inadequacy of firm process/products h. Functions/features not suitable i. Lack of integration with existing software
17. What is your ERP's Operating System? a. Packaged OS (Windows) b. Free OS (Linux)
18. What are your ERP's Programming Languages? a. Packaged languages (C++, ASP) b. Free languages (JAVA, PHP)
19. What is your ERP's Database Management System? a. Packaged DBMS (MS SQL Server) b. Free DBMS (MySQL)
20. What is your ERP's Platform? a. Thick Platform (Server/Client) b. Thin Platform (Web based) c. Slim Platform (Hybrid)
21. What is the license fee for your ERP system? 22. What is the implementation cost of your ERP system? 23. What are the additional costs per module of your ERP system?
Suggestions:
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e. Lack of internal resourcesf. There are other projects in progressg. Inadequacy of firm process/productsh. Functions/features not suitablei. Lack of integration with existing software
17. What is your ERP’s Operating System?a. Packaged OS (Windows)b. Free OS (Linux)
18. What are your ERP’s Programming Languages?a. Packaged languages (C++, ASP)b. Free languages (JAVA, PHP)
19. What is your ERP’s Database Management System?a. Packaged DBMS (MS SQL Server)b. Free DBMS (MySQL)
20. What is your ERP’s Platform?a. Thick Platform (Server/Client)b. Thin Platform (Web based)c. Slim Platform (Hybrid)
21. What is the license fee for your ERP system?22. What is the implementation cost of your ERP system?23. What are the additional costs per module of your ERP system?
Suggestions:
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Survey #
Survey for research in
Framework Design for the development of an ERP system
for Small-to Medium-Sized Enterprises in Southeast Asia
The following questions will be used to determine the important factors in developing an integrated manufacturing computer system for small enterprises in the Southeast Asia Region. Please circle the score that you think is most appropriate for the specific questions, where the levels of satisfaction are: 5 =much above average, 4 = above average, 3 = fair/average, 2 = below average, 1 = much below average
Part 1 Satisfaction with the overall specification of the system for both the existing
system and the Novell ERP system for SMEs in Southeast Asia.
System Overall Specification Factors Current System NERP System 1. Adaptability 5 4 3 2 1 5 4 3 2 1 2. Flexibility 5 4 3 2 1 5 4 3 2 1 3. Overall Cost 5 4 3 2 1 5 4 3 2 1 4. Efficiency of Internal business processes 5 4 3 2 1 5 4 3 2 1 5. Ease of use 5 4 3 2 1 5 4 3 2 1
Part 2 Software and module expectations of the system for both the existing system and
the Novell ERP system for SMEs in Southeast Asia. Please score how necessary
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Survey #.
Survey for research in
Framework Design for the development of an ERP system
for Small-to Medium-Sized Enterprises in Southeast Asia
The following questions will be used to determine the important factors in developing an integrated manufacturing computer system for small enterprises in the Southeast Asia Region. Please circle the score that you think is most appropriate for the specific questions, where the levels of satisfaction are: 5 =much above average, 4 = above average, 3 = fair/average, 2 = below average, 1 = much below average
Part 1 Satisfaction with the overall specification of the system for both the existing
system and the Novell ERP system for SMEs in Southeast Asia.
System Overall Specification Factors Current System NERP System1. Adaptability2. Flexibility3. Overall Cost4. Efficiency of Internal business processes5. Ease of use
5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1
5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1
Part 2 Software and module expectations of the system for both the existing system and
the Novell ERP system for SMEs in Southeast Asia. Please score how necessary
Part 4 Organization and Culture of the system for both the existing system and the Novel
ERP system for SMEs in Southeast Asia. Please score how necessary the
following modules are to the system:
Orj’iivii/iitioniil anil C ultural Factors Current System NERP Svstcm1. Centralization2. Responsibility3. Work Routines4. Level of production automation5. Top Management Support6. Reengineering7. Role-Base
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Part 7 General Information 1. What is your gender?
a. Male b. Female 2. What is the number of the company's employees?
a. 1-10 c. 51-250 b. 11-50
3. What is the company's turnover? (Approximately) a. $0.1-0.5 M c. $1.0-2.0 M b. $0.5-1.0 M d. Over $2.0 M
4. How wide is the market area of your company? a. Local c. National b. Regional d. International
5. What is the company configuration? a. Independent company b. Member of a group
6. Is the company planning any organizational change? a. Local automation of existing procedures b. Internal integration of existing business processes c. Business process reengineering d. Business network redesign, through integration with external partners e. Redefinition of company boundaries through the creation of inter-
organizational relationship.
136
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Part 7 General Information1. What is your gender?
a. Male b. Female2. What is the number of the company’s employees?
a. 1-10 c. 51-250b. 11-50
3. What is the company’s turnover? (Approximately)a. $0.1-0.5 Mb. $0.5-1.0 M
c. $1.0-2.0 Md. Over $2.0 M
4. How wide is the market area of your company?a. Localb. Regional
c. Nationald. International
5. What is the company configuration?a. Independent companyb. Member of a group
6. Is the company planning any organizational change?a. Local automation of existing proceduresb. Internal integration of existing business processesc. Business process reengineeringd. Business network redesign, through integration with external partnerse. Redefinition of company boundaries through the creation of inter-
organizational relationship.
136
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Appendix B
Statistical Calculations
This section is written to give an illustration of the uncertainty calculation showed in Chapter 4 of this thesis. All the numbers and data presenting in this appendix are the actual data used in calculation for one of the representative companies. Two types of uncertainty have a direct impact upon inventory policy: demand uncertainty and performance cycle uncertainty (Bowersox at el., 2003).
Demand uncertainty Sales forecasting estimates the units demand during the inventory replenishment
cycle. Even with good forecasting, demand during replenishment cycle often exceeds or falls short of what is anticipated. To protect against a stockout when demand exceeds forecast, a safety stock is added to the base inventory. Under conditions of demand uncertainty, the average inventory represents one-half of the order quantity plus the safety stock. Assume for purposes of illustration that the inventory performance cycle is 10 days. Historical evidence indicates that daily sales range from 5 to 15 units with average daily sales being 10 units.
From the history records in Table B-1, it is observed that stockouts occurred on 2 of 30 days. The sales history over the 30-day period has been arranged in Table B-2 in terms of a frequency distribution. The main purpose of a frequency distribution is to observe the variations of the average daily demand.
Forecast Cycle 1 Forecast Cycle 2 Forecast Cycle 3 Day Demand Accumulated Day Demand Accumulated Day Demand Accumulated
10 10 100 20 5 Stockout 30 9 89 Table B-1 Typical demand experience during three rep enishment cycles
137
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Appendix B
Statistical Calculations
This section is written to give an illustration of the uncertainty calculation showed in Chapter 4 of this thesis. All the numbers and data presenting in this appendix are the actual data used in calculation for one of the representative companies. Two types of uncertainty have a direct impact upon inventory policy: demand uncertainty and performance cycle uncertainty (Bowersox at el., 2003).
Demand uncertaintySales forecasting estimates the units demand during the inventory replenishment
cycle. Even with good forecasting, demand during replenishment cycle often exceeds or falls short of what is anticipated. To protect against a stockout when demand exceeds forecast, a safety stock is added to the base inventory. Under conditions of demand uncertainty, the average inventory represents one-half of the order quantity plus the safety stock. Assume for purposes of illustration that the inventory performance cycle is 10 days. Historical evidence indicates that daily sales range from 5 to 15 units with average daily sales being 10 units.
From the history records in Table B-l, it is observed that stockouts occurred on 2 of 30 days. The sales history over the 30-day period has been arranged in Table B-2 in terms of a frequency distribution. The main purpose of a frequency distribution is to observe the variations of the average daily demand.
Forecast Cycle 1 Forecast Cycle 2 Forecast Cycle 3Day Demand Accumulated Day Demand Accumulated Day Demand Accumulated
Table B-l Typical demand experience during three replenishment cycles
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Daily Demand (in Units) Frequency (Days) Stockout 1
5 1 6 2 7 2 8 3 9 4 10 6 11 3 12 3 13 2 14 2 15 1
Table B-2 Frequency of demand
The probability of occurrences assumes a pattern around a measure of central tendency, which is the average value of all occurrences. While a number of frequency distributions can be used in inventory control, the most basic is the normal distribution. The basis for predicting demand during a performance cycle using a normal distribution is the standard deviation of observations around the measures of central tendency. A normal distribution is characterized by a symmetrical bell-shaped curve, illustrated in Figure B-1. The essential characteristic of a normal distribution is that the three measures of central tendency have equal value. For the inventory management application, the event is unit sales per day and the dispersion is the variation in daily sale levels. Within ± 1 standard deviation, 68.27 percent of all events occur. This means that 68.27 percent of the days during a performance cycle will experience daily sales within ± 1 standard deviation of the average daily sales. The same goes for ± 2 with 95.45 percent and ± 3 with 99.73 percent.
Mean Median Mode
Figure B-1 Normal distribution
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Daily Demand (in Units) Frequency (Days)Stockout 1
5 16 27 28 39 410 611 312 313 214 215 1
Table B-2 Frequency of demand
The probability of occurrences assumes a pattern around a measure of central tendency, which is the average value of all occurrences. While a number of frequency distributions can be used in inventory control, the most basic is the normal distribution. The basis for predicting demand during a performance cycle using a normal distribution is the standard deviation of observations around the measures of central tendency. A normal distribution is characterized by a symmetrical bell-shaped curve, illustrated in Figure B-l. The essential characteristic of a normal distribution is that the three measures of central tendency have equal value. For the inventory management application, the event is unit sales per day and the dispersion is the variation in daily sale levels. Within ± 1 standard deviation, 68.27 percent of all events occur. This means that 68.27 percent of the days during a performance cycle will experience daily sales within ± 1 standard deviation of the average daily sales. The same goes for ± 2 with 95.45 percent and ± 3 with 99.73 percent.
68.27-
95.46
99.73-
MeanMedianMode
Figure B-l Normal distribution
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Performance Cycle Uncertainty Performance cycle uncertainty means that the inventory policy cannot assume
consistent delivery. If performance cycle uncertainty is not evaluated statistically, the most common practice is to base safety stock requirements on the planned replenishment time. However, if there is a substantial variation in the performance cycle, a formal evaluation is desirable. Table B-3 presents a given frequency distribution of performance cycles of one of the specific products from a representative company. Although 10 days is the most frequent, replenishment experience ranges from 6 to 14 days.
Determining Safety Stock with Uncertainty Treating both the demand and performance cycle uncertainty requires combining
two independent variables. The duration of the cycle is, at least in the short run, independent of the daily demand. However, in setting safety stocks, the joint impact of the probability of both the demand and the performance cycle variation must be determined. Table B-4 presents a summary of sales and replenishment cycle performance.
Demand Distribution Replenishment Cycle Distribution Daily Sales Frequency Days Frequency
Table B-4 Frequency distribution demand and replenishment uncertainty
The exact compounding of two independent variables involves multinomial expansion. This type of procedure requires extensive calculation. A direct method is to determine the standard deviations of demand and performance cycle uncertainty and then to approximate the combined standard deviation using the convolution formula:
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Performance Cycle UncertaintyPerformance cycle uncertainty means that the inventory policy cannot assume
consistent delivery. If performance cycle uncertainty is not evaluated statistically, the most common practice is to base safety stock requirements on the planned replenishment time. However, if there is a substantial variation in the performance cycle, a formal evaluation is desirable. Table B-3 presents a given frequency distribution of performance cycles of one of the specific products from a representative company. Although 10 days is the most frequent, replenishment experience ranges from 6 to 14 days.
Determining Safety Stock with UncertaintyTreating both the demand and performance cycle uncertainty requires combining
two independent variables. The duration of the cycle is, at least in the short run, independent of the daily demand. However, in setting safety stocks, the joint impact of the probability of both the demand and the performance cycle variation must be determined. Table B-4 presents a summary of sales and replenishment cycle performance.
Demand Distribution Replenishment Cycle DistributionDaily Sales Frequency Days Frequency
Table B-4 Frequency distribution demand and replenishment uncertainty
The exact compounding of two independent variables involves multinomial expansion. This type of procedure requires extensive calculation. A direct method is to determine the standard deviations of demand and performance cycle uncertainty and then to approximate the combined standard deviation using the convolution formula:
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The standard formulation for EOQ which has the annual demand volume of 1,720 units at $39 per unit with $17 per order and 15% inventory carrying cost per year, is as follows:
Q* = 112Ds 112*1720*17 = 99.98
IC 39*0.15 The fill rate represents the magnitude of a stockout rather than the probability.
The case fill rate is the percentage of units that can be filled when requested from the available inventory. Assume that a company desired 99 percent product availability to the case fill rate;
Table B-5 Table of loss integral for standardized normal distribution
Source: Edward Silver, David Pyke, and Rein Peterson, Inventory Management and Production Planning and Scheduling. 3rd ed. (New York: John Wiley & Sons, 1998), pp. 724-34.
The calculated value off(k) is then compared against the values in Table B-5 to find the one the most closely approximates the calculated value. For this example, the value of k that fits the condition is 1.175. The required safety stock level is:
SS = k* = 1.175* 20.75 = 24.38 units
The safety stock required to provide a 99 percent product fill rate when the order quantity is 100 units is approximately 25 units. An increased order size can be used to compensate for decreasing the safety stock levels, or vice versa. The existence of such a
140
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The standard formulation for EOQ which has the annual demand volume of 1,720 units at $39 per unit with $17 per order and 15% inventory carrying cost per year, is as follows:
W S l2'172D'17.m99MV 1C V 39*0.15
The fill rate represents the magnitude of a stockout rather than the probability. The case fill rate is the percentage of units that can be filled when requested from the available inventory. Assume that a company desired 99 percent product availability to the case fill rate;
Table B-5 Table of loss integral for standardized normal distribution
Source: Edward Silver, David Pyke, and Rein Peterson, Inventory Management and Production Planning and Scheduling. 3rd ed. (New York: John Wiley & Sons, 1998), pp. 724-34.
The calculated value off(k) is then compared against the values in Table B-5 to find the one the most closely approximates the calculated value. For this example, the value of A: that fits the condition is 1.175. The required safety stock level is:
SS = k * a c =1.175*20.75 = 24.38 unitsThe safety stock required to provide a 99 percent product fill rate when the order
quantity is 100 units is approximately 25 units. An increased order size can be used to compensate for decreasing the safety stock levels, or vice versa. The existence of such a
140
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trade-off implies that there is a combination of replenishment order quantities that will result in desired customer service at the minimum cost.
141
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trade-off implies that there is a combination of replenishment order quantities that will result in desired customer service at the minimum cost.
141
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Appendix C
Management decision aid in the NERP System
There are several features in the NERP system that will provide very useful
information to the decision maker in order to make the appropriate decision. These
features are "Transaction pending reminder," "Cost Information," "scheduling
adjustment, "Dynamic Reorder Point and Replenishment order quantity," and "Expected
completion date and Expected delivery date." This appendix represents the actual figures
captured from the company that installed the NERP system, focusing only on the
management decision aid modules. A brief explanation on the module and the data
presented in it is provided.
Cost Information
The cost management module in the NERP system provides the user with the
necessary information of different types of costs. As can be seen from Figure C-1, the top
portion of the figure shows the products related cost; for example the "Lamp" costs $300
per unit, and the customer was given a 3.5% discount on an order quantity of 27 units.
The total cost before tax for this order is $9418.40 and $10736.98 including 14% tax. The
second portion (the bottom portion) shows the production and profit related cost
including the safety factor added by the system. The order quantity of the Lamp is only
27 units; however the system has added a safety factor of 1.35 units to the production,
therefore the company will be required to produce 28 units of the Lamp instead of 27
units to prevent a product shortage due to production operations. In order to carry out the
production of 28 units, the raw material cost of $2,535.91, the labor cost of $765.45, and
the setup cost of $35 for the total of $3,336.36 is required as the initial production cost.
The Lamps are sold at $300 per unit, and with an order of 27 units and a total of $8,100
in revenue, the company will earn $4,763.64 as a profit.
This cost management module can be very useful for users, who can check the
detailed cost of the product before sending the order to the production department. A cost
142
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Appendix C
Management decision aid in the NERP System
There are several features in the NERP system that will provide very useful
information to the decision maker in order to make the appropriate decision. These
features are “Transaction pending reminder,” “Cost Information,” “scheduling
adjustment, “Dynamic Reorder Point and Replenishment order quantity,” and “Expected
completion date and Expected delivery date.” This appendix represents the actual figures
captured from the company that installed the NERP system, focusing only on the
management decision aid modules. A brief explanation on the module and the data
presented in it is provided.
Cost Information
The cost management module in the NERP system provides the user with the
necessary information of different types of costs. As can be seen from Figure C-l, the top
portion of the figure shows the products related cost; for example the “Lamp” costs $300
per unit, and the customer was given a 3.5% discount on an order quantity of 27 units.
The total cost before tax for this order is $9418.40 and $10736.98 including 14% tax. The
second portion (the bottom portion) shows the production and profit related cost
including the safety factor added by the system. The order quantity of the Lamp is only
27 units; however the system has added a safety factor of 1.35 units to the production,
therefore the company will be required to produce 28 units of the Lamp instead of 27
units to prevent a product shortage due to production operations. In order to carry out the
production of 28 units, the raw material cost of $2,535.91, the labor cost of $765.45, and
the setup cost of $35 for the total of $3,336.36 is required as the initial production cost.
The Lamps are sold at $300 per unit, and with an order of 27 units and a total of $8,100
in revenue, the company will earn $4,763.64 as a profit.
This cost management module can be very useful for users, who can check the
detailed cost of the product before sending the order to the production department. A cost
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management module that supported by NERP system can provide the comprehensive
visibility of the cost necessary for the Southeast Asian SMEs.
.-'.11Sales Order
Us erlaadmin
Order ID SaQ-Og007
Refer F1'.°R) !Sale Order
Date 1
1QuotatIon ID
09/07105
Customer Kerne Josh
salesllathe !Valentino
Discount I 3.5 %
':TAX''" GST ) 14P4 (G5T + PST )
Address1 131,1:14utt'1 Cost 4001 Peofit I l‘lote I
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management module that supported by NERP system can provide the comprehensive
visibility of the cost necessary for the Southeast Asian SMEs.
0 9 /0 7 /0 5
ZJz J
~3
C ustom er O rd e r D a te |P
Save
E stim ate Com pletion D a te |0 9 /1 3 /0 5
E x p ected Delivery D a te ; J09/14/OS
Iga S a le s O r t lu r
U s e ; ID admin
O rder ID f SaO -0Q 007 Da.te j“R efer From [sale Order 3 19uotationID f~
C ustom er N am e ]Mr. Josh
S alesN aitie { v a ie n t in o
D iscount I 3 .5 %
TAX r 7 % ( GST ) p 11% (-G5T + PST j
Address Product | Cost and Profit | Note j
Product ID jp rO -00003
Unitp . ---------------
UnitPrice»)
(Lamp
Q u an tity OT"3
N ote
Add
Update
3 0 0 ,0 0 27 Q (3 .5 % Discount Delete
Product ID Product Name Unit UnitPrice($) Quantity, O T ' j Note'PrD-00001 TANK, 10X54, QH, Si... Box 100.00r 7 0PrD-00002 Filling Cabinets Box 80.00 12 0 2% DiscountPrD-00003 Lamp Box 300.00 27 0!3.5% Disco...
Total N e t % ■9416.10 Total * r 10736.98
Address] Product Cost and Profit j Notej
1 Initial Cost
Product ID Product Name Qty/SF RM Cost Labor CostPrD-00001 TANK, 10X54, Q H ,... 7 35 183.75 106.58PrD-00002 Fillin^Cabinets 12.60 314.62 113 40PrD-00003 Lamp >6.35 2,535.91 765 45
m p u s n i ffltlllil iSilliliirm m
OT Cost Setup Total j 310.320.00 20 .00 !
443:020.00 15.0035.00I 3,336.360.00
Product ID Product Name Qty/SF I Initial Cost I Sale Cost 1 Profit |PrD-OOOOi TANK, 10X54, QH, Single 7.35! 310.32 700.00i 389.68!PrD-00002 Filling Cabinets 12.60] 443.02! 960.001 516.98PrD-00003 Lamp 28.35! 3,336.361 8,100.001 4,763.64!
Figure C -l Cost management module.
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Expected Completion Date and Expected Delivery Date
The NERP system can provide the user with expected completion date and
expected delivery date of the order, as shown in figure C-2. Both of the expected dates
are calculated automatically by the NERP system based on the current production, the
pending production, availability of workforce, and availability of the raw materials. In
figure C-2, the order has been placed on September 7th, 2005 and the NERP system has
estimated the completion date of the order to be on September 13th, and expects to deliver
to the customer on September 14th.
This feature provides the user and customer with the approximate date that the
products will be finished and delivered. The user then can easily add the extra workforce,
or overtime hours to the production if the order is needed.
EMSdles Order
User lbadmin
Order ID 5aff:130007
Refer From Sale Omer.
.Date
Quotation ID
119107105
Customer Name JMr. Josh
Sales Name iValentino
'Discount 3.
TAX 7% ( CST) P" 14% ( G5T + PST )
Customer Order Date
Esdiiiate CoMpletion Date.: 0.3/13/05
Exeetted,peliyerie.Dat
Figure C-2 Expected completion and delivery date
Production Scheduling and Scheduling Adjustment
Figure C-3 shows the Production Scheduling module and Scheduling Adjustment
module in the NERP system. The Production Scheduling module represents the status of
the transaction order created on the NERP system. It provides the users with an order
identification number, order type (sale order, sale quotation, or internal order), promised
delivery date, customer's name and the status of the production. There are three types of
status that can be shown on the module: "Finish," "Requesting Raw Material," and
"Waiting." The Requesting Raw Material status tells the user that the production
department is waiting for the raw material to arrive from the warehouse. The Waiting
status shows that the order is ready (with all required raw material), and waiting to be put
in the production order. Last, the Finish status tells the user that the production of the
144
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Expected Completion Date and Expected Delivery Date
The NERP system can provide the user with expected completion date and
expected delivery date of the order, as shown in figure C-2. Both of the expected dates
are calculated automatically by the NERP system based on the current production, the
pending production, availability of workforce, and availability of the raw materials. IntVifigure C-2, the order has been placed on September 7 , 2005 and the NERP system has
estimated the completion date of the order to be on September 13th, and expects to deliver
to the customer on September 14th.
This feature provides the user and customer with the approximate date that the
products will be finished and delivered. The user then can easily add the extra workforce,
or overtime hours to the production if the order is needed.
jSs| S a les O rd e r
User IDs
O rd er ID
R efer From
C ustom er Nam e
Discount f
S a v e |
f S a 0 -0 0 0 0 7 1 D a te f '0 9 /0 7 /0 5
[Sale Order V j Q u o ta tio n id
jfvlr. Josh . r JCustom er O rd e r D a te j
fValentino zl E stim ate Com pletion D a te [0 9 / 13/05
j 3 .5 %. E x p ec ted Delivery D a te [0 9 / 14/05
TAX r 7 % ( GST ) W 14% ( GST + PST )
Figure C-2 Expected completion and delivery date
Production Scheduling and Scheduling Adjustment
Figure C-3 shows the Production Scheduling module and Scheduling Adjustment
module in the NERP system. The Production Scheduling module represents the status of
the transaction order created on the NERP system. It provides the users with an order
identification number, order type (sale order, sale quotation, or internal order), promised
delivery date, customer’s name and the status of the production. There are three types of
status that can be shown on the module: “Finish,” “Requesting Raw Material,” and
“Waiting.” The Requesting Raw Material status tells the user that the production
department is waiting for the raw material to arrive from the warehouse. The Waiting
status shows that the order is ready (with all required raw material), and waiting to be put
in the production order. Last, the Finish status tells the user that the production of the
144
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specific order is completed and ready to move to the warehouse or be shipped to the
customer.
The scheduling adjustment module shows only the orders under the status of
"Waiting." Because these orders are not yet in the production line, they are still
adjustable. The users can use their experience in order to change and schedule the
production order. The current version of NERP system cannot optimize the scheduling
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pending the arrival of the raw materials, (4) Raw Material Requisition pending the
issuing of the raw material to the production department. Figure C-4 shows four types of
pending reminders on the NERP system.
ERP for SME
File Common Sales Purchase Inventory Oroduction
Alert Detail Sales Quotation pending"afe SaQ-00004 Supplier Quotation pending are : PuS-00001 Purchase Order pending are : Pu0-00001 Raw Material Requisitign pencil-0 are,: 00Q-00005 OpQ-00006
Figure C-4 Pending reminder
Dynamic O. ROP and Inventory
1,4 NtA CUI1011, IIIVOIlt01 7 PI Ei
Raw Material
ID Name Unit Cost Qty on Order City on Hand ROP RaM-000131 Polyethylene Resin LB 1.013 0.00 354.00 18.00 4.03 RaM-00002 Fastener EA 0.25 12.00 270.00 12.00 3.00 RaM-00003 Fiberglass Roving KG 1.19 0.00 263.40 64.00 16.00 RaM-00004 Plastic Tube EA 4.75 0.00 295.00 26.00 8.00 RaM-00005 Tank, Base EA 0.43 0.00 285.00 66.00 16.00 RaM-00006 Pyrofill Fiber Carbon LB 0.85 0.00 299.85 49.00 12.00 RaM-00007 Hanging File Folder Pkg 1.75 0.00 370.00 149.00 35.00 RaM-00008 Plastic Drawer Labels EA 0.38 0.00 208.00 . 202.00 50.00 RaM-00009 Flanging Folder Bars EA 0.48 0.00 208.00 179.00 41.00
i RaM-0131310 File Folder Labels Box 0.39 0.00 185.00 223.00 54.00 RaM-00011 File Folders Box 0.16 0.00 105.00 348.00 82130 RaM-00012 Controlling Lock EA 1.33 0.00 277.00 54.00 13.00 1 RaM-00013 Lamp LA EA 29.05 0.00 268.00 45.00 10.00 RaM-00014 Base Assembly EA 16.35 0.00 268.00 61.00 15.00 RaM-00015 Finished Shaft EA 1.30 0.00 268.00 21.00 5 CO RaM-00016 3/8 Steel Tubing Inc 0.05 140.00 74.00 559.00 140.00 RaM-00017 6D Steel Plate EA 9.25 0.00 268.00 81.00 20.00 .„ I
.„-,..,,..u „ go,,,,,,,, -, .....nu move
tOlall 4 aillui ...,,, f '*• , ID 'Me cis Oty on Order Qty,ori Hand Oty on De... ?ROP 11