Effect Of Erp System On Company Competitive Strategy

By Author: Peter Naruka
Total Articles: 74
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ERP is information support system; it is designed to provide updated, accurate and consolidated information to the management at any point of time thus effect of an ERP system on the competitive strategy of the company is massive. ERP collate and integrate whole organizational data from across the functional spectrum into one single repository, it is then possible to utilize all the information by a click of a button for realizing optimal efficiency. The software designed specifically to perform this task transforms complex, disparate and fragmentary sets of data into clear and logically structured format to make it extremely helpful to management for taking decisions. ERP supplies the vital information at the right time to decision-makers and allows them to see organization as a whole in place of distinct parts. It also enables speedier implementation of changes across the entire organization which makes effect of an ERP system on the competitive strategy of the company huge.

ERP also has immense potential in bringing down cost of production and keep prices of services or products to minimum. The companies who are able ...
... to achieve this remain safely placed in the market and withstand threats of competition and new entrants in a sound manner. Companies using ERP get benefits like keeping their inventory under control and better production planning. With better planning over-purchase of inventory and dead stocks get reduced to increase cash flow. Availability of funds gives lot of freedom to the management in taking decisions. This advantage increases effect of an ERP system on the competitive strategy of the company immensely.

Today's market is customer-centric, with ERP, any organization can improve its responsiveness and providing better services to the customer. Management can get response and feedback from their customers and can plan new products or can add or enhance certain features to launch better product or services in the market. The accurate and timely information made available to the management is extremely beneficial for making correct decisions to get an edge over the competition.

The flawless management of all the units and departments of the organization is major effect of an ERP system on the competitive strategy of the company. It does not matter if company is working at distant geographical locations in different countries with separate systems of accounting, currency and language. Multi-lingual, multi-accounting and multi-currency features of ERP allow large or medium organizations to expand their business beyond geographical boundaries and still manage entire operations with efficiency and ease. ERP enhances business process efficiency, enables speedier actions between units, allows operational staff to access real time information from anywhere and merges entire supply chain network seamlessly. This advantage too makes effect of an ERP system on the competitive strategy of the company immense.

It's not that ERP only integrates and enhances functioning of primary and support activities which comprise the value chain model it also harmonizes functioning of modules like HR, administration, procurement processes with primary activities like sales, marketing, production and logistics etc to provide an edge to the company over its competitors.

Read about SAP R/3 Architecture. Also know SAP B1, SAP Business One Implementation. Read about SAP HR Module.