Many organizations think that Enterprise Resource Planning systems are expensive and wasteful exercises. They ignored integrated system and pursued a non-integrated strategy, and that have paying attention exclusively on reducing inventories, cycle times, costs, etc., through the application of demand-based flow manufacturing. Finally, they begins to learn ERP can serve many valid and essential purposes such as capturing product definition data, complete order management, planning material needs, invoice management, etc. The list goes on, but the main point is that ERP system and flow are not mutually exclusive.
ERP must be implemented properly and rapidly at first time to meet ROI (Return of Investment) expectations and become positively measurable. This may seem obvious, but ERP and SCM are not often approached in this manner the first time. As a result, many problems occur during and, not as good as, after implementation. Due to this organization have to go for re-implementation or major tune-up. This will be costly and ROI will affect.
Usually, ROI comes from process improvements of the business with running system, not from new system. ERP system alone, no matter how wonderful it is, makes little impact on business performance. If organization continues to follow the old process after implementation of new system, organization can expect the same or worse performance. It up to organization, whether they want to improve their business process or continue the old process. The system is capable to support many new processes to improve business, but not without the organization deciding what those processes are and accepting their use. Organization can absolutely be assured of ROI from ERP if they correctly implement and use maximum new processes.
Many of people say there is a controversy about ERP ROI but there should not be any controversy, if you cover both the tactical and strategic issues of how integrated system can or cannot support improvements in your business performance. Each user in the organization needs to understand that positive ROI comes from changing the business process performed in the past to more streamlined, faster and lower cost production, reduced cycle time that better serve the requirements of the customer. If organizations are doing in that way, they will get maximum ROI from ERP system.
