Enterprise Resource Planning and the Development of E-Commerce

Enterprise Resource Planning

Enterprise resource planning (ERP) is a crucial process that organisations use to manage and integrate essential components of their operations. ERP planning system software applications play a critical role in resource planning by consolidating all necessary processes into one system. This integrated system encompasses planning, purchasing, inventory management, sales, and marketing, streamlining organisational operations.

An ERP system is a cohesive force that combines the various computer systems within a large organisation. Without an ERP application, each team within the organisation would have its IT system tailored to its specific tasks. However, with ERP software implementation, each team retains its system while gaining access to all systems through a single application and interface. This integration facilitates a comprehensive planning and operating system.

ERP applications are crucial in enhancing communication and information sharing among different teams within an organisation. By collecting data on the organisation's activities and the status of various teams, the ERP system makes this information readily available to other teams, enabling them to utilise it effectively.

Implementing ERP applications can significantly contribute to an organisation's self-awareness by connecting information related to production, finance, distribution, and human resources. This integration bridges the technological gaps between different parts of the organisation, eliminating duplication and incompatible technologies. 

It often integrates systems such as accounts payable, stock control, order monitoring, and customer databases into a unified system. Over the years, ERP offerings have evolved from traditional software models reliant on physical client servers to cloud-based software that offers remote web-based access. 

While an ERP system does not entirely eradicate inefficiencies, it prompts the organisation to reconsider its structure and operations to maximise the benefits of ERP technology. Despite the potential advantages, ERP systems often fail to achieve their intended objectives due to organisations' reluctance to abandon outdated processes incompatible with the software. 

Additionally, some organisations are hesitant to let go of old software that has proven effective in the past. To ensure the success of ERP projects, it is crucial to keep them distinct from numerous smaller projects, which can lead to product and service cost overruns.

E-commerce

Electronic commerce, or E-commerce, is the natural evolution of MRP systems. E-commerce refers to any commercial activity or financial transaction that involves exchanging products, services, financial resources and information over the Internet.

The activities are focused on conducting internal and external business processes as a continuous stream of product and data flows upstream and downstream of the supply chain, utilising cloud-based internet technologies across many different IT networks and platforms.

E-commerce encompasses the capability to exchange products or services by leveraging computer networks like the internet or mobile technology, such as "apps" on mobile phones. The realm of electronic commerce relies on various technologies to facilitate its operations, which draw on technologies such as:

• Mobile commerce.
• Electronic funds transfer.
• Supply chain management.
• Internet marketing.
• Online transaction processing.
• Electronic data interchange (EDI).
• Inventory management systems.
• Automated data collection.

Organisations have faced challenges due to the disparity between the advantages of supply chain technology and the means to actualise those advantages. Nevertheless, the growing adoption of E-commerce technologies has offered a streamlined and productive method of realising the benefits of modern supply chain technologies. 

Adoption of E-commerce Technology

This can unify all internal and external organisational operations encompassing the tangible, monetary, and informational movements of products, services, and data across the supply chain. Furthermore, the influence of E-commerce on supply chains is considerably more advanced. 

By utilising electronic solutions, organisations can now pinpoint discrepancies between various levels of supply chains, thereby eliminating the performance gap. The advent of E-commerce has also facilitated the implementation of ERP and WMS systems, enabling organisations to enhance the efficiency and effectiveness of their supply operations with customers and suppliers.

These new capabilities still need to be fully exploited as technology organisations invest in new E-commerce software solutions and expect greater investment returns. E-commerce helps solve many issues that organisations may need help coping with, such as political barriers or cross-country changes, and it provides organisations with a more efficient and effective way to collaborate within the supply chain.

The emergence of E-commerce has created job opportunities in information-related services, software apps, and digital products. However, E-commerce has also resulted in job losses, especially within the retail, postal, and travel sectors, which are expected to experience the most significant job losses due to the increasing reliance on E-commerce and customers' self-sufficiency in using online services provided by organisations.

Advantages of E-commerce

One of the main advantages of E-commerce is its convenience to customers. They can now shop from home and easily browse through an organisation's online shopping portal. This is especially beneficial when purchasing products or services that are not available locally. 

By shopping online, customers can access a broader range of products, saving them time, money, and effort. Additionally, online shopping gives customers purchasing power as people can research products and compare prices among multiple retailers.

E-commerce technologies have also helped reduce transaction costs by eliminating the need for intermediaries. Organisations and end users can now directly engage in online product or service searches, which has contributed to the success of E-commerce at both urban and regional levels. However, the success of E-commerce relies on how effectively local organisations utilise it and how well local end users adapt to its use.

Despite E-commerce's advantages, human interaction is still needed, especially for customers who prefer face-to-face contact. Many customers are concerned about online transactions' security and integrity, and remain loyal to well-known retailers.

To address these concerns, some clothing retailers, like Tommy Hilfiger, have introduced "virtual fit" platforms on their E-commerce sites to minimise the risk of customers purchasing ill-fitting clothes. However, the effectiveness of these platforms varies significantly.

While E-commerce has created new job opportunities and increased customer convenience, it has also led to job losses in specific sectors. E-commerce success depends on the proper use of local organisations and the adaptation of local end users. Additionally, human interaction is still needed to address customer concerns regarding online transactions.

The rise of E-commerce has been identified as a principal and significant factor contributing to the decline of brick-and-mortar retailers, a phenomenon often dubbed the "retail apocalypse". The proliferation of online shopping platforms like Amazon has posed challenges for traditional retailers in retaining and attracting customers, prompting them to revamp their sales tactics.

Many businesses have resorted to implementing sales promotions and intensifying their digital presence to entice consumers, leading to the closure of physical store locations. This shift in consumer behaviour has compelled some traditional retailers to prioritise their online operations over their traditional storefronts, ultimately reshaping the retail industry's landscape.

Additional articles can be found at Supply Chain Management Made Easy. This site looks at supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness of their product and service supply to the customers' delight. ©️ Supply Chain Management Made Easy. All rights reserved.