Codification of processes within an enterprise resource planning (ERP) system is integral in ensuring that quality is maintained (Leoncini & Montresor, 2007). In this manner, an aspect of continuous improvement on quality is observed. Eventually, firms benefit from such continuous improvement concepts that are derived from codification.
Codification of processes within an ERP system ensures proper numbering of processes. An example of such coding practice is evidenced in numbering of materials, current stocks and pricing. In this manner, firms are able to maintain a continuous flow of processes or functions without confusion (Leoncini & Montresor, 2007).
Firms that are known to lose time and money through duplication of processes are able to eliminate this bottleneck using codification. In many of the instances, an auto-material requirement planning (MRP) is also facilitated from the ERP codification. In this respect, the auto-MRP involvement in material planning is done at a low cost and supervision.
The codification process is not an easy task as it involves a wide range of experts. In this respect, the management of the ERP is done by a team of experts who facilitates continuous improvement in the firm. The codification process in an ERP system is essential in ensuring that non-value activities that are streamed out, hence reducing unnecessary costs (Leoncini & Montresor, 2007).
Moreover, firms are able to reduce the cost of labor involved in managing different processes. Eventually, firms are able to integrate their functions into achieving a common goal.
By ensuring that a firm’s supply chain is lean and abides to quality standards, achieving a competitive advantage becomes easy. Moreover, management of data within the firm requires a well organized ERP system. Such is only achieved through codification of data streamlined within the ERP system.
It is true that the ERP systems are sometimes a hindrance to innovations (Kersten, Blecker & Herstatt, 2007). In order to minimize such risks, alignment of processes and functions is necessary. This can be done through business process reengineering (BPR), which supports introduction of innovations to the firm. Moreover, the BPR ensures that business processes that require alignment are redesigned through rethinking and creativity.
ERP can steer innovations through incorporation of a project sponsor or a steering committee. The benefit of a project sponsor is that it is independent in decision making and controlling the ERP implementation.
In this regard, innovations are incorporated at various stages or phases of an ERP system. In addition, an ERP can harness innovations through consultant services. Consultants are widely knowledgeable experts who foster innovation in a firm that lack in-house skills.
For clients who want to implement the ERP system in their companies, the following are some of the ERP benefits that encourage innovations. Firstly, the ERP encourages sharing of a single database (Shtub, 1999). From this perspective, all departments and staff members are able to share certain information from others.
In this regard, sharing of ideas is also encouraged. Eventually, best ideas are shared across functions and departments for the common good of the company. Secondly, the ERP allows integration of other information-based technologies. For example, a technology tailored specifically for the company can be integrated into the ERP system.
An example of such a technology is the bar-code reader, which can be integrated into a company’s ERP system using an application programming interface (API). Finally, companies that seek to implement ERP systems benefit from customizing the ERP packages. This is usually done by using third-party software. In this respect, a company benefits from additional ERP functionality.
References
Kersten, W., Blecker, T. & Herstatt, C. (2007). Innovative logistics management: Competitive advantages through new processes and services. Berlin, BER: Erich Schmidt Verlag GmbH.
Leoncini, R. & Montresor, S. (2007). Dynamic capabilities between firm organization and local systems of production. New York, NY: Routledge.
Shtub, A. (1999). Enterprise resource planning (ERP): The dynamic of operations management. New York, NY: Springer.