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Erp Concept for Enterprise Management and,Knowledge Management Era. Ivona Vrdoljak Ragu,University of Dubrovnik,1 Introduction. Development of information and communication technologies has influenced the evolution. of all kinds of computer applications in the organization At the same time external. environment and phenomenon of globalisation have become more complex with new. requires and conditions for enterprises In that context effective information system has. become necessity for every organization in order to increase competitiveness by cutting. down costs through better logistics In these circumstances enterprises have two challenges. to create and implement an infrastructure for information technologies with applications for. storing and sharing information and to effectively use these information for decision making. process Success for enterprises depends upon a significant flow of information and goods in. the supply chain client relationship and the ability to perform e business Vukovi et al. 2007 E business is concerned specifically with information systems solution packages used. by enterprises for e business transaction purposes for meeting customer requirements in. Business to Business B2B and Business to Consumer B2C exchanges Popular among the. e business applications for B2B are Supply Chain Management SCM and Enterprise. Resource Planning ERP systems and may include online purchase or procurement. between customer and supplier For B2C e business application the best example is. Customer Relationship Management CRM system, Information technology includes all matters concerned with the computer science and. technology design development installation and implementation of information systems and. applications IT is a framework for achieving strategic goals of an enterprise that incorporates a. variety of commercial software packages that are related to various areas of an organisation. such as finance accounting human resources inventory procurement and customer service. It is recognized that the ability to provide right information at the right time brings a great. advantage to the world of complex business relationships and competitiveness. ERP as an enterprise wide set of management tools that balance demand and supply. having the ability to link customers and suppliers into a complete supply chain to employ. proven business processes for decision making and to provide high degrees of cross. functional integration among sales marketing manufacturing operations logistics. purchasing finance new product development and human resources thereby enabling. people to run their business with high levels of customer service and productivity and to. simultaneously lower costs and inventories while providing the foundation for effective e. commerce Wallace Krezmar 2001,www intechopen com, 114 New Trends in Technologies Control Management Computational Intelligence and Network Systems. ERP as an e business application for B2B allow the organisation to better understand its. business resources and plan for the future the popular ERP packages in the market are. SAP BAAN Oracle Financials JD Edwards and People soft. The purpose of this paper is to explore ERP concept and its implementation in enterprises. The research framework examines importance of ERP concept and its implementation as a. main factor for competitiveness for large Croatian enterprises The result of the research. reveals that the ERP systems are not insufficiently used in large Croatian enterprises Details. of the results implications of the findings and conclusions are presented and discussed The. present study provides a starting point for further research of implementation process of. ERP systems in Republic of Croatia,2 ERP historical perspectives.
The evolution of ERP systems is a reflection of added layers of functionality to its germ cell. Materials Requirements Planning MRP of the 70 s Manufacturing Resource Planning. MRP II emerged in the 80 s and then followed by Enterprise Resource Planning ERP. systems in the 90 s and ERP II in the 2000 s see Table 1 ERP offers one integrated solution. that aligns information technology and business processes into one repository The ERP. progression parallels the development of the economy which was considerably instituted. on the tangible assets during the 70 s But over time this dependency gradually skewed. towards the intangible assets and intellectual capital. 1960s Enterprise Resource Planning ERP is born in the early 1960s from a joint effort. between J I Case the manufacturer of tractors and other construction machinery and. partner IBM Material Requirements Planning or MRP is the initial effort This application. software serves as the method for planning and scheduling materials for complex. manufactured products, 1970s Initial MRP solutions are big clumsy and expensive They require a large technical. staff to support the mainframe computers on which they run. 1972 Five engineers in Mannheim Germany begin the company SAP Systemanalyse und. Programmentwicklung The purpose in creating SAP is to produce and market standard. software for integrated business solutions 1975 Richard Lawson Bill Lawson and business. partner John Cerullo begin Lawson Software The founders see the need for pre packaged. enterprise technology solutions as an alternative to customized business software. applications 1976 In the manufacturing industry MRP Material Requirements Planning. becomes the fundamental concept used in production management and control. 1977 Jack Thompson Dan Gregory and Ed McVaney form JD Edwards Each founder takes. part of their name to create the company moniker Larry Ellison begins Oracle Corporation. 1978 Jan Baan begins The Baan Corporation to provide financial and administrative. consulting services, 1979 Oracle offers the first commercial SQL relational database management system. 1980 JD Edwards begins focusing on the IBM System 38 in the early 1980s MRP. Manufacturing Resources Planning evolves into MRP II as a more accessible extension. to shop floor and distribution management activities. 1981 Baan begins to use Unix as their main operating system. 1982 Baan delivers its first software product JD Edwards focuses on the IBM System 38. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 115. 1983 Oracle offers both a VAX mode database as well as a database written entirely in C. for portability, 1984 Baan shifts the focus of their development to manufacturing. 1985 JD Edwards is recognized as an industry leading supplier of applications software. for the highly successful IBM AS 400 computer a direct descendant of the System 38. 1987 PeopleSoft is founded by Dave Duffield and Ken Morris in 1987. 1988 PeopleSoft s Human Resource Management System HRMS is developed. 1990 Baan software is rolled out to 35 countries through indirect sales channels The term. ERP Enterprise Resource Planning is coined in the early 1990 s when MRP II is extended. to cover areas like Engineering Finance Human Resources and Project Management. 1991 PeopleSoft sets up offices in Canada This leads the way to their presence in Europe. Asia Africa Central and South America and the Pacific Rim. 1995 Baan grows to more than 1 800 customers worldwide and over 1 000 employees. 1999 JD Edwards has more than 4 700 customers with sites in over 100 countries Oracle. has 41 000 customers worldwide 16 000 U S PeopleSoft software is used by more than. 50 percent of the human resources market SAP is the world s largest inter enterprise. software company and the world s fourth largest independent software supplier overall. SAP employs over 20 500 people in more than 50 countries To date more than 2 800 of. Baan s enterprise systems have been implemented at approximately 4 800 sites around. 2001 9 11 occurs creating a drop in demand for new ERP systems. 2002 Most ERP systems are enhancing their products to become Internet Enabled so. that customers worldwide can have direct access to the supplier s ERP system. 2004 Services Oriented Architecture SOA becomes a standard that ERP vendors work. towards This software architecture allows different systems to communicate between. one another, 2003 2005 Industry consolidation occurs Oracle E Business Suite JD Edwards.
Peoplesoft and Seibel Microsoft Navision Axapta Great Plains and Solomon Infor. Baan Mapics and a slew of other products Sage Best Software is acquired. The consolidations continue to occur and the key players SAP Oracle Infor and. Microsoft continue to build out their products The next phase of ERP systems will be the. merged products including Oracle s Fusion and Microsoft s project green s end product. Table 1 ERP history www erpandmore com,2 1 Phase 1 Manufacturing integration MRP. MRP systems were developed in the 70s MRP is connected with simple production. operations It represents a more advanced concept of earlier efforts to process the bill of. materials The inventors of MRP were looking for a better method for ordering material and. they found it in that concept The basic concept for planning material requirements is based. upon the four questions which represent its logic Vukovi et al 2007. What are we going to make,What does it take to make it. What do we have,What do we have to get,www intechopen com. 116 New Trends in Technologies Control Management Computational Intelligence and Network Systems. These four questions are called the universal manufacturing equation It has a logic that is. applied in production enterprises MRP simulates the universal manufacturing equation It. uses the master schedule to answer the question what are we going to make the bill of. material to answer the question what does it take to make it and inventory records to. answer the question what do we have and to determine future requirements thus answers. the question what do we have to get The main function of MRP is to guarantee the. availability of a required material MRP is used for planning the supply and production of. materials for internal use assembly production or distribution and it has to be available at. the right time and in the right quantity The planning process includes monitoring of stock. size automatic creation of orders for materials intermediate production or its divisions By. functioning in that way MRP attempts to maintain a balance between the minimum safe. inventory size and the costs Classic inventory management treats every single material. element or product separately not taking account of the frequency of use and consumption. of one part or another The MRP approach is different because a lot of customers order. individual products in packages so that demand is not entirely independent There must be. a connection between demand of nuts and bolts paint and brushes etc MRP recognizes this. connection and attempts to balance demand and supply Vukovi et al 2007. MRP becomes a formal mechanism for priority management in changing production. surroundings The changes in production surroundings are not possible or probable they. are inevitable The function of MRP that is directed at keeping deadlines and on changes in. the production of enterprises is called the Priority Planning Capacity is a factor that is of. equal importance when compared with the previous two factors Wight 1993. Tools for capacity planning in the production enterprise as related to the MRP computer. system are,Sales and operations planning,Master scheduling. Demand management,Rough cut capacity planning, The total development of these tools has led to the next step of planning evolution Due to the.
above MRP shortcomings in the 1970 s the Manufacturing Resource Planning system MPR II. has emerged in the 1980 s Sadagopan 1998 stated that unlike MRP MRP II addresses the. entire manufacturing function and not just a single task The increased functionality enabled. MRP II to check the feasibility of a production schedule taking into account the constraints. and to adjust the loading of the resources if possible to meet the production schedule While. Siriginidi 2000 added the possibility of the integration with other shops MRP II has certain. extensions like rough cut capacity planning and capacity requirements planning for. production scheduling on shop floor as well as feedback from manufacturing shops on. progress of fabrication This last functionality requires a more integrated system. MRP II is more than a material management tool as indicated by Koch 2001 and within the. logistic vision the technology of MRP II manufacturing resource planning offers an. interpretation of both the main problems of manufacturing as material flow and the tools. and procedures needed to solve these problems by realizing a full control system However. Swan et al 2000 observed that MRP II has been widely promoted by technology suppliers. as the definitive best practice solution for production management and control But. enterprises have encountered many problems in implementing MRP II including. organizational not just software However prior to these findings Foxlow 1994 reported. that there is a need for new knowledge based manufacturing software incorporating. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 117. artificial intelligence techniques offers benefits to companies whose products are complex. highly varied or made to order However these are precisely the areas where conventional. MRP II systems are widely perceived as having failed. 2 2 Phase 2 Enterprise resource planning ERP, With the evolution of concepts like MRP and MRP II we arrive at the currently used. concept of enterprise resource planning or ERP The foundation for ERP is the same as in. MRP II ERP has developed as a set of business processes thanks to the development of. information and communication technologies while its conceptual development is just one. step in the evolution of enterprise management Vukovi et al 2007. The ERP systems were also faced with their own implementation and integration problems. The major difficulties with integration however appeared during the augmentation of core. ERP systems with legacy systems, The main reasons to implement the ERP concept are Vukovi et al 2007. Integration of financial information,Integration of clients orders. Standardization and speed of production processes,Stock sizing.
Human resources information standardization, It is essential is to draw a difference between the concept of ERP and the ERP system ERP. systems enable the realization of the ERP concept, 2 3 Phase 3 Customer centric Resource Planning CRP. The range of ERP functions was further expanded at the end of the 1990s to include front. office functions such as sales marketing and e commerce E commerce applications needed. to be connected to back end systems and thus forced many ERP software providers. including SAP PeopleSoft and BAAN to reinvent themselves as CRP providers While. traditional ERP solutions were equipped to support the make to stock configure to order. business model CRP systems are able to meet the e commerce build to order fulfil to. order requirement Effective manufacturing and service delivery in the e commerce model. require customer centric continuous planning instead of the classic ERP assumption of long. planning cycles Bosilj Vuk i Spremi 2005, 2 4 Phase 4 Inter enterprise Integration XRP or ERP II. Since the world of the 2000s has become one of interconnected enterprises creating global. information systems the scope of ERP systems comprises the entire value chain of the. enterprise its customers suppliers and trading partners The main goal of the XRP system is. to provide intelligent decision support capabilities in order to reduce inventory foster. strategic pricing improve cycle times and increase customer satisfaction throughout the. supply chain management and selling chain management To achieve this goal an XRP. model must support the integration of external and internal business activities with the. suppliers and customer s information and processes Bosilj Vuk i Spremi 2005 ERP. systems were also faced with their own implementation and integration problems The. major difficulties with integration however appeared during the augmentation of core ERP. systems with legacy systems Themistocleous and Irani 2001 stated that ERP systems were. then introduced to overcome integration problems However organizations did not. www intechopen com, 118 New Trends in Technologies Control Management Computational Intelligence and Network Systems. abandon their existing systems when adopting an ERP solution as ERP systems focus on. general processes and initially did not allow much customization The problems of. integration within the core of ERP systems have resulted in multiple shortcomings as. reported by DeSisto 1997 that poor ERP integration resulted in high order error rates. incorrect billing and shipping addresses misquoted pricing and discounts and misquoted. out of stock inventory,3 ERP defined, There are a numerous definitions of ERP but in this paper the most popular definitions will.
be presented Wallace and Krezmar define ERP as an enterprise wide set of management. tools that balance demand and supply having the ability to link customers and suppliers. into a complete supply chain to employ proven business processes for decision making. and to provide high degrees of cross functional integration among sales marketing. manufacturing operations logistics purchasing finance new product development and. human resources thereby enabling people to run their business with high levels of customer. service and productivity and to simultaneously lower costs and inventories while. providing the foundation for effective e commerce, An enterprise resource planning system is a business management system that comprises. integrated sets of comprehensive software that can be used when successfully. implemented to manage and integrate all business processes and functions within an. organization They usually include a set of mature business applications and tools for. financial and cost accounting sales and distribution management of materials human. resources production planning and computer integrated manufacturing supply chain and. customer information abjek et al 2008, Klaus Rosemann and Gable define ERP as a logical and compact software solution which. strives toward the integration of all processes in an organization in the aim of presenting a. comprehensive view of the organization through singularity of information and IT. architecture Roseman Gable 2000 whereas Yen Chou and Chang Yen et al 2002. describe ERP as a software which can be used to integrate information through all functions. of organization in order to automate all business processes Rao 2000 described an ERP. system as a software solution to produce the right product on the right place at the right. time and for the right price containing the best industrial and management practice. captured in those solutions It is necessary to emphasize that ERP is not a software software. package or set of computer applications Software packages of ERP systems or ES provide. support for efficient resource planning or ERP The main function of ERP is to integrate. operational procedures within the department along with the MIS and to relocate. organizational resources in changing surroundings ERP systems are integrated software. solutions which are used for resource management of the organization ERP systems are. used for resource planning and also for the concept of combining unique departments. systems and utilizing the methods which are most appropriate for problem solving. The main goal of ERP is to implement the best practices for all business processes It may be. said that ERP is a key business strategy today and the greatest advantage of its. implementation is the ability to fundamentally eliminate multiple systems within an. organization with no more redundancy Implementing ERP on platforms is not always. easy because of the massive re engineering process that involves security quality assurance. and training for members of the organization entrusted to use the ERP systems In addition. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 119. to maximizing the operational effectiveness of the ERP IT managers system security. officers and system developers will find themselves challenged on security and control. issues Vukovi et al 2007,4 Characteristics of ERP systems. When most people refer to the core ERP applications or modules they mean the back. office capabilities to manage human resources accounting and finance manufacturing and. project management functions However major ERP suites from Oracle PeopleSoft and. SAP now provide much more including modules for sales force automation business. intelligence customer relationship management and supply chain management Musaji. There are some significant differences between ERP and non ERP systems These differences. are Musaji 2002, In ERP systems certain control procedures leave no documentary evidence of.
performance For some other procedures the evidence of performance is indirect it. may be included in the program logic or in the operator s instructions Therefore. compliance tests may have to be structured differently in an ERP environment and. observation of the client s procedures may become more important. In ERP systems information is often recorded in a form that cannot be read without the. use of a computer, Financial and business information is often generated automatically by ERP systems. based on data previously entered without further human instructions. Errors that might be observed in non ERP systems may go undetected because of the. reduced human involvement in computerized processing There is a danger that errors. in processing may be applied to a large number of transactions without being noticed. With proper controls ERP systems can be more reliable than non ERP systems This is. because ERP systems subject all data to the same procedures and controls Non ERP. systems are subject to random human error Although computer processing will usually be. consistent errors may still occur for example if the computer is incorrectly programmed. It is difficult to make changes after an ERP system has been implemented Therefore we. should be aware of the organization s plans to introduce significant new systems or to. make major modifications to existing systems It is advisable to review new systems or. modifications before implementation so that a preliminary assessment can be made of. the adequacy of control procedures in order to ensure an adequate audit trail and to. plan any necessary changes in the audit approach, ERP systems vary from the simplest batch controlled type to complex integrated. applications that perform a number of functions simultaneously. 4 1 Implementation of ERP systems, Parry and Graves 2008 noted that implementation of an ERP system does not end with the. system going live Markus et al 2000 It is an ongoing process where new functionality. modules updates and corrections need to be carried out in conjunction with changes in. organisational processes Kremmergaard Moller 2000 These software and process. changes continue throughout the lifetime of an ERP system as it evolves in parallel with the. organisation Many publications have described the ERP lifecycle as having different phases. Markus et al 2000 Markus Tanis 2000 Ross Vitale 2000 Parry James Moore 2005. www intechopen com, 120 New Trends in Technologies Control Management Computational Intelligence and Network Systems. however Markus and Tanis s 2000 ERP lifecycle model has been widely accepted They. refer to an enterprise systems experience cycle and describe four distinct phases within. this journey the Chartering phase during which decisions leading to the funding of an. enterprise systems will be made the Project phase where the ERP software is configured. and rolled out to the organisation the Shakedown phase where the company makes a. transition from go live to normal operations the Onward and Upward phase during. which the company captures the majority of business benefits from the ERP system and. plans further steps of technology implementation and business improvement This final. phase refers to the management of ERP systems that covers ERP operations ERP upgrades. and ERP maintenance such as error fixing and minor enhancements Markus et al 2000. Markus Tanis 2000 Nah Lau 2001 Following initial implementation there are. subsequent revisions re implementations and upgrades that transcend what is normally. considered as management of ERP system Chang 2004 Management activities for software. systems are commonly classified as one of the four distinct types 1 corrective 2. perfective 3 adaptive and 4 preventive Pressman 1992. The figure 1 below shows how ERP can support IT process It shows Modules in an ERP. based integration approach,INTEGRATION,ERP INDIVIDUALLY 2nd ERP SPECIAL.
PACKAGE DEVELOPED PACKAGES APPLICATION S,MODULE S MODULE S MODULE S. OUT OF CUSTOMIZED ERP PACKAGE FRAMEWORK,THE TECHNOLOGY. FUNCTIONAL FIT DEVELOPMENT TECHNIQUE CUSTOMIZATION. AND ADDITONAL,DEVELOPMENT, SELECT ERP PACKAGES DEVELOP ERP INDIVIDUALLY IMPLEMENTATION. TECHNOLOGY,INTEGRATE BEST OF BREED CHOICES, Fig 1 Modules in an ERP based integration approach Thomas Herzog 2006. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 121.
4 2 Critical success factors in ERP implementation. Table 2 presents the main factors revealed from the literature review and that are found to. be vital for successful ERP implementation top management support business plan and. vision re engineering business process effective project management and project champion. teamwork and composition ERP system selection user involvement education and training. AL Fawaz et al 2008,Critical Success Factor References. Al Mashari et al 2003 Umble et al 2003,Top management support. Zhang et al 2002,Loh and Koh 2004 Schwalbe 2000,Business plan and vision. Somers and Nelson 2004 Nah 2003,Davison 2002 Hammer and Champy. Re engineering business process 2001 Somers and Nelson 2004 Nah. 2003 Murray and Coffin 2001, Effective project management and project Zhang et al 2002 Somers and Nelson.
champion 2004 Remus 2006 Loh and Koh 2004,Loh and Koh 2004 Al Mashari et al. Teamwork and composition 2006 Remus 2006 Nah 2003 Rosario. Wei and Wang 2004 Shehab et al 2004,ERP system selection. Everdingen et al 2000 Sprott 2000, User involvement Esteves et al 2003 Zhang el at 2002. Woo 2007 Nah et al 2003 Zhang et al,Education and training. Table 2 Critical success factors in ERP implementation AL Fawaz et al 2008. abjek Kova i and Indihar temberger have given more complex literature reviewed when. a factor in ERP implementation table 3 is about critical success. Top management Al Mashari et al 2003 Al Sehali 2000 Akkermans. support and Van Helden 2002 Esteves Souza and Pastor. Collado 2000 Gargeya and Brady 2005 Gattiker,2002 Gupta 2000 Harrison 2004 Holland and.
Light 1999 Jarrar et al 2000 Mabert et al 2003,Magnusson et al 2004 Parr and Shanks 2000. Skok and Legge 2002 Somers and Nelson 2004,Somers and Nelson 2001 Sternad et al 2007. Umble et al 2003 Yen et al 2002 Zhang et al, Clear goals and Al Mashari et al 2003 Al Sehali 2000 Akkermans. objectives and Van Helden 2002 Gargeya and Brady 2005. Holland and Light 1999 Mabert et al 2003,Magnusson et al 2004 Parr and Shanks 2000 Reif. 2001 Somers and Nelson 2004 Somers and Nelson,2001 Sternad et al 2007 Umble et al 2003.
www intechopen com, 122 New Trends in Technologies Control Management Computational Intelligence and Network Systems. Project team Akkermans and Van Helden 2002 Esteves Souza. organization and and Pastor Collado 2000 Gargeya and Brady. competence 2005 Jarrar et al 2000 Mabert et al 2003. Magnusson et al 2004 Parr and Shanks 2000 Reif,2001 Skok and Legge 2002 Somers and Nelson. 2004 Somers and Nelson 2001 Sternad et al 2007,Umble et al 2003. User training and Al Mashari et al 2003 Al Sehali 2000. education Akkermans and Van Helden 2002 Gupta 2000. Jarrar et al 2000 Mabert et al 2003,Magnusson et al 2004 Skok and Legge 2002. Somers and Nelson 2004 Somers and Nelson,2001 Sternad et al 2007 Umble et al 2003 Zhang.
et al 2003, Business Process Al Mashari et al 2003 Akkermans and Van. Reengineering Helden 2002 Esteves Souza and Pastor Collado. 2000 Gargeya and Brady 2005 Gattiker 2002,Harrison 2004 Jarrar et al 2000 Magnusson et al. 2004 Skok and Legge 2002 Somers and Nelson,2004 Somers and Nelson 2001 Sternad et al 2007. Zhang et al 2003, Change Aladwani 2001 Al Mashari et al 2003 Al Sehali. Management 2000 Akkermans and Van Helden 2002 Esteves. Souza and Pastor Collado 2000 Gargeya and,Brady 2005 Holland and Light 1999 Jarrar et al.
2000 Magnusson et al 2004 Parr and Shanks,2000 Skok and Legge 2002 Somers and Nelson. 2004 Somers and Nelson 2001 Sternad et al 2007,Umble et al 2003 Yen et al 2002. Communication Aladwani 2001 Al Mashari et al 2003 Al Sehali. 2000 Akkermans and Van Helden 2002 Esteves,Souza and Pastor Collado 2000 Gargeya and. Brady 2005 Holland and Light 1999 Mabert et al,2003 Magnusson et al 2004 Somers and Nelson. 2004 Somers and Nelson 2001 Sternad et al 2007,Yen et al 2002.
User Aladwani 2001 Al Sehali 2000 Esteves Souza and. involvement and Pastor Collado 2000 Gattiker 2002 Magnusson et. participation al 2004 Skok and Legge 2002 Somers and. 2004 Sternad et al 2007 Yen et al 2002 Zhang et, Legacy system Al Sehali 2000 Akkermans and Van Helden 2002. management Gattiker 2002 Reif 2001 Somers and Nelson 2004. Somers and Nelson 2001 Sternad et al 2007,Umble et al 2003 Zhang et al 2003. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 123. Consulting Al Mashari et al 2003 Al Sehali 2000 Akkermans. services and Van Helden 2002 Harrison 2004 Magnusson. et al 2004 Skok and Legge 2002 Somers and,2004 Somers and Nelson 2001 Sternad et al 2007. Project Al Mashari et al 2003 Al Sehali 2000 Akkermans. Management and Van Helden 2002 Esteves Souza and Pastor. Collado 2000 Magnusson et al 2004 Reif 2001,Somers and Nelson 2004 Somers and Nelson.
2001 Sternad et al 2007 Umble et,al 2003 Yen et al 2002 Zhang et al 2003. Sponsorship Akkermans and Van Helden 2002 Esteves Souza. and Pastor Collado 2000 Parr and Shanks 2000,Skok and Legge 2002 Somers and Nelson 2004. Somers and Nelson 2001 Sternad et al 2007, System Al Sehali 2000 Akkermans and Van Helden 2002. technological Gargeya and Brady 2005 Gattiker 2002 Jarrar et. al 2000 Parr and Shanks 2000 Somers and,Nelson 2004 Somers and Nelson 2001 Sternad et. al 2007 Zhang et al 2003, Minimal Esteves Souza and Pastor Collado 2000 Gargeya.
Customization and Brady 2005 Mabert et al 2003 Somers and. Nelson 2004 Somers and Nelson 2001 Sternad et, Table 3 Critical success factors in ERP implementation Source Adjusted and updated upon. Sternad et al 2007 in abjek et al 2008,5 Knowledge management era. Knowledge has become the most important input implemented in business organisations. Numerous books articles and special editions of journals have already been devoted to. explaining concept of knowledge and its management in organisations It is not necessary to. dwell on these except to iterate that the key components of successful knowledge. management are strategy culture technology organisation and people Drew S 2000. Different authors are bound to put different definitions of the knowledge management For. example Wiig sees knowledge management as a process of facilitating and managing. knowledge related activities such as creation capture transformation and use Wiig 1997. Brooking understands knowledge management as an activity which is concerned with. strategy and tactics to manage human centred assets Brooking 1997 On the other hand. Bair defines it as a set of policies organisational structures procedures applications and. technologies intended to improve the decision making effectiveness of a group or a firm. Bair 1997 Finally according to Harris knowledge management is a discipline that. promotes a collaborative and integrated approach to the creation capture organisation. access and use of an enterprise s information assets Harris 1998. Knowledge management comprises information communication human resources. intellectual capital brands etc Knowledge Management KM has tactical and operational. www intechopen com, 124 New Trends in Technologies Control Management Computational Intelligence and Network Systems. perspectives KM is more detailed and focuses on facilitating and managing knowledge. related activities such as creation captures transformation and use e g Wiig et al. Enterprises tend to pursue one or several of five basic knowledge centred strategies Wiig. Knowledge strategy as business strategy emphasises knowledge creation capture. organisation renewal sharing and use in all operations. Intellectual asset management strategy emphasises enterprise level management of. specific intellectual assets such as patents technologies operational and management. practices customer relations organisational arrangements and other structural. knowledge assets, Personal knowledge strategy emphasises personal responsibility for knowledge. related investments innovations and competitiveness renewal effective use and. availability to other or knowledge assets within each employee s area of accountability. Knowledge creation strategy emphasises organisational learning basic and applied. research and development and motivation of employees to innovate and capture lessons. learned to obtain new and better knowledge that will provide improved competitiveness. Knowledge transfer strategy emphasises systematic approaches to transfer knowledge. to points of action where it will be use to perform work This strategy includes. knowledge sharing and adopting best practices, Since the importance of knowledge rapidly grows there is a growing need for knowledge.
management especially the management of processes in which knowledge is created and. used Quintas Geoff 1997 Most authors observe human capital as a system consisted of. three elements The first element is intellectual capital It refers to fundamental individual. attributes such as cognitive complexity and the capacity to learn together with the tacit and. explicit knowledge skills and expertise an individual builds over time Gratton Ghoshal. 2003 The second element of human capital is social capital which is about who one. knows and how well one knows them The third element is emotional capital based on a. self esteem courage and resilience These three different elements are highly inter related. Social capital helps individuals to develop intellectual capital by accessing the knowledge. and skills that those people possess Emotional capital brings the integrity and self. awareness to build open and trusting relationships which underpin the creation of social. capital As an example of the world leading company at the field of intellectual capital it is. mentioned Swedish insurance company Skandia which has comprehended the. importance of knowledge and intellectual capital ten years ago For better insight of their. business accomplishments usually observation and furtherance Skandia has developed. the scheme for intellectual capital intellectual capital is composed of several important. following components IC was seen as the sum of human and structural capital Human. capital was defined as the knowledge skill and experience of employees Structural capital. however was the extension and manifestation of human capital into innovations business. processes and relationships with dealers and others Roos 1998. Intellectual capital management ICM and knowledge management KM are. multidimensional and cover most aspects of an enterprise operation There is overlap but. there are also major differences For example KM has tactical and operational aspects and is. more detailed The ICM and KM role is to keep and sustain the present and future body of. knowledge in order to guarantee the firm s long term viability and profitability. Management of knowledge is becoming a new business philosophy and is treated as a. source of power and together with Intellectual Capital represent the enterprise s future. www intechopen com, Erp Concept for Enterprise Management and Knowledge Management Era 125. potential There is considerable overlap in the scope of intellectual capital management and. knowledge management ICM focuses on building and governing intellectual assets from. strategic and enterprise governance perspectives with some focus on tactics Its function is. to take overall care of the enterprise s intellectual capital. The management of intellectual capital is a strategic activity which positively modification. efficiency of enterprises and means that the enterprise Tipuri D 1999. Apprehended the role and importance of employees in resumption of competitive. advantages, Defined its key competence in economic surroundings. Developed the system for creating necessity know how. Installed the system of rewarding, Developed the specific culture for encouragement of experimenting and expanding. total knowledge,6 ERP concept and enterprise knowledge. ERP packages led to better production planning quality and inventory control expense. management and more efficient distribution The primary objective of ERP systems is to. seamlessly improve the internal efficiency through order fulfilment However information. on just one side of the business equation is ineffective in achieving a competitive advantage. in the new global economy The new market demands a distributed knowledge network. which necessitates the participation of the entire value chain from customer to supplier and. in some cases even from competitors Enterprises that strategically maximize the impact of. these new knowledge flows will be in a position of competitive advantage in the emerging. networked economy This requires synergetic relationships between CRM KM and supply. chain within one system Mirghani 2005 According to Thompson and Close 2001 since. the beginning of 1997 the major ERP vendors e g SAP PeopleSoft and Oracle have. attempted to expand their dominant position in the financial manufacturing and human. capital management enterprise applications markets into the increasingly lucrative customer. relationship management CRM market Until recently these attempts have mostly failed. to meet client expectations However their labours are beginning to pay off. Although ERP systems interconnect different departments through the various modules but. to some extent ERPs initially created functional silos by enforcing the business process. workflow through single technology This silo effect needs to be counterbalanced by. implementing KM initiatives that promote the communication and knowledge sharing. among various value network collaborators The KM initiative as supportive mechanism for. ERP will reveal different kinds of knowledge to different stakeholders The conventional. ERP systems have tremendously improved order fulfilment and intra organization business. process workflow but fell short to address the inter enterprise business process. complexities The latter requires a full collaboration ecosystem that attracts valued. customers and shareholders from all directions to share the pertinent business knowledge. The leverage of human intellectual capabilities has been the focus of ERP Directing and. maintaining intellectual energy while attempting a restructuring or re engineering program. is seen as a typically difficult example of this much overlooked area Gartner defined ERP as. a business strategy and a set of industry domain specific applications that build customer. and shareholder value by enabling and optimizing enterprise and inter enterprise. collaborative operational and financial processes This definition transformed the. www intechopen com, 126 New Trends in Technologies Control Management Computational Intelligence and Network Systems.
traditional back office ERP system from internal transactional system into a complete value. network system that incorporates the front office functionalities for various partner. communities Integrating the front office with ERP indisputably offers an information. visibility strategy that pushes the right information to the right people at the right time. through the right communications channels Mirghani 2005. From systems point of view ERP and KM systems need to be implemented simultaneously. in the framework of integrated enterprise information systems Simultaneous. implementation of ERP and KM systems requires incorporation of both KM and ERP into. enterprise business processes and incorporation of KM into ERP system development. Despite the different focus of ERP and KM systems the two systems to some extent have. common goals Both ERP and KM aim at improving business processes to achieve better. business performance with tasks based on data information and knowledge. ERP systems emphasize the efficiency of business processes in enterprises To achieve the. goals ERP systems maintain mechanism for data information consistency through high. degrees of standardization formalization and specialization KM systems devote to the. knowledge processes of enterprises such as knowledge creating storing transferring and. sharing In perspectives of enterprises the ultimate goals of the two systems are helping. enterprise survive in the global market by improving their performance In summary ERP. and KM systems manage the business from the point of views of physical and knowledge. assets respectively, With a proper framework in which ERP and KM can cooperate with each other an. enterprise can benefit from the advantages of ERP and KM and be successful in global. competition,INFORMATION,CONSULTANT QUALITY,SATISFACTION. VENDOR KNOWLEDGE ERP SUCCESS,INDIVIDUAL,ORGANIZATION. ORGANIZATIONAL, Fig 2 Knowledge management for ERP success model Sedera et al 2003. The interrelation between Knowledge Management and ERP has two facets Hosain et al.


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