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Abstract

The
purpose of this article is to build and validate the necessity for small to
medium-sized enterprises (SMEs) in order to adopt an enterprise resource
planning (ERP). Which would be based on the SME’s environmental, organizational
culture, and ability to adopt technological changes.

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Introduction

In
that location are excellent tools like Six Sigma Quality, Factory Automation,
Design for Manufacturability etc. with tremendous potential. But, none of them
will ever give their full potential unless they are matched with effective
forecasting, planning, and scheduling processes. Enterprise Resource Planning
(ERP) is the solution, which is a direct outgrowth and extension of
Manufacturing Resource Planning.” 

Towards the close of last century, it was out of
coercion and not by simple choice that large industrial houses went in front on
the unchartered and an expansive path of ERP adoption. The un-standard,
non-synchronized data, misaligned and broken information flow coupled with
non-refined business processes were becoming a major hinderance in their growth
story.” 

This
possibility became a reality only with the coming up of ERP Solutions from
giants like SAP, Oracle, Microsoft and many more, duly supported by launching
of robust servers and dependable networks. But over the last decade, with
technology becoming simpler and easily available, with the coming up of ready-to-use
off-the-shelf ERP packages with shortened implementation phase, the emergence
of cloud computing (with pay as you use option), requiring minimum in-house
skill set, the possibility to become leaner and efficient organization, now
looks close to reality for SMEs.” 

Indian Context

Compressed product
development cycles, cut throat domestic and worldwide competition, economic
downturns, rapidly shifting customer demands and volatile financial markets
have increased the pressure on SMEs to come up with effective and competitive
capabilities to endure and win. Enterprise resource planning (ERP) is often
considered as one of the solutions for their survival.”

“Up to mid-1990s, the SMEs sector in India had
operated under much-protected economic regime characterized by limited
competition and highly regulated business environment. This business atmosphere
had resulted in a limited focus on process efficiencies, centralized control
structures, highly formalized business settings and lack of professional business
practices. However, following the economic liberalization and opening up of the
economy to foreign multi-national companies, Indian SMEs have to adopt modern
business practices and strategies, which in turn can provide them a cutting
edge over its competitors.”

“ERP software integrates different functional spheres
in an organization – by linking the entire supply chain thus aiming at adapting
best industry practices, for providing the right product at the right place at
the right time therefore leading to lowest cost. ERP has the ability, once
implemented, to integrate all major activities across the organizational
departments using an integrated software solution. In effect, this can greatly
assist the organization to carry out its operations in more effective and
efficient ways and allow the workforce to interact and collaborate in an
information-enabled environment. Using ERP, large manufacturing firms are
linking up with their suppliers and

Customers located in
any part of the world. Employees are sharing information with each other on a
real-time basis. ERP can expedite responses to customers’ orders and inquiries,
reduce inventory, shorten production cycle time, improve quality, raise the
efficiency of delivery of products and services and strengthen in-company
coordination. After concentrating on the large-scale firms, the ERP vendors are
now targeting on SMEs. In recent times, many multinational companies have
limited their operations to partnering only those midsize companies that are
using compatible ERP software. Hence, it becomes all important for many midsize
companies to adapt their business model and adopt ERP software that is
compatible with the largest enterprises with which they trade. However, ERP
implementation in SME and large organization cannot be viewed at par as there
is a vast difference in characteristics between two. In SMEs, there are scarcity
of resources in terms of management and manpower, R&D, finance, marketing,
etc. SMEs deal with small number of customers and operating in limited markets.
They have flat and flexible structure.”

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