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Results of Implementing ERP System in a Multi-plant Enterprise
Elzbieta Wyslocka1,*
1Czestochowa University of Czestochowa, Department of Management, ul. Dabrowskiego 69, 42-201 Czestochowa, Poland
Abstract. Enterprise Resource Planning (ERP) systems enhance productivity and working quality by
offering integration, standardization and simplification of multiple business transactions. The article
discusses company's internal processes and their complexity resulting from expansion of the company to
new plants. Using a case study of the implementation of one of the Polish ERP systems of Macrologic in
several multi-plant enterprises, it demonstrates how it improved the functioning and organization of
processes in these companies.
Introduction
In-depth analysis and interpretation of data is nowadays
one of the most important elements of decision-making
for most businesses. Due to growing amount of
information and needs related to their analysis,
companies are increasingly investing in IT solutions that
allow not only collection of records in data warehouses
but also their compilation, interpretation and graphic
presentation. The ERP (Enterprise Resource Planning)
system facilitates making strategic business decisions
based on reliable data. It is a key element in maintaining
business continuity. It provides easy access to data from
all possible areas of the business. In literature, factors
influencing the success of enterprise ERP
implementation have been quite widely discussed, as
well as the need to improve approaches and
implementation methods. [1-4] Some of the works are
also devoted to the specifics of multi-plant enterprise
management and the functioning of their ERP systems
[5-7]. In the article using a case study of the
implementation of one of the Polish ERP systems of
Macrologic in several multi-plant enterprises, it
demonstrates how it improved the functioning and
organization of processes in these companies.
1 ERP system as a tool supporting
planning and decision-making in
enterprise management
Decision-making process in modern businesses requires
access to up-to-date and accurate information. This is
one of the challenges companies face and a key factor in
corporate decision-making. Often, company information
is dispersed in several databases or several programs.
For example, inventory data is in one database and
customer information in another. In many cases,
databases are isolated or autonomous systems (not
integrated and independent) (Figure 1).
Fig. 1. Structure of the isolated databases systems.
As illustrated in Figure 1, in case of isolated systems,
storage, production, sales, and customer information are
stored in several databases / programs. Since it is not
possible to share information within a single system, it is
difficult to use it. Enterprise Resource Planning (ERP) is
very useful for making business decisions. This system
collects data, organizes and integrates all areas of
company's operations and supports resource
management, accounting for maximum efficiency.
Integration involves use of a common database within a
single system, so that the company uses only one set of
data. ERP system optimizes costs and inventory,
accelerates information exchange, and streamlines
communication, helping to improve customer service
and shortening fulfillment of orders. The process-based
(modular) structure of the ERP System integrates
information from various processes taking place in the
enterprise, which provides full support for relevant
business decisions in companies from different
industries, so this system is applicable in both
manufacturing, trading and service providing enterprises.
Such a structure of ERP system allows to deploy all or
selected items simultaneously or in the right order.
Each of the modules can support handling of individual
processes in different areas of the company: in sales,
x physical
location of
products,
x current
inventory,
x quantity of
products
booked
Warehouse
x quantity of
scheduled
products for
production,
x quantities
currently
produced ,
x production
capacity
Production
x quantity of
finished
goods for
sale ,
x confirmed
sales orders,
x customer
information
Sales
department
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© The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative
Commons Attribution
License 4.0 (http://creativecommons.org/licenses/by/4.0/).
* Corresponding author: wyslocka@zim.pcz.pl
supply, stock, production or accounting. The advantage
of modular structure of the system, however, is its
integrity. Modules linked together represent a functional
system, making it more efficient by sharing information
in real time.
A complete ERP system with all modules, regardless of
industry, is usually chosen by medium and large
companies. They receive support for resource
management and process monitoring, business
operations settlement, and assessment of financial
standing.
The use of ERP systems in enterprise management is
steadily increasing, however, the quality of data
provided by them should be taken into consideration.
Conducted research [8] shows that it is very important to
match technology to tasks (task-technology fit - TTF).
Organizations are embedded in developing environments
that poses new challenges. They require continuous
adaptation of information systems or organizations to
contextual understanding of data quality. Although ERP
systems are considered durable, it is important to
remember to modify them as their mismatch can affect
data quality beyond typical functionality. Ensuring TTF
will be an increasingly challenging task with growing
non-routineness.
In order to fully utilize the potential of ERP system, its
functionality should be extended to include the planning
of resources of its customers and suppliers. The process
of creating an extended ERP system must include
business partners (customers and suppliers), taking into
account different technological and financial statuses of
their customers and suppliers. Thus, an effective and
flexible, extended ERP system must contain both high-
end and low-end solutions, and also understand that full
inter-organizational integration may not be possible [9].
Research conducted on the ERP implementation process
in enterprises indicate that the assistance provided by
external consultants during ERP implementation is
essential. Knowledge transfer is an extremely important
factor in the success of an ERP system. It has also been
proven that passing on knowledge about the technical
aspects of ERP systems is more important than effective
communication and conflict resolution among members
of an organization. It also seems that top management
assistance in ERP implementation is less important than
acceptance by its users [3]. ERP systems enable
businesses to run accounting and manage different areas
of business. They can, for example, support distribution,
service and production. The ERP system is often set up
to match the business processes in the company. As a
rule, companies operating in a particular industry are
pursuing similar business processes. However, some of
them implement their own specific processes. The ERP
system can be modified and configured to meet the
company's requirements in this area.
2 Management in multi-plant company
Managing an enterprise involves making many difficult
decisions. Especially in multi-plant companies,
managers encounter various dilemmas. Particularly those
involved in human resources management are important.
The question arises as to how industrial relations in
subordinate plants are controlled, but at the same time
leaving them with some degree of flexibility? One way
to solve this problem is to negotiate at the plant level, but
to address certain issues, solutions from the central
human resources department can be implemented [10]. It
is important to take initiatives in personnel management
and to use factors that seem to provide stable industrial
relations in circumstances that, as evidenced by
experience, tend to favor conflicts. Problems are
associated, for example, with the high proportion of the
workforce rewarded for the results, the differentiation of
earnings and the difference in earnings between factories
[11].
Modern production management allows for higher
efficiency of production processes. By using the right IT
tools, companies can cut costs, increase productivity, and
improve relationships with customers and suppliers. To
increase the productivity of all plants in the network,
multinational corporations develop and implement multi-
sector management improvement programs. Numerous
studies described in the literature on systems for
improving the quality and effectiveness of multiple
facilities are systematically carried out [6]. A decisive
step towards improving the productivity of multi-plant
companies is to embrace their operations with one link,
which is the ERP production system.
A separate problem with the operation of large
companies is the coordination of multi-site purchasing
activities to minimize the total cost of purchase. In the
literature, an integrated model of linear programming
and multitasking approach has been proposed, which are
ideally suited to coordinating purchases in multi-
component organizations to achieve global profitability.
Proposed model provides an effective coordination
mechanism that helps multi-plant organizations and
suppliers maintain availability of materials in the right
amount, at the right quality and at a minimal cost [5]. On
the other hand, it should be noted that supply chain
management is suitable both for large multi-plant
enterprises and for small organizations [12].
It also seems that problems of material flow management
in the supply chain, where links belong to the same
owner, are similar to those that occur in the supply chain
where organizations are not linked by a single owner
[13]. In addition, the level of integration between
independent companies may be greater than that of
formally dependent companies. With this in mind,
companies can choose between vertical integration and
supply chain management, that is, between the costs and
benefits of control, from the owner's position, and those
that are rooted in indirect control through relations [7].
In solving all of these and other problems that arise in
managing a multi-plant enterprise, ERP system may be
helpful. It should be well configured, adapted to the
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processes taking place in the enterprise and its
organizational structure.
3 Structure and functions of Macrologic
ERP system
A classic, integrated ERP system allows to manage all
business operations. It supports top executives -
generating statistics, reports, and analyzes, providing
information needed to make decisions.
With the use of information technology and modern
systems, business processes conducted in operational
management - production, logistics, sales and marketing
as well as in auxiliary activities - accounting, wages and
fixed assets are modeled. Thanks to sharing and
exchanging information (information flow), it helps to
forecast and plan future activities using the full
knowledge within the enterprise (finance, controlling)
and the maintenance of quality standards (quality
management).
In response to growing competition and declining
margins, companies increasingly use optimization of
production processes. The whole company benefits
because Macrologic ERP Manufacturing provides data
relevant to other the areas of management: sales,
personnel, finance, and fixed assets. The comprehensive
solution makes it easy to record and plan production
staff working time, optimize utilization of machines and
equipment, and manage budgets in production processes.
ERP Manufacturing module provides effective
management support at all stages of production:
planning, product manufacturing, accounting and
reporting for the board. Management information
generated in Macrologic ERP Production is used by
other Macrologic ERP modules: Sales, Logistics and
Personnel.
The amount of knowledge that companies gather in
collecting data makes it often difficult to use the data
effectively. Effective customer relationship management,
sales processes and logistics within the company are
possible through the use of tools provided within the
Macrologic ERP Logistics. Two solutions are used to
support sales processes: Macrologic CRM and
Macrologic ERP Logistics. Used separately or together,
support activities in the area of customer acquisition,
sales and warehouse management.
Using software in the area of customer relationship
management allows preparation of proposals that meet
customer needs and requirements, building contact
history, and supporting businesses in developing
effective promotional campaigns. These activities
complement the analysis of the cost and profitability of
sales processes for which the logistics department is
responsible. In contrast, the use of ERP in the
management of sales processes allows companies to
increase efficiency of their trading activities, which in
practice translates to shorter sales cycles, improved
market forecasts, and analysis of shopping carts. This
enables total sales management, from procurement,
through execution, to delivery to the client.
Human resources processes, starting from selection and
employment, through ongoing updating of employee
records, payroll, social security and tax settlements, are
all needed to begin the process and deliver them
effectively. In Macrologic ERP Personel staff
management is not divided into individual tasks. The
program works on the entire personnel management
process: from the recruitment process to the end of the
contract. This allows control of all events to flow
smoothly, and supervisors receive all information
necessary to consciously shape the future personnel
policy.
Especially in multi-plant enterprises, benefits of
implementing the program are significant:
xfast data flow between people involved in the
recruitment and servicing process,
xability to adapt the program to needs of
organization's staff both at the headquarters and
in the subsidiaries,
xfaster access to essential employee data for all
authorized people,
xability to react quickly to staff changes in the
organization.
Also in the area of enterprise financial management,
planning and analysis is much easier thanks to the use of
the Macrologic ERP Finance system. It allows to track
financial situation, streamline payments and settlement
processes, support company's asset management, create
current financial reports and forecasts. Multidimensional
analysis provides managers with decision-making
knowledge and help to develop new strategies in
businesses. In every company, a lot of information
concerning the business "wanders" down the corridors,
between plants, departments, branches, employees. If
this information is organized, one can plan systematic
operational activities. If the company and its managers
are able to analyze this information in the most intricate
levels, then forecast, plan and settle accounts, we are
talking about an action strategy, and support for this
project is the Macrologic Controlling Information
System. Controlling system allows to create
multidimensional OLAP analysis. Data are collected in
many dimensions in the so-called OLAP cubes, which
can be freely formed. Multidimensional analyzes enable
strategic decision making from the company's point of
view. They may be associated with optimizing costs in
selected areas of business or choosing the best deals for
business partners.
The software base contains a rich set of predefined,
standardized processes that allow for quick launch. Each
organization has its own habits and requirements
resulting from its "know-how". Therefore, standard
processes are defined in the first step. However, if they
require changes - any modifications to the processes are
possible. This facilitates the BPMN process modeler - a
tool that allows to change defined processes, and most
importantly, every change is immediately reflected in the
ERP system. Managers can quickly adapt existing
processes in the company to Macrologic ERP, because
the modeler allows to create very different processes
tailored to the individual needs of the enterprise. The
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process modeler, built into the ERP system, and constant
process information provide a bird's eye view on the
company. It is an easy way to identify barriers and
blockades in the business. Recognizing what needs to be
improved (with measurable indicators in the process
diagrams), each manager can simultaneously make
changes to the way the company operates and the ERP
system. If an organization, for example, develops
(creates new plants) or restructures, the manager can
easily change processes by modifying diagrams. By
using a process modeler, any company can easily adapt
existing processes and add new ones to the system. The
program will automatically reflect changes for all
employees affected by the process.
4 Examples of implementation of
Macrologic ERP in multi-plant
enterprises
There are many companies where implementation of
ERP system has brought tangible benefits. Some of them
will be discussed on the example of ERP Macrologic
implementations in selected multi-plant enterprises. The
Industry Group, which is a world-class expert in
implementing projects involving machinery and
equipment for the mining industry, can be the first
example. The quality of company's products has been
confirmed by numerous Polish and international
certifications and customer trust expressed in long-term
business relationships. Implementing Macrologic ERP
enabled the company to reduce IT maintenance costs. In
addition, Industry Group has significantly improved the
implementation of financial management processes,
which is particularly important in the case of a parent
company. Implementation of the Production module
contributed to the improvement of production processes,
especially in strategic planning, which translated into
unit productivity growth of 20%, production increase of
30% and reduction of failure compensation buffer up to
24 hours. The company had also succeeded in increasing
the efficiency of warehouse management and improving
customer service, which helped to reduce inventory by
40%. The benefits of raising the work culture of the
organization are also important.
In another example of ATLAS Group one of the
dynamic growth drivers are new acquisitions that are
important both in expanding the offer and in increasing
the scale of operations. Following the centralization of
human resources operations at the ATLAS Group, it was
necessary to introduce a common IT system that would
improve HR and payroll while preserving the specifics
of individual companies. Diversified personnel policies,
several work systems, and various wage regulations
required the use of IT solutions that would enable
evolutionary staffing and payroll adjustments in the
companies they acquired to be in line with company
rules. Also, in a distributed organization like ATLAS, it
was necessary to introduce employee self-service, which
facilitated access to their own HR-payroll data. The
decision to introduce extended billing periods prompts
us to look for tools to automate the activities of creating
graphics and to facilitate the control of planning and
accounting of working time in accordance with the
Labor Code. The company headquarters also needed
improvements in delegation service. Each year, ATLAS
accounts for several thousands of domestic and overseas
business trips. On the one hand, the Company sought to
facilitate the control of the use of company and private
car delegations and, on the other, would ensure
compliance with legal regulations.
Due to the fact that the companies of the Group have
different business profiles - production, mining,
transportation or power industry - and their own
organizational characteristics (e.g. different
remuneration systems), ATLAS has sought a solution
that would take these differences into account.
Implementing a system that supports group management
usually means "stiffening" the rules of action to unify
principles throughout the group or even centralizing HR
and payroll. The Company wanted the system to allow
organizing the service in subsidiaries in a way that have
a common environment within the Group, but at the
same time maintaining its own, effective logic.
Macrologic proposed a flexible solution that met these
expectations. The proposed system allowed, among
others handling various remuneration systems within the
Group.
In the case of the Polonia Logistyka company, dynamic
development of the company and establishment of new
locations in the field have led to a situation, in which
previously used IT solutions became ineffective.
Difficult flow of information on transport orders, their
profitability, use of transport fleet, and the exchange of
this information between departments have been serious
barriers to operations of the company. Therefore, the
management board has decided to purchase and
implement a solution that would collect all relevant
information regarding transport and forwarding orders
on the one hand, and on the other it would allow access
to them from various locations of the Company.
Additional requirement expected by the management
board was that the solution managing transport operation
should communicate on-line with other systems used by
the Company. As a result of works carried out, the basic
aim of the project was to connect all branches of the
company to a single information exchange system. Thus,
the management of Polonia Logistyka was given the
opportunity to analyze the current condition of the whole
company through cross-analysis reports on, among other
things, orders, costs of service or sale of services.
This is the basis for taking strategic activities for faster
and more effective business development. Employees of
Polonia Logistyka have been able to work remotely from
virtually anywhere where is access to the Internet. The
vehicle loading visualization mechanism allows for
better planning of the use of means of transport, and the
route planning mechanism facilitates optimization of
journeys. This greatly improved the work of sales
representatives who at any time can check the load on
cars and properly plan further orders. It has managed to
largely eliminate empty passages of cars, which
significantly influenced the optimization of costs. On the
other hand, the route planning mechanism allows firstly
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to optimize the route, and secondly, drivers receive a
fully-defined route, which in turn affects their
performance. This creates a possibility to handle more
transport orders. In addition, any driver, regardless of the
car used, has the possibility to accurately record fuel and
route settlements. The cost analysis of car usage (also
from the finance and accounting program) provides
accurate accounting for drivers. Communication between
forwarding software and accounting and finance
programs have completely eliminated errors that had
occurred earlier when transmitting data between the
previous system was done manually, and significantly
improved performance of accounting department.
5 Conclusion and Future Work
Modern management can be considered as a single
sequence of decisions and creation of conditions for
effective implementation of the decision. Management
should be treated as a form of practical decision-making
activity concerning the best use of existing assets,
capital, and human resources in order to fulfill the
assumed tasks to ensure sustainable business growth.
Making decisions requires transforming information into
a collection of variants and choosing the best one - final
decision (optimal), instruction for further action. So the
quality of information, its up-to-date, becomes crucial in
the management decision-making process. IT is an
indispensable tool of modern management. Supporting
the decision-making process by an ERP system brings
measurable benefits. This system collects data, organizes
and integrates all areas of a company's operations and
supports resource management, accounting for
maximum efficiency. The case study of the
implementation of ERP Macrologic discussed in this
work confirms this thesis. Especially in the case of
multi-plant enterprises, the effects of information
integration are clearly visible. It is important that the
ERP system allows unification of certain solutions, at the
same time individualizing and adjusting them to the
needs of individual plants.
ERP software is designed to help companies streamline
their operations, but can also complicate them if the new
system does not meet user expectations as a result of
incorrect decisions during implementation. We need to
involve employees in cooperation with the managerial
staff and the system vendor so that the company gets
practical software that improves the efficiency of its
business processes.
In order to better analyze the impact of ERP system
implementation in multi-plant enterprises on
management effectiveness in the future, quantitative
studies assessing the change in economic categories,
such as costs and revenues, must be conducted. On the
other hand, the implementation of an ERP system based
on processes occurring in the enterprise requires a
detailed analysis of these processes.
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