Enterprise Resource Planning In John Goods Shipping Assignment 2 Answer

Answer :

Research Proposal: Enterprise Resource Planning (ERP)

Sponsor: Seamus Jennings

Managing Director

John Good Shipping

Executive Summary

The use of such IS/ IT ensures increased productivity, better management of business operations, boost in sales, a better understanding of customer demands and motivated workforce. Although several IS/ IT tools such as SCM, CRM and ERP are all essential for business management, the use of ERP in the company has been selected based on the current situation of the organisation. Additionally, the problems and opportunities of the new system have been presented to justify the reason for selecting it. Furthermore, the development and testing of the system have been included along with the necessary post-implementation activities like change and risk management, to convince the sponsors about its effectiveness. However, in order to maintain its competitive advantage in such a dynamic market, it still has room for improvement and integrating an ERP system with its various operations is the right step forward.

Introduction

The use of technology and software in business operations is a necessary trend in the highly digitalised and dynamic world where gaining a competitive advantage over rival companies is essential to remain sustainable in the market. As a result of this, small and medium enterprises (SME) in the UK are gradually adopting and integrating information system and technology in their business operations and segments. The use of such IS/ IT ensures increased productivity, better management of business operations, boost in sales, better understanding of customer demands and motivated workforce. The report has been presented as a proposal for implementing an Enterprise Resource Planning (ERP) system for sponsor organisation John Good Shipping. Although several IS/ IT tools such as SCM, CRM and ERP are all essential for business management, the use of ERP in the company has been selected based on the current situation of the organisation (Zach et al. 2014, p. 309). Before discussing the implementation process of the ERP system, the internal and external environment of John Good Shipping has been evaluated to better under their areas of concerns and focus. Additionally, the problems and opportunities of the new system have been presented to justify the reason for selecting it. The system implementation process has been presented using the System Development Life Cycle (SDLC) framework, which provides an overview of the system analysis and design. Furthermore, the development and testing of the system have been included along with the necessary post-implementation activities like change and risk management, to convince the sponsors about its effectiveness.

Organisational Context

John Good Shipping is an independently owned logistics company operating in the UK. Being one of the most promising medium-sized enterprises in the UK market, the company has a lot of opportunities for future growth and development. Established in 1833 by John Good, the company was initially run by the family and operates as a freight forwarder and shipping agency (Martin et al. 2020). With headquarters in Kingston upon Hull, UK, the company ships goods all across the world and is currently quite reputable in the UK market. One of the most positive aspects of the company is that it has a very slow staff turnover rate where more than half the employees have been working for five years or more for the company. Their unique shipping technology is popular as it allows customers to interact directly with the system without any company intervention. In addition to this, the company has also gained a lot of loyal customers due to their charitable activities under Mathew Good Foundation established by the joint managing director. Each and every organisational move is operated complying with their core values while offering company profits to implement social incentives for their surrounding communities (Real Business 2020). With a lean management structure and agile approach, the company is focused on making long-term business decisions.

However, in order to maintain its competitive advantage in such a dynamic market, it still has room for improvement and integrating an ERP system with its various operations is the right step forward. The use of such an information system can turn out to be beneficial for them if they are able to make necessary management and structural changes associated with it.

Internal and External Company Environment

In order to evaluate the current internal and external environment of the company, SWOT analysis and Porter's Five Forces framework has been used in the report. Additionally, the current market trend about the use of IS/ IT has also been discussed for selecting an appropriate system.

SWOT Analysis

Table 1: SWOT Analysis of John Good Shipping

Source: Created by Author

Porter’s Five Forces

The threat of New Entrants| Low: As the shipping and logistics industry requires high capital investments which makes chances of new entrants minimal.

The threat of Substitute| High: As other small and medium enterprises in the freight forwarder business are already using advanced information system for analysing various aspects of the business. They can develop strategies to gain a competitive advantage over John Good Shipping.

Bargaining Power of Supplier| High: With IS like ERP and CRM systems are already in demand for medium and small enterprises, suppliers are very selective about working for the most promising company. Despite their advanced shipping technology, suppliers might refuse to work with them due to their outdated business analytic tools.

Bargaining Power of Customers| Low: John Goods Shipping Company uses one of the most advanced shipping technologies that allow customers to interact directly with the system (Martin et al. 2020). As a result of this, customers prefer this company over other similar alternatives which give the company an upper hand.

Competition in the Industry| Low: Due to their cheap pricing and use of advanced shipping technology, not many companies operating at the same price range can provide similar customer service quality.

Figure 1: Porter Five Forces

(Source: Dobbs 2014, p. 27)

Use of IS/ IT in the Company and Current Market Trend

The freight forwarding business already requires some of the best technologies which make companies operating in this sector highly digitalised. With the technological boom in the corporate sector in the last decade, not only large multinational corporations, but even small and medium enterprises have gradually adopted the use of information system for integrating their various business operations and segments (Leon 2014, p. 212). Use of ERP systems like SAP, Oracle and Microsoft AX is quite common in the UK companies which provide them with better insights on the dynamics of business and market. As business models and structures involve a complicated process, integrating them using AI and technology instead of manual management, tend to yield better results (Rajnoha et al. 2014, p. 167). With the use of an appropriate information system, John Good Shipping is lagging behind other similar enterprises in terms of business strategies based on analytics. As the company already has the upper hand due to their advanced shipping technologies, using an ERP system would help integrate its business functions and help them gain competitive advantage and maintain sustainability in the market.

Figure 2: ERP Market Share

(Source: Woodie 2018)

Opportunities and Problems in the Proposed IS/ IT

Problems: Although the implementation of an ERP system in John Good Shipping can provide multiple benefits and help the company integrate its business processes, there are some major drawbacks associated with this system that should be considered by the company before installation. The most crucial problem is that ERP systems are quite expensive, and third-party hiring consultants for the implementation process might exceed total budget which is about 54% (Carlton 2017). As the company has already invested in advanced shipping technologies, arranging resources for such an information system might be difficult. In addition to this, after the installation system, the company would still need an experienced workforce to operate the system properly. This can take the hiring of newly trained employees or train their existing ones which are again costly (Elmonem et al. 2016, p. 5). As the ERP system integrates all departments within the organisation, any form of resistance in communication within the company can undermine the software efficacy (Bharati and Chaudhury 2015, p. 123). Moreover, even with hired professionals and administrators to operate the system, the company would need to change the business practices to align it with the system. Finally, the installation of an ERP system does not show immediate effect, and the company might have to plan long-term before they can reap its benefits.

Figure 3: ERP Implementation Process

(Source: Elmonem et al. 2016, p. 5)

Opportunities: The chosen information system for John Good Shipping is an Enterprise Planning Resource (ERP) system which is a business management software used to integrate the business processes in real-time. One major benefit of using such a system is that it can optimise the various business processes like supply chain, manufacturing, services, HR, procurement and finance. Due to the use of Big Data and AI to analyse company-related information, the company can have access to reliable and accurate information in real-time (Jagoda & Samaranayake 2017, p. 212). Moreover, the flow of information within the organisations and its departments becomes swifter due to the use of ERP systems. Companies can even get rid of unnecessary business data which minimises the chances of redundancies. While improving customer service quality, ERP systems can also increase performance and help the company make long-term decisions at an affordable price.

Justification of the Proposed IS/ IT System

From the perspective of information system consultant, an ERP system was deemed ideal for Joh Good Shipping company based on their current internal and external environment and evaluating the pros and cons of the system itself. In order to better demonstrate as to why the ERP system is ideal for the company, a System Development Life Cycle (SDLC) framework has been used which would make the proposal convincing for the sponsors of the project. With the help of an SDLC, the implementation process of the ERP system can be broken down in a systematic manner (Khan, Parveen & Sadiq 2014, p. 534). The SDLC framework primary includes five major stages, of which only a few most relevant to this project has been discussed. The first stage is the planning step, where the requirement for the implementation is analysed. This is followed by the design stage and implementation stage. Once the installation of the software is complete, it is then tested and finally requires maintenance to track the business evolution.

Figure 4: SDLC Stages

(Source: Khan, Parveen & Sadiq 2014, p. 534)

Planning: ERP is generally referred to as a business management software used by business organisations to integrate their business processes and develop a centralised control system which would operate all the other systems. The ERP uses technology and software along with Big Data and AI, which helps the company make long-term business decisions and develop strategies based on the system outcomes (SAP, 2020). ERP can be used to integrate the various business processes such as financial management, human resources, supply chain, manufacturing process and even procurement and services under a centralised main system. ERP can use various technologies ranging from AI to machine learning and allows visibility of all the business aspects. John Good Shipping being a medium-sized logistics company, maintaining the business operations is a complicated process and requires heavy investment in the shipping technologies as well. However, due to recent growth in the company’s business structure and expansion in Shanghai and Istanbul has made it quite difficult to carry out management orders and information across all sectors (Martin et al. 2020). Moreover, customers interacting with the system due to their advanced technologies, also requires necessary evaluation to further improve customer services while also increasing their profit margin. Accumulating and analysing data from all departments manually is a strenuous process is subject to several human errors. Using an ERP system would automatically integrate the data from all areas and analyse them using AI and machine learning. Apart from assisting in achieving organisational objectives and development of strategies, the ERP system would also ease out the employee efforts motivating them towards their other job roles.

Feasibility: John Good Shipping already uses a lot of financial investments for their shipping technology. As the installation of the ERP system is quite an expensive process, the company can redistribute its resources for both technological systems and develop a modified business model based on it. Moreover, an integrated central system to control all aspects of the business would allow the company management more control over the included areas and optimise the identified weaknesses (Antoniadis, Tsiakiris & Tsopogloy 2015, p. 299). As the workforce is quite experienced in the use of technology, training them for the ERP system would not take much effort or time. This justifies that the implementation of the system is economically feasible with adequate availability of human resources necessary for operating the new system. However, a cost-benefit analysis is necessary to assess the expenses of installing the system, training staff members, purchasing necessary hardware and software against the future benefits that can gain from the system.

Evaluating Alternate Systems and Process of Selecting the Ideal Solution

As the installation of an ERP system and training of employees is quite expensive, it is important to consider the available alternatives to ERP systems. If the company is unable to increase its profit margin and sales in the long-term due to this implementation, the expense for this installation would outweigh its benefits and result in a loss for the company. Due to a lack of capital resources like large corporations, John Goof Shipping can always opt for a lower cost and risk approach which would provide similar results (Bahssas, AlBar & Hoque 2015, p. 73). These alternatives can be business process reengineering or even organisational change management, which can be developed to form a more centralised and integrated approach to business operations. A more technically focused ERP implementation is also possible although that requires the usage of technical resources which might be harder to acquire. However, having evaluated the other associated impacts of the alternatives, it can be stated that the use of an ERP system is ideal for John Good Shipping.

Figure 5: ERP Implementation Process & Training

(Source: Bahssas, AlBar & Hoque 2015, p. 74)

System Analysis and System Design of the Proposed System

Figure 6: ERP system design

Source: Created by author

Business Requirement: In order to initiate the implementation process of the ERP system in John Good Shipping company, it is necessary to identify and gather all the necessary requirements of the system. While the software itself can be purchased from a third-party vendor by licensing it on a monthly or yearly basis, the company should also need to hire professionals that would set up the system and even customise it based on the needs of the organisation and its goals. The necessary hardware and software tools should also be required, and an appropriate data collection method is necessary to ensure the AI is fed the necessary information to perform an analysis (Bradford 2015). As the company needs to integrate its various business aspects under a single central unit, using the ERP system is the perfect choice for John Good Shipping.

Process Diagrams: In order to properly use the analytical tools and AI of the ERP system, it is better to use advanced computer-mediated technology. As the ERP system has its own automated analytical modules, the modelling diagrams for it can be provided by the hired administrators and professionals. The use of CASE tools seems to be appropriate for such a purpose as the process is quite simplistic and yields efficient output.

Designing the New System: Although John Good Shipping will be providing necessary training to their staff members for operating the ERP system, however, technical perfection cannot be expected of them. For this reason, the underlying integrating and intelligence functions are far too complicated for the existing employees of the company (Mittelstädt et al. 2015, p. 448). For this reason, the company has to rely on the graphical user interface, which would allow the users to initiate the necessary analytical processes of the system by simply click or touch of a graphic button.

Development, Testing and Implementation of the System

John Good Shipping company already has the necessary technological and digital infrastructure to implement the ERP system due to its use of shipping technologies. However, installing computers and IoTs at every department would ensure the smooth sharing of information among them which is crucial to the functioning of the ERP system. Based on the current trend in the UK, using ERP software like Oracle and SAP is a perfect choice for the company as they provide flexible user operations along with graphical user interface for carrying out the analytical processes (Ke et al. 2015, p. 112). Apart from the other associated actions for implementing the new system, it is also essential to run a testing process to ensure minimal errors during the final run. Such testing might include integration testing, system testing and user acceptance testing as they reduce the chances of mismanagement errors and could affect the general business operations in the company. While the installation is ongoing, the company can start training their employees by trained professionals to ensure their immediate engagement once the implementation is complete. However, these training hours should be conducted after general office hours so as not to affect the general flow of business operations. 

The third-party vendors or consultants can provide the system administrators who would also look after the training process of the employees. Once the employees are accustomed to the regular usage of analytical tools and graphical interface, when performing in real-time, they can be confident and motivated towards their tasks. However, it should be kept in mind that all segments and departments of the organisation should be included in the system as ERP systems can function effectively only if the information is shared among all the segments. In addition to this, the company should never apply the new system in all areas simultaneously as getting used to a new system requires time. Only implementing in one or two segments at a time while keeping the others same would make the employees gradually get accustomed to the new process and provide enough time for the business process reengineering and modification of business practices (Harwood 2017, p. 112). It is also necessary to evaluate the privacy and security risks associated with use of ERP system beforehand. As a lot of confidential data will be fed to the AI of the ERP system, any form of data theft or security breaches can expose these data to other rival companies and hamper the business growth of the organisation. It is quite evident that development, testing and implementation processes are all essential and carried out effectively.

Post-Implementation Activities

As the core purpose of the ERP system is to integrate all business processes under a single unit, the company should ensure that the flow of information between the departments is smooth and mutual. Moreover, aligning the organisational goals and objectives with the ERP system functions is also essential for effective use of the system. The analysis made by the ERP system AI would be assessed and future strategies will be developed based on them to make proper use of company data and information (Ha & Ahn 2014, p. 1065). In addition to this, the company would need to hire a system administrator from whom the employees can get assistance from time to time when faced with any issues or difficulties while using the system. Once the ERP system is fully functional, all the identified areas of weaknesses should be properly evaluated by the company management and necessary improvements in those areas should also be prioritised.

Change, Risk and Project Management after System Implementation

In order to align the organisational goals and objectives with the ERP system functions and analysis, John Good Shipping needs to make modification in the organisational and management practices and also adopt a better project management model. However, such changes cannot be pre-determined and should only be possible once the ERP system analyses the integrated information from all aspects of the company. Moreover, the change and risk management approaches of the organisation should also be modified based on the analytical outcome of the ERP system. Furthermore, the distribution of the available resources should be reconsidered to ensure all aspects are provided with their requisites and are able to function at their full potential.

The risk management for ensuring effective implementation of the ERP system can be performed with the help of a risk register.

Table 2: Risk Register

Source: Created by Author

Conclusion

Considering the various aspects covered in the proposal, it is evident that the ERP system is necessary for John Good Shipping company to achieve their organisational goals and objectives. The evaluation of the benefits and problems of the ERP system and contrasting it with the current situation of the company has justified the selection of this information system. Moreover, the system design and analysis along with the management changes in the organisation, would be enough to convince the sponsor about the necessity of this system in their company.