Page 646 - Introduction to Business

620 PART 6 Managing Business Operations, Management Information Systems, and the Digital Enterprise

multinational A property of ERP U.S. user is able to see the same statement in U.S. dollars. Multinational refers to
systems to handle the accounting the ability of ERP software to handle the accounting standards of multiple countries.
standards of multiple countries
For example, DaimlerChrysler’s ERP system follows the U.S. accounting standards in
its U.S. subsidiaries, and follows the Mexican accounting standards in its Mexico sub-
sidiaries. ERP systems are now being used in more than 100 countries and by virtually
all major industries, which include oil and gas; telecommunications; pharmaceutical;
utilities; automotive; high tech and electronics; engineering and construction; con-
sumer products; chemicals; retail; consulting and professional services; banking;
media; metal, paper, and wood products; public sector; and health care.
For example, suppose a salesperson for a U.S. computer manufacturer is
accessing an ERP system from Paris via the Internet to prepare a quote for a cus-
tomer. The salesperson enters some basic information about the customer’s
requirements into the ERP system using her or his laptop computer. The ERP sys-
tem automatically produces a formal contract, in French, specifying the product’s
configuration, price in French francs or Euros, and delivery date. When the cus-
tomer accepts the terms in the contract, the sales representative keys this informa-
tion into the ERP system. The system automatically
• Verifies the customer’s credit limit and, if it is approved, records the order.
• Updates the sales and production plan.
• Creates a bill of materials for the order and executes a materials requirement plan.
• Schedules the shipment, identifying the best routing, and, working backward
from the delivery date, reserves the necessary materials from inventory.
• Orders any needed parts from suppliers and schedules final assembly at the
company’s factory in Taiwan.
• Credits the salesperson’s payroll account with the corresponding commission
in French francs or Euros, and his or her travel account with the expense of the
sales call.
• Calculates the actual product cost and profitability in U.S. dollars and updates
the divisional and corporate balance sheets, the accounts-payable and accounts-
receivable ledgers, the cost-center accounts, and the corporate cash levels.
In short, the ERP system performs nearly every business transaction resulting from
the sale. 4

Benefits and Costs of ERP Systems

A recent survey of 163 companies representing a wide range of industries and the
public sector in Australia, France, Germany, Spain, the United Kingdom, and the
United States examined the effects of ERP systems. It determined the benefits
achieved by these organizations; the number in parentheses represents the per-
centage of the companies in the survey that achieved that particular benefit.

Improved financial management (70 percent). Financial and general man-
agers can exert tighter financial control, make better predictions about
financial performance, and assess better the implications of operational
changes on key performance metrics.
Faster, more accurate transactions (69 percent). Highly integrated, accurate
databases result in reduced IT costs, improved data quality, and better
customer service. Accurate transactions are an intermediate benefit that
enables other business objectives.
Better managerial decision-making (63 percent). Managers supported by
efficient decision-making capabilities are able to make better, faster deci-
sions that are aligned with the organization’s strategies.

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