By Raymond Tsang

To succeed in today’s global economy and highly technology-driven markets, Hong Kong manufacturers must find ways to improve their competitiveness. Reducing costs, improving quality and shortening time to market, for both existing and new products/services, will enhance the capability of an enterprise to be more responsive to market changes. This calls for a very important competitive enabler: an integrated information system that enables individual functions or business units to effectively contribute to the goals of an enterprise.

ERP Systems – Evolution
The focus of manufacturing systems in the 1960s was on inventory control. During that era, most of the software packages (usually customized and run on mainframes) were designed to handle inventory needs based on traditional inventory concepts.

Then came the 1970s when the focus was shifted to MRP (Material Requirement Planning) systems – which primarily translated the master schedule built for end items into time-phased net requirements for sub-assemblies, components and raw materials planning and procurement.

The 1980s was the time when the concept of MRP-II (Manufacturing Resource Planning) -- an extension of MRP to shop floor and financial accounting activities -- evolved and began to take the stage.

As technology rapidly advanced, the 1990s stands witness to a development that provides a higher level of integration than MRP-II, and one that acts as an umbrella for a variety of information system applications including distribution resource planning (DRP), logistics, customer service, human resources, project management and more sophisticated financials. As these business aspects typically represent a complete gamut of activities within any business enterprise, the term ERP (Enterprise Resource Planning) was born. In addition to system requirements, ERP addresses technology aspects such as client/server distributed architecture, RDBMS (relational database management systems), and object oriented programming.

Nowadays, ERP solutions address broad areas within any business from such aspects as manufacturing, distribution, finance, project management, to service, maintenance, and Transportation. A seamless integration of all these business activities is essential to achieve high degree of visibility and consistency among various business functions across an enterprise.

An ERP system should be sufficiently versatile to support different manufacturing environments. These include make-to-order, make-to-stock, assemble-to-order and engineer-to-order. In addition, an ERP system should be complete enough to support both discrete as well as process manufacturing scenarios. Efficiency of an enterprise depends heavily on quick and accurate flow of information across its complete supply chain -- from the customer to manufacturers, and ultimately to suppliers.

However, regardless of how versatile an ERP system may be, it cannot be a full business enabler without an effective means to communicate and facilitate data exchanges with outside sources. To that end, the industry generally has adopted, in the past decade or so, EDI (Electronic Data Interchange) as a main tool of electronic data communications among trading partners of the international community.

'Front-to-Back Office' – ERP with an E-Commerce Touch
In most business scenarios these days, companies are not only constantly pushing the edge of the envelope in finding innovative ways to be responsive to market and generate revenues, but also how to keep the existing customers satisfied and thereby creating loyalty. Generally speaking, full customer life-cycle management is essential to attaining customer satisfaction -- one of the most important measures of business success these days. Having a superbly efficient back-end ERP system alone would not suffice. To achieve total business enhancement, we need a total business enabler. In other words, we need a business system that is not just an ERP system, but also an e-commerce enabled mechanism, which can serve as a direct channel to the market. This requires nothing less than full front-to-back office integration, sometimes known as the e-commerce-enabled ERP. This ERP empowers every individual throughout the organization with a common, enterprise-wide view of the customer, while allowing customer to also interact directly with relevant business units based on the same data residing the enterprise’s back-end ERP system.

With that in mind, many organizations have now implemented Enterprise Resource Planning (ERP) systems to reduce costs and improve efficiency, they are also heavily focusing on finding ways to improve the critical interactions between them and their customers over one system and via the Internet. Recognizing this need among the enterprises, several leading ERP vendors such as SAP AG, Baan Company, Oracle Corporation, and People-soft are also quick to respond and have attempted to add to their products the Enterprise Relationship Management (ERM) functionality -- an e-commerce-enabled capability.

By integrating front-office capabilities into the otherwise backend duties-eccentric ERP systems, customers are empowered to share data from back- and front-office systems in a single common database, gain an integrated view of all their corporate data, and then act on it. (The action or interaction made possible by this between the enterprise and customer could be in a form of online sales or transactions that serve the business interest of the enterprise). In any case, this successful marriage of the front office solution with ERP will create a seamless flow of crucial customer information throughout a company's sales and service units and its business operations, thereby bringing substantial business benefits to the organization as a whole.