What is ERP? Why do it?

What is ERP? Why do it?

ERP (Enterprise Resource Planning) is a concept that emerged in a situation where systems that had been built individually, like any era, were sporadically spreading at any moment and had difficulty connecting them.

If you've been working for a while, many of you may have felt it. 'Why don't you just take the information here and write it to me?', 'I think it will be automatic if you bring the information over there and put it in?' The back. Isn't it?

There are many reasons that this is caused by sporadic system development. And it doesn't become central control somewhere, and the business department sporadically creates it.

And now, the business is not finished in Korea, but the business is being done as corporations are established all over the world. In the company's position, it is efficient to manage all the information from all over the world or each business unit in one place.

The concept that emerged for this is ERP (Enterprise Resource Management).

Do not interrupt the flow of all information in the company (group) through ERP!

You should not think of ERP as a system perspective that simply connects and integrates multiple systems. You should not think that you just connect the systems you have now and do it for the integrity of your consolidated financial statements.

ERP has established a new company and standardizes all business processes and methods, so it aims to improve intrinsically, so it can never be finished by just modifying the existing system.

Let's say that the company has a factory and has a full-value chain that even makes and sells it. Then, the company will purchase hundreds and thousands of materials that go into production for the first time, and it is ERP that makes it possible to see at a glance what is happening in every series of flows through manufacturing, production, sales, sales, and service. to be.

To add a little more, why was the cost determination process of each material applied so, how did the cost fluctuate accordingly, and how the planning and the costs used in each process changed, labor costs, and service costs in the company? It would be easy to understand that it is an environment where all the situations that occur can be integrated and managed.

It's not easy to just look. That's why even if you think that this is only IT's job for the ERP project to succeed, the ERP project will never succeed.

It is a large-scale project that involves hundreds of billions of resources and hundreds of people to introduce ERP. And, like starting a new company, all designs are re-entered from the beginning ..

And these are all the foundations of the business process, and it can't be solved by the IT organization alone to contain everything that happens in the field.

I'm sorry to keep talking about IT, but I hope you understand that it is because of the trend.

Companies that could not quickly arrange for efficient operation of the company will soon be destroyed.

As mentioned earlier, today's businesses are increasingly complex, diversified, and subdivided into business structures. And the market is rapidly changing based on various platforms and technologies such as AI, IoT, and influencers.

Companies are also making changes in real-time, and numerous large companies are already hesitant to make various attempts to strengthen their ability to respond to the market.

In 2000, 46% of Fortune's 500 companies disappeared in 2010. The year 2000 is the time when all fields began to change rapidly as the Internet began.

It is shocking that 46% of the 500 companies have disappeared, but the future will be even more problematic. [Chissot] thinks that about half of the remaining 54% in 2010 will probably disappear again in 2030 because the times are changing more rapidly than at that time.

The ability to respond to change is possible with the company stabilized.

To be proactive in responding to new changes, it is necessary to prepare in advance. If you are in a hurry to respond to and overcome many business challenges that occur every year and every year, you will have to be exhausted and collapsed one day.

Being able to respond quickly to numerous changes means that I should know every part of my company and business from 1 to 100 and be able to make changes anytime, anytime. It should be.

It is said that in these days, de-industrialization or the collapse of business boundary is often said. This means that the same manufacturing and service industries are not only competitors, but suddenly competitors emerge from the IT industry and competitors from the pharmaceutical industry.

In short, now is the time when it is meaningless to divide and analyze business between businesses. There are many very famous examples, so you can see even a few things.

(KODAK) Who knew Pilka would be ruined? Digital technology has eliminated film cameras. Now, smart phones (mobile phones) are removing digital cameras.
(SONY) Who knew that MP3 would appear in the sound equipment (cassette, radio, etc.) business?
The above is a famous example, and let's look at a few more examples that feel like touching the body.

(Samsung Electronics-BESPOKE) A declaration of propaganda about de-industrialization was introduced by decorating the refrigerator of household appliances like furniture. (I feel it)
(E-cigarettes) Instead of cutting and smoking a typical tobacco leaf, it is replacing electronics.
The contents of this industry change will be discussed in detail later in other postings. Anyway, the times are actively changing too quickly based on IT, and in the past, the technology has not followed, but the technology has risen to a level beyond that.

ERP for stable operation of the organization is essential rather than an option in order to quickly dissolve this novelty in the organization and respond to the market quickly. In order for companies to continue to grow, they must respond quickly and quickly to these changes and threats.

3C for establishing a management innovation system
Competitive, Compact, Clear

It would be right for companies that have ERP to be properly established to see that the infrastructure for management innovation has been established. Once control of enterprise resources is made clear, efficiency (Compact) and transparency (Clear) are secured.

In addition, as business redesign is facilitated as needed, global standards can be established accordingly, or the company's own competitive innovation process can be re-established.

(Case) Samsung Electronics continues to pursue change even now.

Let's take a look at Samsung Electronics, a leading company in Korea. Samsung Electronics is leading IT now, but not in the past. It was being pushed by SONY in the TV market, and in the 2000s it was not so prominent.

However, in 10 years, it will take over SONY and Siemens and become the top 1 in the world. Of course, there are various reasons, but Samsung Electronics constantly innovates processes, continuously conducts company-wide innovation activities, and doubles the speed of organization.

In addition, based on IT, management innovation is established, the infrastructure is firmly built, and Samsung's unique ERP, SCM, etc. are established as standard processes for each glo. And it was applied globally and made it possible for a company called Samsung Electronics to roll in one cycle.

(It's a story I heard in the old days, but Chairman Kun-hee Lee says he could check details related to all Samsung corporations at any time and time with one smartphone.)



If your company does not have ERP in place, try introducing it as soon as possible. If you want to become a global company.