Can the hottest ERP solve the decision-making prob

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Can ERP solve decision-making problems

as Herbert Simon, a famous American management scientist who won the Nobel Prize in economics, said, "decision making is the heart of management, management is composed of a series of decisions, and management is decision-making." Whether the decision is correct or not, its importance is self-evident for both enterprise management and managers who make decisions. According to the statistics made by Rand Corporation, a famous think tank and consulting company in the United States, 85% of every 100 bankrupt large enterprises in the world are caused by the careless decisions of enterprise managers

decision making is important and complex. Because of its great significance, some people retreated and dared not bear it, and became "slippery"; Because of its complexity and difficulties, some people acted rashly and became "reckless men". Those managers who are brave in undertaking and don't want to be "reckless men" hope to have some tools and methods to improve the success rate of decision-making. ERP is one of these tools and methods

but can ERP solve the decision-making problems of enterprises? In other words, it is a great good news that ERP is gradually emerging from the third tier cities. What help can ERP bring to enterprise decision-making? Many managers have doubts. As the general manager said, I don't know how to make decisions. Will ERP know? Even a friend asked, if people make decisions and computer execution, it is acceptable. If ERP can make decisions, won't it become a computer commander? How is that possible? Therefore, we need to analyze the role that ERP can play in business decision-making

generally, people divide the decision-making in the operation of enterprises into three levels: (1) strategic level, which is completed by the senior managers of enterprises and involves long-term planning, most of which are unstructured (non programmable) decisions, with few rules to follow; (2) Tactical level, which is completed by the middle-level managers of the enterprise. Tactical decisions made for but not the most important response to strategic decisions, are mostly semi-structural decisions; (3) The operation level, completed by the front-line managers, involves the implementation of specific tasks, pays attention to efficiency, and is mostly structural (programmable) decision-making, with the nature of routine procedures. As shown in the following table:

in the business operation of an enterprise, as an integrated system with electronic management information and business processes throughout all aspects of enterprise operation, to analyze the help of ERP to enterprise decision-making, we start with the operational decision-making with the largest amount of decision-making:

from the characteristics and structure of the decision-making given in the above table, operational decision-making is what front-line managers face every day Daily decisions that have pre-defined processing rules. For example, according to the due collection policy of accounts receivable formulated by the enterprise, front-line credit managers have to make such a decision every day -- which customers should they collect payment from today, and what is their respective amount? With ERP, this decision can be completely completed by the system: the A/R system (compared with other operation links in industrial and agricultural production or the sales system) automatically alerts and prompts the due payment. Some systems can also print collection letters and statements to suppliers, and some systems can even automatically send collection emails to each other according to the e-mail address in the customer information. For another example, according to the minimum inventory limit set by the enterprise, the warehouse keeper must make such a decision every day -- what materials should be purchased today to make up the inventory, and how much is the purchase volume? ERP system can also automatically complete this simple and standardized but extremely cumbersome decision: after MRP calculation, ERP can automatically allocate the variety, quantity and recommended arrival time of procurement to relevant procurement supervisors. Such operational and structural decisions are the best of ERP. It's not too much to call such a decision-making and implementation process "computer commander": aren't salespeople collecting payment according to the command of ERP? Aren't the purchasing personnel ordering materials according to the command of ERP

as for those tactical level and semi-structured decisions, ERP system can not be completely controlled, or even replace people to complete, like operational decisions. For example, the preparation of annual operating budget, whether it is the budget starting from sales revenue or the budget starting from manufacturing quantity, although ERP is good at dealing with its standardized preparation format and the linkage between projects, ERP cannot give a very reasonable prediction of its starting sales revenue and manufacturing quantity due to too many related factors. Another example is periodic performance analysis. ERP can give a variety of key performance indicators, and even give the corresponding balanced scorecard to analyze the pre-defined evaluation objects, but the performance can't just look at the numbers. It has a close relationship with external market, customers and other factors. Finally, the analysis conclusion of the evaluation object should be drawn through the manager's experience and judgment of selecting the well cover pressure tester from the above three aspects. Of course, many ERP systems have set up prediction and analysis methods and models, such as predicting future revenue or output through the calculation of historical data, and analyzing performance through the comparison of goals and reality. However, in any case, for tactical level and semi-structural decisions, ERP can only complete the quantitative part, from the internal and historical part, while those qualitative and flexible parts can only be completed by managers on this basis

the most difficult and most influential parts of enterprise business decisions are those strategic level and unstructured decisions. It rarely happens, and its performance is different every time. It usually appears in front of the top leadership of the enterprise with a new business opportunity or an unprecedented business disaster, waiting for them to make a "life and death choice". For example, a mature enterprise needs to make decisions about whether to enter a new industry and how to enter this industry. Taking Porter's five forces model commonly used in industry analysis as an example, this paper analyzes five forces, including customer bargaining power, supplier bargaining power, alternative product threat, new entrant threat, and competition between existing companies. The ERP system of the enterprise in which it is located may not be able to help much, not to mention how ERP can have enough information and appropriate models to analyze in the enterprises with good industry appearance? Another example is an enterprise with major problems in operation. The top leadership of the enterprise needs to make decisions on whether and how to restructure the enterprise. Which institutions can be reduced, which product research must be terminated, which processes and positions need to be adjusted, and the particularity, fuzziness and futurity of the decision determine that ERP cannot be completed as easily as giving a product gross profit table and production schedule, and there is even no model and sufficient information to make suggestions. Of course, ERP is not unhelpful for such decisions. As American entrepreneur S. M. Walson said: a successful decision is equal to 90% information plus 10% intuition. The information required for any decision can't be only external and general. ERP can at least provide detailed internal data as a reference and comparison value. After studying the new industry, we still need to compare the return on investment and cash flow with the existing industry; The results of enterprise restructuring or overdue results should also be compared with those before restructuring and before the crisis

perhaps the top managers of enterprises will feel sorry for this, because ERP seems to be designed for their subordinates. In the "strategic level" decisions they care about and work hard for all day, ERP cannot be "automated" like operational decisions. But wait a minute to complain about ERP. Please look at yourself first: Mintzberg, who was a doctoral student at that time, took a stopwatch to record what the five senior managers were really doing, rather than what they said and did. He found that it was different from the belief they believed and advocated. Managers did not do what they thought they wanted to do and should do - "strategic decision". At the same time, Mintzberg found that the characteristics of management work are "short, diverse and fragmented". If a manager wants to do one thing regularly, such efforts are doomed to fail, because he will be constantly interrupted or need to deal with other things

therefore, the real management world is like this. Strategic decisions are always important but not urgent, while operational decisions and tactical decisions, whether important or not, are mostly very urgent. Moreover, under the urging of subordinates, most senior managers "dislocation downward" and make decisions at the tactical and operational levels. Since the time of senior managers can easily become "time for others", anyone can come to him at any time and interrupt his ongoing work. Therefore, even if these decisions are made, senior managers cannot think deeply, but are eager to give subordinates a reply for implementation. Before ERP provides automatic decision-making, scientific decision-making process, relevant decision-making basis and a large number of decision-making calculations, senior managers have to "pat their heads"

thanks to ERP, not only the cumbersome daily business decisions of middle and low-level managers can be completed automatically and semi automatically, but also the senior managers can get rid of the detailed decisions and start thinking about the real strategic issues with the support of information. Although ERP may never replace the "10% intuition" derived from talent and experience, it still greatly liberates the decision-making productivity of enterprises and brings decision-making confidence and happiness to enterprise managers. (end)

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