ERP helps companies know themselves better
( LIANG YU)
07/27/2001
In line with city hall's resolution to make full use of information technology to boost the local economy, the adoption of the enterprise resources planning (ERP) system is expected to become one of the top concerns of local enterprises, especially State-owned firms. Yet insiders caution that, in order to ensure successful implementation of ERP, the most urgent task for local SOEs is to raise awareness among top managers of the importance of a modern management approach. Transparency Initiated by the US-based Gartner Group in the early 1990s, ERP is widely regarded as a computerized information management system that, based on the supply chain theory, integrates all operations-involved resources like customer demand, production and raw materials. By resorting to such a system, enterprises' business processes can be simplified and their operations can be carried out in a more efficient and transparent way, experts said. Since the very beginning of its establishment, Shanghai General Motors, one of China's key automakers, has decided to rely on an ERP information system to handle its production, logistics and overall management, according to Zhang Xinquan, manager of Shanghai GM's information technology (IT) branch. Although it took the company more than 14 months and 300 million yuan (US$36 million) to implement such a system, Zhang insists that the reality has proved it is a worthwhile deal. "Thanks to our ERP system, we can have a clear idea of customer needs and carry out our production in a flexible made-to-order way," said Zhang. "That enables us to turn out various models on a single production line, and such a practice is rare among our domestic peers." On the other hand, its ERP system helps the company minimize its stock of raw materials and manufactured vehicles to a desired level, thus avoiding the risk of overstocking and putting itself in a more advantageous position in keen market competition. "Whatever the enterprises, big or small, it is vitally necessary for them to usher in an advanced management theory and practice, and a mature IT-enabled environment is needed to support their operations," Zhang said. Step-by-step adoption "Most domestic companies are not ready for ERP systems, though many of them have become aware they should get prepared," said Peter Zencke, executive board member of SAP AG, one of the world's largest corporate management solution providers, which claims that over 80 per cent of the global Fortune 500 enterprises have been using its software products. For foreign companies like SAP, it is necessary to adapt to the local environment, yet they have to get the firms' management to realize that ERP systems can act as a catalyst to achieve streamlined operations, Zencke said. Underestimating the importance of the ERP system, some Chinese companies simply regard it as an IT product, and others are hesitant about adopting the system, which results in lengthy ERP implementation time, according to Klaus Zimmer, president of SAP's Great China operation. "Successful implementation largely depends on awareness among top-level executives," said Ding Caiqing of Shanghai Small Enterprises Production Development Service Centere. SOE top executives have few handy examples that show the advantages of ERP systems, which lead to their reluctance to readily accept such a modern management philosophy and practice. While quite a few foreign management software products are costly and present difficulties in their application in the domestic environment, some SOE leaders are hesitant to accept ERP systems as, bound by their terms, they are unwilling to see their successors become the beneficiaries of such systems when they begin to function effectively. As a result, Zhu Weijia, senior official of the Shanghai Economic Commission's information centre, estimates that fewer than 10 per cent of the city's more than 17,000 SOEs have adopted ERP systems. The government has decided to beef up its efforts to change the situation. Aimed at the city's small- and middle-sized State firms, an informatization forum is to be kicked off soon, which is expected to boost local SOEs' IT-enabled management.
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