Successful Wal-Mart using Enterprise Resource Planning (Essay Sample)

Successful Wal-Mart using Enterprise Resource Planning (ERP)
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Successful Wal-Mart using Enterprise Resource Planning (ERP)
The Reasons behind the Success of the Implementation
Wal-Mart collaborated with SAP to acquire a customized system that was designed to meet the organization’s specific needs. Firstly, SAP ensured that the software provided was compatible with the firm’s existing systems. In this way, Wal-Mart did not have to replace its entire systems because the majority of the existing software was in alignment with the ERP. Secondly, SAP did not implement the system in one-step. The implementation process was systematic which gave the firm’s employees an opportunity to familiarize itself with the functions of the system. Thirdly, SAP offered the necessary support to retailer's staff to learn advanced functionalities of the system that aid to formulating store execution, inventory optimization, merchandise planning, and pricing strategies (SAP, 2015). As a result, the management learns how to use the system to identify and eliminate any weaknesses in the business process.
Unlike other ERP packages, Wal-Mart acquired a system that was customized to meet particular needs of the retail organization. For instance, the retailer emphasizes offering goods and services at subsidized prices, as such; the ERP monitors operations in all stores regardless of their locations to ensure that the prices are lower than those of the competition are. Moreover, the system deters managers from using experiences to impose costs that do not meet the organizations' standards. In this way, the firm ensures that all its clients achieve the retailer’s benefits. Wal-Mart has particular needs to address for different segments of the retail chain. Customers, suppliers, and various departments in the stores have varying needs that ought to be catered for at the right time (Choi, Chow, & Liu, 2013). In this regard, the organization’s ERP system is custom made to offer sector-specific services. Consequently, the system simplifies operations at the stores since every sector's needs are addressed appropriately.
Ideally, the retailer’s ERP system supports the store system, which forms the basis of the organization’s business process. It performs critical functions such as task management, loss prevention, replenishment and ordering, and inventory. Consequently, the system suits the needs of the organization (Choi, Chow, & Liu, 2013). The firm acquired a system that was easy to configure according to the size of the organization.
Costs of the ERP System
The costs for the implementation of an ERP system are very high. At the same time, SAP, being a global leader in ERP system charges high installation fees as well maintenance fees. Although the actual details of the cost were never divulged, it is evident that Wal-Mart had to pay a large amount of money to secure the services given its investment in different countries across the world. Further, the retailer had to purchase new hardware appliances to replace the existing software because some of them were outdated. However, given that SAP charges standard annual fees that are independent of profits benefited Wal-Mart because of its high profitability (SAP, 2015).
Problems/Limitations of the ERP System
Although SAP offers support o all its clients, it does not provide customized technical support. In some instances, the Wal-Mart’s staff receives replies from the technical support team that does not address the organization’s unique challenges. As a result, employees have to find solutions to their problems on their own despite the fact that the ERP system could have solved the problem mush easier. The system invokes serious security concerns; for instance, expecting a non-programmer to change the database on the fly poses challenges since the organization requires a track of all changes in the system. The non-professional could alter critical information that could lead to malfunctions of the system. At the same time, ERP systems manage much data from the varying components, which challenges the enforcement of security protocols. Further, the ERP system is not as flexible as the users would have expected. In effect, it is difficult for the system to adapt to the particular business process and workflow (Choi, Chow, & Liu, 2013). Consequently, the ERP system requires minute changes to provide customized processes to the firm.
On the same note, the system does not align with all business processes. Subsequently, Wal-Mart had to change some of its business processes to agree with the standards of the ERP system. Innately, changes require resources to implement whereas some employees could be resistant to the necessary modifications. In the process, the business fails to meet its organizational goals, which has detrimental effects on performance. The system has a limited range for customization because the user ought to respect the agreement license (Qrunfleh, & Tarafdar, 2014). Ideally, some of the processes require changes that are not allowed under the license, which in turn affects organizational performance and business processes negatively. Notably, employees need minimal training on how to use the ERP system. However, employees’ resistance to change and unwillingness to learn the new system affects their performance and that of the firm. Wal-Mart understands the ERP systems suffer from the weakest point where malfunctions on one of the departments affect the other parties. In essence, the system spans the entire organization, which means that all departments should be at their optimum to achieve the best results. Importantly, ERP aim to streamline organizational processes; consequently, the system incorporates all the organization’s processes thus increasing the chances of problems from the weakest link effect (Ram, Corkindale, & Wu, 2013).
Essentially, the system requires absolute transparency between departments. Therefore, the unwillingness to share information between departments affects the effectiveness of the system. Besides, Wal-Mart deals with different firms as suppliers; therefore, the system faces the challenges of incompatibility. In some instances, other partner companies could install the latest ERP systems, which are not compatible with Wal-Mart’s system (Qrunfleh, & Tarafdar, 2014). As a result, the two entities fail to share information even though it is necessary to the success of the system.
Information Processed by the ERP System
Wal-Mart’s ERP system focuses on merchants who include clients and suppliers. Ideally, the retailer needs feedback from customers to learn of its weaknesses. Communication between clients and the firm's staff is critical to the success of the business. The information that the retailer receives from the clients covers a broad range of issues that include...