Assignment Chapter 17

  1. Describe the Benefits of Using an ERP system.

Companies need to integrate their internal and external information. For this reason they may utilize ERP which is short for Enterprise resource planning. Some of its benefits are:

  1. Companies have many internal functions going on including inventory management and planning of different activities. ERP can be helpful in these types of function management by managing the information that flows in them.
  2. Different departments can use the same ERP to effectively share information with each other.
  3. Different resources are properly managed with the help of ERP. So resource optimization is performed.
  4. ERP systems provide a wealth of information that can be used and analyzed in a wide variety of ways. What is an inherent risk with so much information?

There is no doubt that ERP provides abundance of information to companies which can be analyzed to make company processes efficient. But the drawback of so much information is an overload of information that may not be easy to handle by the human resource or the information systems. Therefore, there is always a need to set up system preferences so than only the necessary information is stored which would be easy to manage and analyze.

  1. Explain how an ERP system can improve the evaluation and analysis of performance metrics.

ERP can help the management make the right strategic decisions. As ERP is a customization tool, performance metrics can be customized with it to suit the requirements. The fact that it can be customized according to the desired requirements, it can help in making correct analysis and evaluation.

  1. What are the four main functions within SAP’s supply chain software?

SAP is one of the largest supplier of ERP. Its four main functions are as follows.

  1. It can help in supply planning to meet market demands.
  2. It can help in managing order size and inventory levels and hence is a useful tool in supply chain execution.
  3. SAP software makes regular updates to the information system utilizing the internet. It helps companies collaborate the supply chain with multiple businesses.
  4. With the help of SAP, a supply chain coordination of the supply chain of a company becomes easy and efficient.
  5. As we know that cash-to-cash cycle  =  Average days of acc receivable + Average day of Inventory – Accounts Payable Cycle time

Average days of account receivable =6.75 Days

Average day of Inventory =300,000/35,000 = 8.75

Accounts Payable Cycle time =200,000/35,000=5.71

Cash-to-cash cycle = 6.75 + 8.75 – 5.71 = 9.61