ERP SOLIDIFIES THE FOUNDATION FOR E-BUSINESS

In a recent survey by Information Week, 66% of IT managers viewed ERP as their most important and strategic platform because it provides a solid
foundation and information backbone for e-business. When ERP and ebusiness are properly implemented, they supercharge each other. E-business is the best vehicle to share business information with partners for creating major B2B synergies (Norris et al., 2000, p. 93). A fully integrated ERP system will capture and create accurate, consistent and timely relevant data,and assist in intelligent business decision-making. The impact of ERP/ebusinessintegration is substantial, ranging from reduced inventory and personnel level to improved order and cash management. It also results in improved customer responsiveness, reduced IT costs and the availability ofresources for value-added activities. The following case is an example where the full integration of ERP with e-business and SCM led to successful business (Sun, 1999; Whiting, 1999):Colgate Palmolive Company, with $9 billion in consumer products business, has five regional divisions in North America, South America, Europe, Asia/Pacific and South Africa. The implementation of SAP R/3 in 1993 helped Colgate reduce its finished inventory by 50% and cut order receipt-to-delivery time for its top 50 customers from 12e to five days.
Because of its tremendous increase in international sales and the
constantly changing manufacturing/distribution model, Colgate integrated
its SCM-called supply network planning with its e-business platform from Sun Microsystems to leverage its existing ERP in early 1998. This supply network planning system together with the vendor-managed inventory (VMI) software helped Colgate-Palmolive manage its inventory at customer sites (such as Kmartdistribution locations). By mid-1999, Colgate implemented the
Web-enabled supply network planning modules in all of its North America manufacturing and distribution facilities. The VMI software was installed at about 70% of the customer facilities, which accounts for half of the company’s sales volume. In the later part of 1999, Colgate implemented the production planning, detailed scheduling and demand planning of supply network modules, and integrated them with SAP sales and service applications and business information warehouse software.Colgate is seeing a clear payoff on improved service to customers and suppliers. Since it achieved manufacturing efficiencies from ERP/e-business, the company has been having single-digit growth on sales revenues and double-digit growth on net income every year(Colgate, 2000). Now, the company is counting on its ERP/ebusiness to further the operating efficiencies.The companies that have successfully implemented ERP systems will become the masters in helping other suppliers to integrate ERP and e-business to create a Web-based extended ERP environment. A well-run Web-enabled ERP system will make the entire value chain very powerful. Examples of successful cases include Sun, IBM, Compaq, Intel and Cisco in the high-tech industry; CitiGroup, Bank of America and Charles Schwab in the financial
services; and Amazon.com in the retail industry.