Implementation of Enterprise Resource Planning Using the Value Engineering and System Dynamics Methods

The Enterprise Resource Planning (ERP) system is an integrated software package applied by many enterprises as an operations platform over the past years. However, according to an industrial survey, the failure rate of ERP system implementation is relatively high because of high implementation costs and long implementation time, incapable implementation teams, process misfits, resistance to change and inadequate training. This paper proposes a Value Engineering (VE)-based framework that combines the System Dynamics (SD) method to support implementation of ERP systems. Within the framework, VE is a systematic, functionally oriented method for generating decision alternatives, whereas SD can simulate the possible outcomes in terms of the generated decision alternatives so that a suitable strategic decision for the ERP implementation can be evaluated and selected. The proposed method is applied to a SAP R/3 implementation case in the manufacturing industry. The application case shows that the method can achieve a positive result indicating the high value-added output of ERP systems implementation.

[1]  C. Bianchi,et al.  Opportunities and pitfalls related to e‐commerce strategies in small–medium firms: a system dynamics approach , 2002 .

[2]  David N. Ford,et al.  Tipping point failure and robustness in single development projects , 2006 .

[3]  S. W. Fong.  Value engineering in Hong Kong—a powerful tool for a changing society , 1998 .

[4]  Charles Y. J. Cheah,et al.  Appraisal of value engineering in construction in Southeast Asia , 2005 .

[5]  Shih-Wen Chien,et al.  Investigating the success of ERP systems: Case studies in three Taiwanese high-tech industries , 2007, Comput. Ind..

[6]  V. Botta-Genoulaz,et al.  An investigation into the use of ERP systems in the service sector , 2006 .

[7]  Roberto Poles,et al.  System Dynamics modelling of a production and inventory system for remanufacturing to evaluate system improvement strategies , 2013 .

[8]  Toni M. Somers,et al.  The Impact of ERP Implementation on Business Process Outcomes: A Factor-Based Study , 2007, J. Manag. Inf. Syst..

[9]  Toni M. Somers,et al.  The impact of strategy and integration mechanisms on enterprise system value: Empirical evidence from manufacturing firms , 2003, Eur. J. Oper. Res..

[10]  S. Haeckel,et al.  Managing by wire , 1993 .

[11]  Niels Bjørn-Andersen,et al.  Exploring Value Cocreation in Relationships Between an ERP Vendor and its Partners: A Revelatory Case Study , 2012, MIS Q..

[12]  Jen-Her Wu,et al.  A methodology for ERP misfit analysis , 2007, Inf. Manag..

[13]  Christos D. Tarantilis,et al.  A Web-based ERP system for business services and supply chain management: Application to real-world process scheduling , 2008, Eur. J. Oper. Res..

[14]  Michael Shayne Gary,et al.  Combining system dynamics and conjoint analysis for strategic decision making with an automotive high‐tech SME , 2002 .

[15]  J. Alegre,et al.  The importance of management innovation and consultant services on ERP implementation success , 2011 .

[16]  David L. Cooke,et al.  A system dynamics analysis of the Westray mine disaster , 2003 .

[17]  Paulo Carlos Kaminski,et al.  Product development process with focus on value engineering and target-costing: A case study in an automotive company , 2007 .

[18]  Pankaj Dutta,et al.  A system dynamics framework for integrated reverse supply chain with three way recovery and product exchange policy , 2013, Comput. Ind. Eng..

[19]  Davide Aloini,et al.  Risk management in ERP project introduction: Review of the literature , 2007, Inf. Manag..

[20]  Elliot Bendoly,et al.  Enterprise resource planning: Developments and directions for operations management research , 2003, Eur. J. Oper. Res..

[21]  Charles Møller,et al.  ERP II: a conceptual framework for next-generation enterprise systems? , 2005, J. Enterp. Inf. Manag..

[22]  Mei-yung Leung,et al.  Developing a soft value management model , 2002 .

[23]  J. Martin Corbett,et al.  ERP implementation: a compilation and analysis of critical success factors , 2007, Bus. Process. Manag. J..

[24]  Sherry D. Ryan,et al.  Exploring knowledge sharing in ERP implementation: an organizational culture framework , 2006, Decis. Support Syst..

[25]  Samy E. G. Elias.  Value engineering, a powerful productivity tool , 1998 .

[26]  Matthew K. O. Lee,et al.  A framework of ERP systems implementation success in China: An empirical study , 2005 .