Evaluating the impacts of enterprise resource planning on organizational performance for small to medium enterprises in manufacturing
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Today’s fast-paced global economy has intensified the demand for manufacturing companies to make their products more quickly and with higher quality to meet heightened consumer expectations while reducing costs. This competitive environment requires small to medium enterprise’s (SMEs) to implement well-designed business processes and leverage information technology (IT), such as an Enterprise Resource Planning (ERP) system, within their facilities to become more agile, flexible, and integrated to meet changing market demands. Issues emerge when facility managers lack reliable data on performance and costs, which subsequently impairs even basic decisions for resource allocation or process improvement. Although the benefits of a successful ERP implementation in large firms are recognized, there is a general lack of empirical IT productivity literature focusing on SMEs. This research is expected to contribute to a framework for performance measurement, providing facility decision-makers with important metrics for analyzing their firm’s ability to improve upon competitive priorities. Employing the Delphi process, key performance indicators (KPIs) including time, speed, quality, and cost, and corresponding performance measurement metrics, investigations are conducted between traditional manufacturing processes in SMEs and processes enhanced through ERP adoption. In this longitudinal case study, significant improvements are observed in production operations relative to time following ERP implementation including a reduction in the defect rate, total manufacturing cost, and scrap rate along with increases in on-time delivery and flexibility.