Due to increasing global competition, many enterprises are aware of the benefits of Enterprise Resource Planning (ERP). While the external environments and alliance partnerships facing an enterprise are becoming more complex, executives should consider appropriate partners to enhance efficiency and performance of supply chain management (SCM) as well as to gain potential competitive advantages. This study constructs a conceptual model to evaluate the performance and competitive advantages associated with ERP from a SCM perspective. The resulting model can be used to assist an enterprise in evaluating the potential partnerships. The survey data was gathered from a transnational textile firm in Taiwan. The training and learning models were based on the strategic thrust theory and used the Back-Propagation Network (BPN) as an evaluation tool.
The internal information systems of a traditional organization are usually orientated on a functional basis. This set-up does not encourage efficient departmental communication within the firm. Traditional information systems do not satisfy the information requirements of global logistic trends. Recently, there has been an emphasis on integrating a company’s internal and external activities to improve a firm’s competitive edge. This approach, when applied to the development of integrated information systems, has become a major thrust. Davenport (1998) stated that an integrated information system is a smart tool that can be used by a firm to solve problems associated with widely distributed information sources.
Enterprise Resource Planning (ERP) systems can integrate a firm’s internal information from a financial perspective, allowing finance, accounting, purchasing and other departments to acquire information in a timely manner. ERP emphasizes integration of the flow of information relating to the major functions of the firm. The broader and more complex the organization is, the more it requires integrating this information flow. When applying supply chain management (SCM), orders can be forecasted efficiently and correctly, stock costs for supply chain partners can be reduced, and a manufacturing schedule can be set to optimize manufacturing and supply time. Additionally, strategic alliance was developed to facilitate collaboration between firms (Forrest & Martin, 1992). It plays an important role in establishing a firm’s competitive advantage (Bowersox, 1990). SCM emphasizes close collaboration between supply chain partners and the building of a strong alliance in their joint strategic business focus. Therefore, SCM and a firm’s competitive advantage are closely linked.
Integrating SCM to an ERP system can facilitate information flow in the supply chain so that partners of the chain can streamline their operations and share information sources to provide timely and accurate services to their customers. Traditional methods to evaluate ERP performance are limited to the internal departments of the company and do not include supply chain partners. However, under the global competition, many companies strengthen their core competencies via selecting their good business partners (Hong, Park, Jang, & Rho, 2005). Moreover, Choy, Lee, and Lo (2003) suggest that improving supply chain execution is important for achieving a firm’s competitive advantage. Shin, Collier, and Wilson (2000) emphasized that a firm’s performance can be evaluated by one or more key competitive priorities. Therefore, the five strategic forces of the strategic thrust theory can be independent or linked (Wiseman, 1985), and may relate to SCM performance.
This study uses a case to construct a conceptual model for the performance evaluation of an extended ERP system from an SCM perspective. The Back-Propagation Network (BPN) is used as a tool to access tacit knowledge held by the firm’s employees and the ERP consultants. This knowledge can be used to evaluate the extended ERP systems that conform to the SCM performances. The goals of this paper are as follows:
(1)
To access the tacit knowledge inherent in the case firm’s employees and its ERP consultants/experts through the model learning process.
(2)
To construct a BPN model to support a firm in evaluating its extended ERP performance from an SCM perspective and to test the competitive advantages gained by the ERP system.
(3)
To produce results that will be useful to a firm when selecting partners.
This model is constructed to be applied on a case by case basis; the data comes from a single transnational textile firm. In follow-up research, the survey can be extended to supply chain members in an upward or downward direction. After the survey has been done, the training and learning parts of the model can be used to increase its practical value. Specifically, future research can include more alliance types. By adjusting for the difference in alliance types, the model will become more flexible. The firm can also evaluate the integral competitive advantages of supply chain members and adjust the cooperative relationships with its partners to ensure satisfaction.
