Benefits and issues of erp implaementation in Vietnam

Logistics service develops rapidly in Viet Nam in recent years. However, Logistics service providers in Viet Nam is still at low level compared with developed countries. Information technology does not play important role in the Logistics development. In many countries, ERP is a key to boost information flow. ERP can provide manager with information more precisely and rapidly. Viet Nam companies day by day merge into that trend despite of difficulties in ERP implementation. Nevertheless, it is a must if companies want to improve Logistics activities.

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Journal of Transportation Science and Technology, Vol 18, Feb 2016

BENEFITS AND ISSUES OF ERP IMPLEMENTATION IN VIETNAM

NHỮNG LỢI ÍCH VÀ VẤN ĐỀ KHI TRIỂN KHAI ERP TẠI VIỆT NAM

ThS Nguyễn Huỳnh Lưu Phương

Bộ môn Thương vụ - Logistics, Khoa Kinh tế vận tải – Trường ĐH Giao thông vận tải Tp.HCM

Abstract: Logistics service develops rapidly in Viet Nam in recent years However, Logistics

service providers in Viet Nam is still at low level compared with developed countries Information technology does not play important role in the Logistics development In many countries, ERP is a key

to boost information flow ERP can provide manager with information more precisely and rapidly Viet nam companies day by day merge into that trend despite of difficulties in ERP implementation Nevertheless, it is a must if companies want to improve Logistics activities

Keywords: ERP implementation, Logistics improvements

Tóm tắt: Logistics là dịch vụ đang có tốc độ phát triển mạnh mẽ tại Việt nam Tuy nhiên, Logistics

tại Việt Nam vẫn còn ở thời kỳ sơ khai, chưa thực sự đạt được trình độ như những nước tiên tiến Điều này là do thiếu việc ứng dụng công nghệ thông tin trong hoạt động Logistics Một trong những ứng dụng phổ biến của công nghệ thông tin đó là ERP ERP đóng vai trò ngày càng quan trọng trong việc đẩy mạnh dòng dịch chuyển thông tin trong các hoạt động Logistics, giúp đáp ứng nhu cầu thông tin nhanh và chính xác Các doanh nghiệp tại Việt Nam cũng dần bắt đầu xu hướng tiên tiến của thế giới mặc dù việc ứng dụng ERP là không dễ dàng chút nào nhưng đó là điều bắt buộc nếu muốn cải thiện hoạt động Logistics của doanh nghiệp

Từ khóa: Triển khai ERP, nâng cao hoạt động Logistics

1 Introduction

In these recent years, the term “Logistics”

is used widely all over the world In Viet Nam,

it is not an exception Most of people in Viet

Nam often think that Logistics is the process

to optimize flow and storage of goods,

services from the point of origin to the point

of consumption to conform with the

customers’ requirements They forgot the role

of information flow within an enterprise

which makes the operations’ efficient and

effective If information flow is sluggish or

obstructed elsewhere, all operations in an

enterprise will be stopped immediately

because information is a companion of work

In order to achieve improved delivery

performance, decreased lead times within the

enterprise and improved efficiency and

effectiveness, manufacturers need to have

efficient planning and control systems that

enable good synchronization and planning in

all the processes of the organization Hence,

there is a need for a standard software

package, which equips the enterprise with the

necessary capabilities to integrate and

synchronize the isolated functions into

streamlined business processes in order to

gain a competitive edge in the volatile business environment

Realizing the requirement of user organizations, some of the leading software companies have designed Enterprise Resource Planning software (also called ERP), which offers an integrated software solution to all the functions of an organization

2 What is ERP ?

ERP is a fully integrated business management system covering functional areas

of an enterprise like Production, Finance, Accounting and Human Resource… It organizes and integrates operation processes and information flow to make optimum use of resources such as men, material, money and machine Taking information from every function, it is a comprehensive tool that assists employees and managers plan, monitor and control the entire business

Once ERP is implemented, all functional areas just use one database, one user interface and one software It can connect all branches

or instances despite of the geography This can lead to a result that there is no difference

in the report, datum and information

TẠP CHÍ KHOA HỌC CÔNG NGHỆ GIAO THÔNG VẬN TẢI, SỐ 18-02/2016 55

Figure 1 ERP Structure

Source: Peacesoft

ERP main components include Human

resource management, Customer relationship

management, Manufacturing resource

management, Supply chain management,

Financial resource management…ERP is built

with some special characteristics It easily

responds to changes of an enterprise, client

server technology makes system be able to be

changed once and all components will be

affected It is a combination of many

functional modules so that the attachment and

detachment one of them cannot make the

system shutdown ERP can also accept

third-party plugins to enhance the system with more

powerful functions ERP is suitable for wide

range of business organizations because the

software makers integrate a lot of business

practices to give more experiences to end

users and to facilitate their activities

3 ERP Benefits

ERP is the only place that an order exists

from the time of being placed to the end of

order life cycle So, manager can monitor the

status of the order and give controls if it is

necessary Without ERP, he may receive

many reports from many departments to know

exactly the current status Apart from that,

ERP can provide organization with many

benefits such as:

 Reduction in paper documents

 Improvement in timeliness of

information

 Greater accuracy of information

 Improvement in cost control

 Faster response to customers, business

operations, market conditions

 Achievement in competitive

advantage

 Improvement in supply-demand linkage with remote locations and branches in different countries

 Unique customer database usable by all applications

4 Promise for ERP implementation

in Viet Nam business organizations

One of obstacles of ERP implementation

is the high cost To implement ERP with full functions, it costs up to millions of US dollars, especially the solution from well-known software makers such as SAP, Oracle, Microsoft, and Epicor It is more appropriate for large size companies However, that statement does not mean that there is no chance for small and medium size companies ERP can be expanded or shrunk to conform client needs The software makers will detach

or attach some components to minimize the cost without affecting the effectiveness of the ERP

In Viet Nam, FPT Software, FAST, Lacviet, itg Viet Nam… are good software providers with acceptable price Though, they are agencies for some foreign companies with the role of supporting the implementation of ERP These companies will hold training program, provide maintenance service, technical assistances, etc… They made their own software before but the competition and the limitation in technology cause them to stop their business Nowadays, customers can easily request an ERP solution without any difficulties in Viet Nam Many companies in Viet Nam pay attention to the benefits of ERP Vinamilk paid more than 1 million US dollars

to get SAP ERP solution Unilever Viet Nam, Pepsi Co, Bibica, Đồng Tâm corporation, Vietnam airlines, PNJ, Đông Á plastic… also implemented one

Due to the small scale of capital, some companies can only apply main components

of ERP such as Customer relationship management, Accounting, Warehouse management (Inventory control predominantly), Document administration Eleminating some important components (Production management, Procurement management, Supplier administration…)

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Journal of Transportation Science and Technology, Vol 18, Feb 2016

results the system is not so powerful as it

should be

Table 1 Some Viet Nam companies applying ERP

Company ERP provider Supporter

Vietso Petrol Oracle FPT

Eurowindow Oracle EBS FPT

Prime Group Oracle EBS FPT

…

Source: Compiled by Nguyễn Huỳnh Lưu Phương (2015)

Some issues can be pointed out while

implementing ERP in Viet nam:

 Unrecognized needs: Some

companies still want to implement ERP even

they do not really need it It wastes much

money while the effectiveness fades away

ERP is only suitable when the company has

many departments that need connecting, a lot

of information to be processed and the data to

be gathered into one point

 Capital constraints: ERP requires

much money so small companies find it

difficulty accepting

 Lack of specialist assistances:

Specialists play an important role in ERP

implementation They give advices to

company that which one is the most suitable

and provide technical assistances They also

solve some problems that is hardly to find

someone else to do it Most of specialists have

knowledge about information technology

The graduate from University of IT though

they still need to know about the managment

knowledge

 No long term plan: When ERP is

accepted, it is must be based on a long term

plan because the problems are difficult to

overcome in short time Some companies just

see the immediate benefits while they cannot

imagine what will occur and forecast demand

in the future This causes the waste in investment

 No utilization: It highly cost to

implement ERP but some companies does not take advantage of its capabiltiy ERP is based

on client server technology, so, it is better to

be executed on network environment The internet infrastructure in Viet Nam is still underdeveloped This is the reason why ERP

is inhibited from proving its powerful abilities There is no link between instances in

a company

5 Conclusion

Logistics does not mean the efficiency and effectiveness of flow and storage of goods, it also needs the efficiency and effectiveness of information flow To achieve good performance of Logistics, ERP is one of the best solutions to make the information flow smoothly and rapidly within an enterprise However, the implementation of ERP may encounter some obstacles It is not easy to be implemented successfully Companies need well-trained staff, commitment, long trial periods and much of capital Alongside the difficulties, companies will get many benefits of reduction in operation costs In Viet Nam, many companies now realize the importance and implement step-by-step This will promise future opportunities to develop and make Logistics service be more optimized 

References:

[1] Le Hung (2009), Toàn cảnh ứng dụng ERP

2008, PC-WORLD Viet Nam

[2] Raymond McCleod, George P.Schell (2007),

Management Information System, Pearson Prentice Hall

[3] Son Thuy (2010), ERP chỉ dành cho môi

trường ổn định, PC-WORLD Viet Nam

[4] Togar M Simatupang (2011), Logistics

Information System, Masyarakat Logistik Indonesia

[5] Vu Anh (2013), Cạnh tranh hơn với giải pháp

ERP, Báo đầu tư

Ngày nhận bài: 19/01/2016 Ngày chấp nhận đăng: 03/02/2016 Phản biện: TS Trương Quang Dũng

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