A Comprehensive Study on the Differences in ERP Implementation between Manufacturing and Service Industry

Abstract

In the first part, this paper presents a review of current literatures on key critical success factors (KCSFs) and their inevitable relative links with ERP benefits, project (strategic) goals and objectives in ERP implementation; this literature review searches for the available KCSFs in two sectors: manufacturing and service industry. The second part of paper looks into the available literature on differences in manufacturing and service industry. From these differences we deduct that there are differences in ERP implementation between manufacturing and services. INTRODUCTION In the course of the 1990s, ERP systems evolved when the functionality of MRPII in production was blended with other applications concerning quality, maintenance, marketing, sales, personnel and various other support activities. Thus, ERP systems moved away from the manufacturing environment to support of the entire manufacturing company and from there to the support of service companies as well. These changes in functionality and application environment have had an important impact on implementation processes for these systems. There is a voluminous literature on implementing ERP systems, which has resulted in an increasingly long list of critical success factors. There is little systematic attention, however, for the question if implementation requires different approaches if it takes place in a services environment instead of a manufacturing environment. Inspired by some implementation failures in a services environment, we have carried out a systematic review of the literature on this issue. First, we have compared the literature on MRP implementation with the literature on ERP implementation. Since ERP is supportive of many more service elements in the manufacturing environment, we expected some first clues from this comparison. Furthermore, we have compared the literature on ERP implementation before 2000 with that after 2000. Before 2000, implementing ERP was most frequently tied to solving the Y2K problem and solving various other problems with legacy systems, whereas this is most certainly less so after 2000. Again, we expected this comparison to give us a clearer view on differences in implementation requirements between manufacturing and services. In our review we looked at differences in the reasons for ERP adoption (including project goals, business objectives) and differences in project routes (project phases) and key critical success factors in implementation between manufacturing and services. Our investigation shows that some differences can indeed be identified that appear to be related to the inherent differences between manufacturing and services. We conclude that, compared to a manufacturing environment, implementation in a services environment needs to be less technology oriented, more bottom-up and more concerned with external integration with customers.