Effects of ERP System-Based Manufacturing Planning and Control in Dynamic Operating Environments

Abstract

Enterprise resource planning (ERP) systems have a disputed reputation. On the one hand, they are claimed to be inflexible and thus detrimental when used in dynamic operating environments. On the other hand, their integrated databases enable swift cross-functional information flows, which are said to be critical for survival in dynamic environments. These two contradicting arguments are frequently made in the practitioner literature, yet both of them can also be based on the organization-theoretical literature: Organic Theory implies that ERP systems should be detrimental in dynamic environments while Information Processing Theory suggests that they should be advantageous. In this study, we use cross-sectional survey data from 151 manufacturing plants to determine which argument is more applicable in the context of manufacturing planning and control. The results are strongly in favor of one of the arguments and thus provide a direct answer to practitioners facing this topical question. To facilitate the future reconciliation of the two contradicting arguments, the paper also discusses how the findings could have been influenced by three contextual factors: namely, the technical nature of the studied system, the mechanic responses to changes in the studied context, and the interconnectedness of the studied activities.