The applicability and impact of Enterprise Resource Planning (ERP) systems: Results from a mixed method study on Make-To-Order (MTO) companies

Abstract

The effect of a Make-To-Order (MTO) production strategy on the applicability and impact of Enterprise Resource Planning (ERP) systems is investigated through a mixed method approach comprised of an exploratory and explanatory survey followed by three case studies. Data on Make-To-Stock (MTS) companies is also collected as a basis for comparison. The exploratory data demonstrates, for example, that MTO adopters of ERP found the system selection process more difficult than MTS adopters. Meanwhile, a key reason why some MTO companies have not adopted ERP is that it is perceived as unsuitable. The explanatory data is used to test a series of hypotheses on the fit between decision support requirements, ERP functionality, and company performance. In general, a poor fit between the decision support requirements of MTO companies and ERP functionality is identified, although certain modules can lead to performance improvements – most notably for Customer Enquiry Management (CEM). MTS companies make more use of planning tools within ERP systems, and it is concluded that production strategy is an important contextual factor affecting both applicability and impact. Follow-up cases with two MTO adopters and one MTO non-adopter develop a deeper understanding of the survey results. For example, in one adoption case, a system was rented to minimise the consequences of making a poor selection decision. Future research could explore how more MTO-specific planning concepts can be embedded within ERP systems to improve alignment.