The Diet Center 1

The Diet Center

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Course

Institution

Date
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Introduction

An enterprise resource planning system is a type of software which is used to handle the

operations of an entity and some of these operations including accounting and supply chain. This

software integrates different business processes and facilitates the flow of data between them.

Through the collection of the company’s shared transactional data from different resources, the

enterprise resource planning system can eradicate data duplication. According to Zeng et al.

(2017, pg. 38), these type of systems are essential in the management of various businesses

regardless of their sizes and the industry they operate in. Without an enterprise resource planning

system in place, organizations are most likely to deal with issues such as untimely financial data,

excessive waste, high operation costs, and an unsatisfying bottom line, which are among the

common issues outlined in the Diet Center case study. Other common issues highlighted in the

case study include the high cost of purchasing and implementing the enterprise resource planning

system, as well as the existence of a favorable business climate comprising of good economic

conditions and political stability to allow the organization to confidently make such a large

investment. This report on the Diet Center, SAP ERP decision case study, will contain an

evaluation of Diet Center’s strategic roadmap in relation with their SAP ERP decision, a review

of the significance of the software in the company’s operation, an evaluation of the adoption of

the system, an assessment of the system’s effect on various firm activities, and a discussion of

the organization’s future.

Evaluation of the firm’s strategic roadmap concerning their SAP ERP decision

The firm’s strategic roadmap in relation to its enterprise resource processing decision

entails a blend of various generic strategies. According to the case study, Diet Center among the

first companies to offer nutritional consultation services, and customized meal plans in North
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Africa and the Middle East region. From 1992 to 2000, it led the market and at that time health

trends, especially among the younger generations, were evolving at a faster rate and the demand

for healthy food was increasing rapidly. However, in 2000 competition in the diet industry began

growing rapidly because of technological advancements like the internet that revolutionized the

business and attracted more competitors to the industry. The company was therefore forced to

formulate new strategies to survive in the new business environment.

First, the cost leadership strategy is focused on enhancing the competitiveness of an

entity. The goal of this strategy is to maintain a market leadership position through efficient

value chain management. In relation to the firm’s SAP ERP decision, this strategy allows the

organization to expand its market share by targeting consumers from the middle class. This

group of consumers is important in the determination of the pricing factor and the cost leadership

strategy enables the firm to cater to their needs. On the other hand, through the differentiation

strategy, the Diet Center can grow its customer base by emphasizing the unique features of its

products. This allows the company to position its products in a manner to stand out and be

different from products offered by its competitors. The focus strategy allows firms to commit

their resources on the expansion of narrowly targeted segments. The Diet Center employs the

focus strategy by offering the best value and low cost. It also focuses on the attributes of its

products by continuously looking for ways to satisfy the psychological needs expectations of its

customers, as well as ensure that it maximizes the value of their money.

From the analysis of the company’s history, it is clear that the mission and vision of Diet

Center are to help people acquire and maintain a healthy lifestyle while aiding them to improve

their quality of life and overall welfare. The decision to implement the SAP ERP system will be
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based on the company’s mission and vision. By implementing it, the firm will be in a better

position to efficiently fulfill its mission and vision.

Significance of the ERP system in the operations of the firm

Nawaz & Channakeshavalu, (2013, pg.31) states that an appropriate ERP system is

necessary for any organization seeking to manage its business functions within an integrated and

centralized system. By 2014, the Diet Center had four software programs in place to run and

coordinate the financial operations of the crucial units of the company. Despite the integration of

the software programs, the operational management of the organization was not satisfactory. The

functions in the finance, procurement, and accounting departments lacked proper oversight and

poorly managed. Due to that, the financial and operational reports were not given to the

management on time. This acted as a barrier to efficient and effective planning. Apart from that,

with the four different software programs in place, processes at the Diet Center were not

organized, interrelated, and undocumented. On top of that, the company was not able to get

proper data updates since the procurement department was not integrated with the accounting

and inventory departments. Besides, the firm suffered the challenge of its operations being

affected by many manual procedures that were subject to human error and delays.

It is important to note that, despite the company having a core operating and data

management system, it always experienced operational inefficiencies. This was because the

system had an independent, stand-alone program that was not able to integrate the transactions

and operations of different departments. Also, the existence of numerous sources of the

information challenged the integrity of the Diet Center. The existence of the stated inefficiencies

in Diet Center’s operation management system, justify the need for the firm to implement an

appropriate enterprise resource planning system.

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An appropriate enterprise resource planning system plays a big role in saving the

company money. Despite the ERP package being a huge investment, it has a higher return on

investment. Through the creation of a central database, data will be easier to retrieve. The system

will also eliminate the need for users to be trained on different systems hence saving the

company money that could have been spent on training. The ERP system plays the role of

improving collaboration. It gives the company a single source of truth from which employees

can work. This helps in the minimization of errors resulting from the utilization of wrong data.

According to Santoso (2018, pg.21), the ERP serves as an excellent business intelligence tool

because the central database helps in the improvement of analytics and reporting. The software

makes the process of generating various reports faster and easier. An appropriate ERP system in

the operations of an organization improves productivity. Through the automation of the most

tedious tasks like processing orders, generating reports, timesheet tracking, and monitoring

inventory levels, employees will be freed time to focus on more thoughtful work hence

increasing the firm’s return on investment in terms of labor. This means that the integration of

the ERP system will enhance the firm’s productivity, profitability, as well as efficiency. Apart

from that, ERP plays a role in simplifying compliance and risk management. This is because it

provides the organization with built-in auditing tools to help with the documentation of things

such as tax provisions hence making it easy to create reports and send them to the relevant

governing body. Besides, the software provides risk management tools to improve financial

management and minimize the possibility of accounting errors. Also, the forecasting tools in the

software allow the users to forecast events in terms of budgeting and demand market. This

information will help create schedules, product development plans and budgets that are more

secure.
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Cost-benefit review of the ERP system

The significance of implementing this system in a firm makes daily operations more

efficient. One of the benefits of the software is total visibility. It allows total access to every

crucial process in the organization by making information from all departments easily accessible.

Along with the increased visibility better reporting and planning is a major benefit associated

with the implementation of the ERP system. Apart from that, it has the benefits of improving

efficiency and customer service. It also helps in the maintenance of a high level of data security.

Having a single repository of data helps in the improvement of consistency, accuracy, as well as

security of the organization’s data.

Considering the many benefits associated with the integration of this system, the

company might be ready to begin comparing the systems. The organization must consider the

costs of implementing the enterprise resource planning system. According to Hussain (2018, pg.

48), one of the costs is the high cost of the enterprise resource planning software. This is the

biggest drawback to the ERP software. While the software alone is a huge investment, the

implementation and maintenance of the software can cost five times as much. This is because the

organization will be required to hire ERP consultants, additional information technology staff

and software training specialists. According to Gupta (2017, pg. 1058), the other cost is that the

software might become complex and difficult to utilize.

Assessment of the effect of the ERP system on various activities within the firm

The implementation of the enterprise resource planning system affects various activities

within the firm which include accounting, financial reporting, inventory management, and

procurement. According toSumner (2018, pg.16), the main impact that the implementation of the
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ERP system will have on the various activities of the firm is increased efficiency. This is because

by integrating the procurement, accounting, inventory, and financial activities, the system will be

able to link the transactions and operations of the different departments. Apart from that, it will

automate the activities involved in inventory management which include taking orders, shipping

and billing. With an ERP system in place, when customers make orders, everyone in the firm

will be able to access the database that contains the orders. When one department completes the

order, it will be automated to the next department through the ERP system. According to (Gupta

et al, 2018, pg.673), this way customers’ orders are handled faster and with minimal errors. The

ERP system will have the same effect on financial reporting hence improve the quality of

financial reports. Heinzelmann (2017, pg. 17) states that with the increased use of new tools and

techniques provided by the ERP system, it will ease the job and activities of the accountants at

the firm and reducing the time transaction processing.

The future the Diet Center

By implementing the SAP ERP system, the Diet Center will be able to achieve the

smooth running of its operational level activities. The SAP ERP system will make the firm

seamless by eliminating all communication barriers. This will promote transparency at the firm,

improve internal communication, as well as the communication with customers and suppliers. It

will give members of the staff and managers relevant information regarding the organization’s

performance hence allow them to effectively plan future actions and allow them to come up with

quick solutions to negative situations that will affect the profitability of the firm. As a result, the

company will be able to minimize the chances of incurring financial losses. Besides, due to the

automation of tasks that comes with the SAP ERP system in place, the firm will enjoy reduced

operating costs. According to Masa'deh et al. (2017, pg. 51) when the ERP system in integrated,
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the company will manage to enhance its competitiveness. Since the ERP system will help the

company improve its customer service, it will have a high chance of increasing its sales and

profits. The SAP ERP system will not only serve as a solution for the Diet Center to run

profitably but also expand globally.

Conclusion

With regards to the SAP ERP system, the Diet Center’s growth strategy entailed a

combination of cost leadership, differentiation, and focus strategies. Its mission was to aid people

to acquire and maintain a healthy lifestyle. An appropriate ERP system was needed in the

operations of the firm to improve the firm’s efficiency and minimize waste. From the analysis of

the costs and benefits of the ERP system, it is evident that the software has more benefits than

costs. The implementation of the SAP ERP system will have a significant impact on the future of

the firm. The firm will enjoy the smooth and efficient running of its operational activities as well

as increased profitability.
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References

Gupta, S., 2017. Identification of challenges and their ranking in the implementation of cloud

ERP: A comparative study for SMEs and large organizations Shivam Gupta, Subhas C.

Misra, Akash Singh, Vinod Kumar, Uma Kumar.

Gupta, S., Kumar, S., Singh, S.K., Foropon, C. and Chandra, C., 2018. Role of cloud ERP on the

performance of an organization. The International Journal of Logistics Management.

Heinzelmann, R., 2017. Accounting logics as a challenge for ERP system implementation: A

field study of SAP. Journal of Accounting & Organizational Change.

Hussain, K.M., Subramanian, D.V., Thangakumar, J. and Kumar, K.P., 2018. ERP: framework

based implementation-a case study. International Journal of Engineering &

Technology, 7(1.9), pp.45-49.

Masa'deh, E.Y.R.A., Mufleh, M. and Alrowwad, A.A., 2017. The impact of ERP system's

usability on enterprise resource planning project implementation success via the

mediating role of user satisfaction.

Santoso, L.W., 2018. Integration between ERP software and business intelligence in Odoo ERP:

case study a distribution company (Doctoral dissertation, Petra Christian University).

Sumner, M., 2018. ERP Project Retrospectives—55 Enterprise Systems: Evaluating Project

Success, Lessons Learned, and Business Outcomes. Midwest Association for Information

Systems, pp.12-23.

Zeng, Y.R., Wang, L. and Xu, X.H., 2017. An integrated model to select an ERP system for

Chinese small-and medium-sized enterprise under uncertainty. Technological and

Economic Development of Economy, 23(1), pp.38-58.