A Research on Corporate Enterprise Resource Planning (ERP) Systems used for Supermarket Supply Chain Inventory Management in Turkey

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1 European Journal of Scientific Research ISSN X Vol.38 No.3 (2009), pp EuroJournals Publishing, Inc A Research on Corporate Enterprise Resource Planning (ERP) Systems used for Supermarket Supply Chain Inventory Management in Turkey Sedat Belbağ Gazi University Department of Business Administration Besevler Ankara / TURKEY sbelbag@gazi.edu.tr Tel: Mustafa Çimen Hacettepe University Department of Business Administration Beytepe Ankara / TURKEY mcimen@hacettepe.edu.tr Tel: ; Fax: Şule Tarım suletarim@yahoo.com Tel: Ayşegül Taş Çankaya University, Department of Business Administration Balgat Ankara / Turkey aysegul@cankaya.edu.tr Tel: ; Fax: Abstract The purpose of this study is to draw a detailed picture of the current situation with regard to supply chain inventory planning systems used in the Turkish retail sector. During the study, companies developing enterprise resource planning (ERP) software were contacted and asked questions oriented to reveal the contribution of current enterprise resource planning software in supply chain management and the opportunities they offer to users in terms of inventory planning. Interviews were made using one or more of the interview techniques of electronic mail, telephone or one-to-one interview. Through these interviews, it was attempted to determine the estimation and planning capabilities of the existing ERP software and draw an inventory of the solutions currently offered to users that will meet the varying demands of the companies operating in the retail sector. In addition, a comparison of the ERP products of national and foreign software companies producing solutions with various functionalities for the retail sector is made along with an evaluation in view of enterprise management. Keywords: Enterprise Resource Planning (ERP), supply chain, retailing.

2 A Research on Corporate Enterprise Resource Planning (ERP) Systems used for Supermarket Supply Chain Inventory Management in Turkey Introduction For a company, supply chain refers to the sum of all the processes starting from the procurement of the raw material from the manufacturer/producer and ending with delivery of the end-product to the consumer (Silver, Pyke and Peterson 1998). The supply chain encompasses many activities within it, such as production, purchase, sale and distribution. Moreover, a supply chain is an organizational network of suppliers, shippers, production plants, distribution centres and retailers (Hillier and Lieberman, 2005). Due to these reasons, smooth operation of the supply chain is very important for enterprises. Otherwise, enterprises can encounter unfavourable situations arising from supply chain issues, such as increased costs, delayed orders, wrong order placements or wrong order quantities. Such problems cause not only financial burden for the enterprise, but also have a negative impact on the brand value in the eyes of the consumers. Companies have aimed to be able to minimize the problems and risks they might encounter (Iles, 2007) and, with this aim, have in time integrated computer software into their systems. At first, Material Requirements Planning (MRP) software which allowed companies to keep track of their inventories started to be used. Later on, when these programs became insufficient for the task, they turned towards ERP. ERP is the generic term used for management software that include modules such as production, finance, marketing and human resources and that allow companies to plan their goods and services (Stevenson, 2007). These software, used by many enterprises, particularly by multinational corporations, have a critical role in ensuring increased efficiency. Zhao and Fan (2007) suggested that new generation ERP systems should be developed based on the principles of low cost, high quality and efficiency. In the recent years, ERP software have become widely used in almost all sectors such as production, services, finance, transportation and public utilities (Botta-Genoulaz and Millet, 2006). To give a few examples, Berchet and Habchi (2005) used an ERP system to arrange the supply chain activities of the telecommunications company Alcatel; Olson (2007) compared alternative ERP options and procurement of ERP systems as package programs and made a list of the advantages and disadvantages of both methods; Yan et. al. (2008) conducted a study aiming at identifying and proposing solutions to problems encountered in ERP applications in the Chinese retail sector; Karsak and Özoğul (2009) conducted a study on how to select the appropriate ERP software in decisionmaking processes; Chou and Chang (2008) examined the effects of ERP applications on performance increase; Vandai (2008) studied the critical success factors in ERP application; Chang et al. (2008) analyzed the performance effects of ERP on supply chain; Bose et. al. (2008) conducted a study on application of ERP systems in the supply chain management and inventory management of a company in the Chinese production sector; and Mabert et. al. (2003) studied the main differences between the ERP application approaches of companies. This study accepts that the main purpose of the ERP software is to regulate the operation of the supply chains of companies. Companies want to minimize the impact of any potential problems in the supply chain by using ERP software. Holsapple and Sena (2005), analyzing 53 companies using ERP systems, attempted to identify against which problems these systems were established and have proved successful. Today, uncertainty seems to be a critical factor that needs to be dealt with by companies in supply chain management. The uncertainty factor should be handled delicately, especially in sectors such as retail where inventory planning is a critical function. The retail sector needs new approaches that will assist in managing uncertainty in the current competitive environment and that will ensure fast and reliable response to changing market conditions (Fisher, Raman and McClelland, 2000). Yet, many planning systems rarely use planning methods that include the uncertainty factors. The purpose of this study is to draw a detailed picture of the supply chain inventory planning systems used in the retail sector in Turkey. As a result of this analysis, an inventory of the currently offered solutions that will respond to different needs in the retail sector and particularly in supermarket chains will be created. To this end, the study will include a comparison of the products of national and foreign companies producing solutions with different functionalities for the retail sector, and an evaluation thereof in view of enterprise management.

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4 498 Sedat Belbağ, Mustafa Çimen, Şule Tarım and Ayşegül Taş Product data management: product description, types, categorization Material requirements planning Customer relations management Accounting Human resources ERP5 is compatible with Windows, Linux and Mac Os X operating systems. Its software language is Python. It uses the open source Zope database (Deldycke, 2005). GNUe(Enterprise) ERP GNUe focuses on offering an integral ERP software package with forms, reports and work flowcharts able to run on all databases, with an XML structure. The software s architecture and interface were developed using various programming languages based on open source (GNUe Brochure, 2002). Although its package solutions are up to date, all ERP modules are constantly updated and developed. The software, able to work on almost all operating systems, is able to use PostgreSQL, MySQL, MaxDB, Oracle IBM DB2 and Sybase databases. Written in Python, the program allows development with other software languages (Carter, 2005). SQL Ledger SQL Ledger is an open source ERP software for accounting and production, developed for the purpose of meeting the basic requirements of small and medium sized businesses. Program features are adequate in terms of adaptability to national accounting systems. In addition to accounting, it also has functions for purchase-sale and inventory management. Its functions and user interface can be tested on the internet. It is compatible with Windows, Linux and Mac OS X operating systems. It can use Oracle, IBM DB2 and Postgre SQl data bases (Herzog, 2006). Opentaps The Opentaps program offers the opportunity to develop business applications that are adaptable at corporate level. Although its focal point is e-commerce, it is also making progress in the ERP area. Program s target group includes retailers, distributors and producers. It has modules for E-commerce, product catalogue, purchase orders inventory and warehouse management, production, customer services, customer services management and marketing management. Its data models have planning, forecasting and budgeting capabilities (Jones, 2005). Opentaps is compatible with Windows, Linux, MAC OS X operating systems. As database, it can use MySQL, MaxDB, PostgreSQL, Oracle, Microsoft SQL and IBM DB2. Using Java and XML as software language, the program supports 39 different languages (Basil Argasosy,2005). Openbravo The groundwork for Openbravo started in mid 1990s when two students from the Navara University, Nicolas Serrano and Ismael Ciordia, decided to develop a software for the university s management system. By 2001, Openbravo ERP, fully adapted to corporate management systems, was launched. The focus has been on two software: Openbarvo ERP and Openbarvo Pos. Openbravo ERP includes modules for data management, purchase management, warehouse management, production management, sales management, finance and accounting and project management. Developed in Java, the program supports XML, Html and Javascript (Openbravo ERP, 2008). OpenERP OpenERP s interface features many graphics and diagrams. The program targets small and medium businesses with maximum 150 employees operating in commerce, distribution and services sectors. It

5 A Research on Corporate Enterprise Resource Planning (ERP) Systems used for Supermarket Supply Chain Inventory Management in Turkey 499 has modules for accounting, customer relations management, purchase and sale, human resources, marketing, material requirements planning, inventory control and project management. Some specialpurpose modules for interface and e-commerce have also been integrated into the OpenERP software. OpenERP can use interfaces created with XML, Excel, Pdf and Open Office. Compatible with Windows, Linux and Mac OS X operating systems, the program uses the PostgreSQL database. It is written in the Python programming language. It supports 11 different language options (Herzog, 2006). OpenPro OpenPro offered users its open source ERP software in 1999, via the web. OpenPro has modules for customer relations management, supply chain management, e-commerce, finance and accounting and human resources. Having a flexible structure, the software is compatible with Windows, Linux, Unix, Sun, and IBM operating systems. It can use Ms-SQL, MySQL, Oracle, IBM DB2, Postgre SQL databases. OpenPro is written in the php programming language, and offers users the opportunity to customize their interface (OpenPro ERP, 2008).