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1、Impacts of ERP Systems on the Integrated-Interaction Performance of Manufacturing and Marketing Li-Ling Hsu.National Kaohsiung First University of Science and Technology, Taiwan, R.O.C.Minder ChenGeorge Mason University, U.S.A.KeywordsSituational Variables, Interface Congruence, Resource Sharing, ER
2、P Benefits, Integrated-Interaction PerformanceAbstractThe effectiveness of interactions between manufacturing and marketing departments often determines the competitiveness and profitability of a firm. Enterprise resource planning (ERP) systems address integration issues of business functions includ
3、ing manufacturing and marketing. Many benefits contributed by ERP implementation found in literature are similar to the benefits and objectives achieved through the integration of manufacturing and marketing functions. This research model based on contingency theory and socio-technical theory is use
4、d to study the effects of ERP implementation to marketing and manufacturing integration. An multiple-cases study of four companies in the electronic industry that have implemented ERP systems was conducted. The study shows that internal organizational and external factors affect the interaction betw
5、een manufacturing and marketing and reducing their gap that results in performance improvement. ERP systems facilitate the integrated-interaction performance between manufacturing and marketing. This study provides a new perspective of the factors that impacts the effectiveness of ERP systems. Indus
6、trial Management & Data SystemIntroduction The Internet economy is a customer-oriented marketplace. Consumers are increasingly engaged in an active and explicit dialogue with companies, its marketing department or even its manufacturing department. The eFoundry system from TSMC is an example of such
7、 close collaboration (TSMC, 2002). The role of the consumer is being transformed from passive buyer to active participant in creating added values. The ability to provide flexibility manufacturing capability to enable mass customization while still being able to reduce costs and improve quality is a
8、 critical element for many manufacturing firms to compete in the marketplace (Armacost et al., 1994; Murakoshi, 1994; Whybark, 1994; Parente, 1996；Hsu，2000). To respond quickly to customer demands and market changes requires better integration of internal functions and processes. In the early 90s, b
9、usiness process reengineering is the approach taken by many enterprises to achieve dramatic performance improvement, often through process integration and applications of some enabling information technology widely (Chen, 1999). Many BPR projects have encountered an insurmountable difficulty in brin
10、g down the stovepipe-like business processes and the associated legacy systems often referred to as islands of automation. ERP systems emerging in the mid-90s are becoming a possible solution to integrate physical production systems with business processes via an integration information system. ERP
11、systems often consist of many modules support business functions such as manufacturing, inventory management, marketing, order processing, etc. These modules are integrated via a common data model and database system which indirectly supporting the interactions among various business functions. Whet
12、her implementing ERP systems really facilitate better integration among business functions and improve the integrated-interaction performance performed jointly by these departments are not addressed by existing research in ERP Li-Ling Hsu and Minder ChenImpacts of ERP Systems on the Integrated-Inter
13、action Performance of Manufacturing and MarketingIndustrial Management & Data Systemsimplementations. This research is designed to address the impacts of information technologies, to the integration business functions. Since the integration between manufacturing and marketingprocesses are the key el
14、ements of many firms core business processes. Our research is focus on the effects of ERP systems to the interactions and integration between manufacturing department and marketing department. Implementing ERP systems are very costly and time-consuming, our research finding may help researchers and
15、practitioners to gain insights of how and why ERP systems in improving firms performances. Our research goals include the study of the relationships of majors constructs defined in our research model:(a) study the internal and external situational variables and their relationships to the gap in inte
16、raction process. (b) examine the relationship between gap in interaction process and integrated-interaction performance. (c) Study the effect of ERP implementation to the relationship between gap in the interaction process and the integrated-interaction performance. Four case studies have been condu
17、cted to verify the research model proposed in this paper. The literature supporting the formulation of the research model and the data collected from the case studies are reported in this paper. The analysis of the case studies against the research models and the implications of the research results
18、 are discussed in detailed in this paper. Literature Review Organizational integration is a major challenge in modern enterprises. Contingency theory argues that the degree of organizational integration is a function of environmental uncertainty and complexity. A resource-based view would suggest th
19、at the degree of organizational integration depends on the costs associated with integration and resources availability.Contingency theory and socio-technical theory are bases that form the research model of this study. Contingency theory addresses the impacts of environmental factors to an organiza
20、tion and its structures. Socio-technical theory studies the impacts of technologies to organizations and the effects of organizational process, culture, and works to technology implementations (Bostrom and Hensen, 1987a, 1987b). The specializations of functional departments may become barriers for c
21、orporations among these departments (Woodward, 1965; Thompson, 1967; Perrow, 1970). Socio-technical theory suggests that organizational characteristics of various functional departments may affect how they interact with each other (Lorsch, 1965; Lawrence and Lorsch, 1967,1986). Geser (1992) conceptu
22、alized organizations as social actors capable of interacting with each other as well as with individual actors. Organization units (e.g., different functional departments) are differentiated actors that participate simultaneously in many different interaction processes and they often have contradict
23、ory values and rules. Marketing department focuses on meeting customer demands while manufacturing department is concerned with control the costs and schedule of the production process and inventory. The interdependencies and interactions based on different objectives are the source of task conflict
24、s Li-Ling Hsu and Minder ChenImpacts of ERP Systems on the Integrated-Interaction Performance of Manufacturing and MarketingIndustrial Management & Data Systemsbetween manufacturing department and marketing department. Above statements, this study considers the ERP implementation will be a useful in
25、tegrated tool to solve some tough problems of existing IS- islands in many companies. As Vosburg and Kumar (2001) also pointed out ERP implementation in company replaced a number of independent mainframe legacy systems Contingency Theory and Interaction process. The interactions and dependencies amo
26、ng departments in an organization are contingent upon internal and external factors such as departmental structure, task structure, specialization, production structure, and department objectives (Ruekert and Walker, 1987; Kahn, 1994; Parente, 1996). Kahn (1994) used socio-technical and contingency
27、theory to interpret the interaction and corporation performance among departments. Parente (1996) also used socio-technical and contingency theory to develop a research model to study cross-functional interactions. Organization Structure and Interaction Process.Literature on the interactions between
28、 marketing department and manufacturing department often measure the organizational structure based on degree of formalization, centralization, and specialization (Barclay, 1991; Kahn, 1994; Parente, 1996). We found that these three constructs of organization structure are highly correlated to gap i
29、n the interaction process that includes interface congruence gap and resource sharing gap (Barclay, 1991; Kahn, 1994; Parente, 1996). Organizational Climate and Interaction Process. Organization climate is the way employees feel to work in an organization. It is a set of measurable characteristics o
30、f the work environment, based on the collective perceptions of the people who work there that influence their motivation, behavior, and performance (Wilkins and Ouchi, 1983). The characteristics of organization related to the fostering of organizational climate include: leadership style, job variabi
31、lity, degree of decentralized decision making and management, individuals commitment to the organization (Tyagi, 1985). Barclay (1991) found that lack of common culture among departments makes these departments to negotiate with each others and has a positive correlation to the gap in interaction pr
32、ocess. Although Parente (1996) also suggested that a more friendly organizational culture has a positive effect on achieving enterprise-wide objectives and sharing common values because the reduced gap in interaction process should reduce conflicts between manufacturing and marketing. However, accor
33、ding to Robbins (1998) perspective of conflict management, Hsu (2000) found that certain degree of conflicts may in fact reduce the gap in the interaction process between manufacturing and marketing. Market Turbulence and Interaction Process.Market turbulence can be measured by customer loyalty, cha
34、nges in the environments, and the ability to forecast market demand (Kahn, 1994). Parente (1996) used a customer-oriented definition of market turbulence and defined it as the changing composition of customers and their preference towards various products. Kahn (1994) found that more turbulent marke
35、t contributes to high degree of uncertainty in market information and hence hinders the interaction between manufacturing and marketing. However, Parente (1996) pointed that in order to serve customers better in a more turbulent market, manufacturing Li-Ling Hsu and Minder ChenImpacts of ERP Systems
36、 on the Integrated-Interaction Performance of Manufacturing and MarketingIndustrial Management & Data Systemsand marketing department need to interact more frequently in order to share information and rescrouces, hence reduce the gap in resource sharing. Hsu (2000) also found both gaps in resource s
37、haring and interface congruence are reduced under more turbulence market. Therefore, we assume negative correlation between market turbulence and gap in interaction process.Gap in Interaction Process and Integrated-Interaction Performance. Literature in manufacturing and marketing interaction resear
38、ch measures the performance of the interaction in the following two approaches. The first approach is measured the performance of the interaction between manufacturing and marketing by measuring the performance of the whole (Lawrence and Lorsch, 1967; Bourgeois, 1980, 1985; Dess, 1987; Hrebiniak and
39、 Snow, 1982; Ruekert and Walker, 1987; St. John and Rue, 1991; St. John, 1991; St. John and Hall, 1991; Bondra and Davis, 1996; St. John, 1999; Kumar et al., 2000). Researchers using this approach are assuming that the ultimate goal for manufacturing and marketing to work together is to maximizing t
40、he profit of the firm. However, there are many external factors that may affect the firm profit and internal factors among employees and functional units may also affect the profit of a firm. Therefore, we prefer the second approach that uses the outcomes of the manufacturing and marketing interacti
41、on as performance indicators. These outcomes include product quality, timeliness of order delivery, reliability, product line flexibility, pricing, and customer services (Hill, 1989). The activities involve manufacturing and marketing as well as interactions between the two departments are considere
42、d an import part of the primary activities in a firms value chain. In our search, we only measured the performance of the integrated interaction between manufacturing and marketing department.The indicators used to measuring performance of the interaction activities between manufacturing and marketi
43、ng are quite different based on our literature review. For example, Ruekert and Walker（1987）use quality management viewpoint to measure the performance of manufacturing and marketing interactions and use Functional Outcomes and Psycho-social Outcomes as indicators. Functional outcomes include the de
44、gree of accomplishment of manufacturing goals and marketing goals, as well the joint goals of the two departments. Psycho-social Outcomes include the perceived effectiveness the relationships and degree of conflicts between employees from manufacturing and marketing deapretment. Deaneet et al. (1990
45、) used Return On Investment, Return On Sales, Sales Growth, and Market Share to measure the interaction performance. Hill (1989) suggested the use of quality, delivery cycle time, reliability, product line design, pricing, and customer service level as indicators for interaction performance. Kohlian
46、d and Jaworski (1990, 1993) adapted a transaction process concept to measure interaction performance to include indicators such as customer responses, business performance, and employee responses. St. John（1991）reviewed many literature and proposed eleven indicators such as lower price, product cove
47、rage, flexibility in product design, product line performance, and after-sales service, etc. St. John and Hall (1991) used market share and sales, profit margin, product quality, and production costs as indicators of individual departments performance while emphasized customizability in production s
48、cheduling, total Li-Ling Hsu and Minder ChenImpacts of ERP Systems on the Integrated-Interaction Performance of Manufacturing and MarketingIndustrial Management & Data Systemsquality management standards, handling of customer complaints, new product development, cost control, and inventory control a
49、s performance indicators of joint decisions by manufacturing and marketing. Pinto et al., (1993) used task outcomes and social outcomes to measure the performance of the cross-functional task force. Task outcomes are related to the execution of project tasks and social outcomes are related to perceived satisfaction and values by people involved in the task force. Karmarkar (1996) conclu
