ERP Systems and Sustainability | Enterprise Resource Planning (ERP) and Sustainability

ERP Systems and Sustainability | Enterprise Resource Planning (ERP) and Sustainability
ERP Systems and Sustainability
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ERP, as the name implies, is an enterprise-wide approach to driving processes and delivering clear and concise information across an organisation. For overall success in this area, it is vital to involve key people from every department across the business. From the initial scope through the implementation project and into optimisation. An organisational structure for delivering ERP also supports sustainability in three ways:

  • Helps people through a significant period of change and encourages skills of challenging the status quo, learning and project-based working
  • Results in a single version of the truth with shared data across the business
  • Occurs in simplified and documented processes reducing the number of variants

What tools can ERP systems offer?

Typical measurement tools, standard in most ERP systems, include product costing, capital budgeting, performance evaluation, and dashboard reporting. ERP packages allow for the allocation of different resources so that businesses can genuinely establish what the cost drivers are. You can record the cost of acquiring material separately, rather than treating as an overhead, using Landed Cost Tracking elements. You can also create A Bill of Packaging to monitor these elements of costs.

Many ERP packages also provide links into specialist measurement packages to gather usage data within the core reporting system. The stricter regulations get, the more of a requirement there will be to improve data gathering tools. Vendors report that it is usually now a requirement in an Invitation to Tender (ITT) that the system supports resource consumption information. Such devices are user-definable so that they measure areas that are specific to the sector in which the organisation works.

Positive Impact Tools

Once a robust measurement system is in place, attention needs to turn towards delivering a positive sustainability impact utilising a range of ERP-based tools. Marc Epstein, in Making Sustainability Work identifies some areas where organisations must assess the impact their activities are having on the sustainability programme:

  • Procurement – seeking sustainable sources of material, reducing packaging and working with suppliers to reduce the harmful effects of their products
  • R & D – identifying processes that use resources more efficiently
  • Marketing – investigating how marketing, distribution and selling methods can mitigate adverse impacts
  • Production – devising processes that are more efficient and less costly in terms of energy and resource consumption
  • Management Accounting – providing information to support decisions on product costing, pricing and product/process design

ERP systems can support the sustainability strategy positively in many ways.

  • By providing the right organisational environment in which to adopt a sustainability strategy
  • Supply measuring and monitoring tools to capture consumption data. Also, exploding material and overhead costs and dashboards to publish and share this data for all to use
  • Giving specific sustainability-focused tools to reduce adverse impact. Asset Management, Product Lifecycle Management or Supply Chain Optimisation modules, for example.

Product development is driving this way as ERP vendors see sustainability as a significant trend for organisations. There are schemes in place to help businesses be accountable for their carbon footprint – Carbon Trust or Enworks, for example. However, these tend to ignore the role of ERP systems in both supporting and measuring reductions & ROIs achieved.

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