Improving productivity and firm performance with enterprise resource planning

Productivity is generally considered to be the efficient utilisation of organisational resources and is measured in terms of the efficiency of a worker, company or nation. Focusing on efficiency alone, however, can be harmful to the organisation's long-term success and competitiveness. The full benefits of productivity improvement measures are realised when productivity is examined from two perspectives: operational efficiency (output/input) of an individual worker or a business unit as well as performance (effectiveness) with regard to end user or customer satisfaction. Over the years, corporations have adopted new technology to integrate business activities in order to achieve both effectiveness and efficiency in their operations. In recent years, many firms have invested in enterprise resource planning (ERP) in order to integrate all business activities into a uniform system. The implementation of ERP enables the firm to reduce the transaction costs of the business and improve its productivity, customer satisfaction and profitability.