Enterprise Resource Planning systems: An assessment of applicability to Make-To-Order companies

Many vendors of Enterprise Resource Planning (ERP) systems claim their products are widely applicable–configurable to meet the needs of any business, whatever the product or service offering. But Make-To-Order (MTO) companies, which produce high-variety and bespoke products, have particularly challenging decision support requirements and it remains unclear whether ERP systems can meet their needs. This paper takes a contingency-based perspective of ERP adoption, assessing the fit or alignment between ERP functionality and a MTO production strategy. MTO features considered include: decision support requirements at critical Production Planning and Control (PPC) stages, idiosyncratic market-related features, typical company size and supply chain positioning, and shop floor configuration. It finds a substantial gap or misalignment between ERP functionality and MTO requirements; for example, between decision support provided by ERP systems and the decision support required by MTO companies at the customer enquiry and design & engineering stages. A research agenda for improving alignment is outlined, with implications for academics, MTO managers and ERP software developers. This includes: developing decision support tools that reflect the customer enquiry management activities of MTO companies; embedding MTO-relevant PPC concepts within ERP systems; and, conducting an in-depth empirical study into applications of ERP systems in MTO companies, assessing their performance impact.

► We adopt a contingency-based approach to examine the applicability of ERP. ► We assess the fit between ERP functionality and a MTO production strategy. ► We find a substantial misalignment between ERP and MTO company needs. ► We outline a research agenda for improving the alignment.