Enterprise resource planning systems are frequently used in conjunction with JIT production. An enterprise resource planning (ERP) system is an integrated set of software modules covering a company’s accounting, distribution, manufacturing, purchasing, human resources, and other functions. Real-time information is collected in a single database and simultaneously fed into all of the software applications, giving personnel greater visibility into the company’s end-to-end business processes. For example, using an ERP system, a salesperson can generate a contract for a customer in Germany, verify the customer’s credit limits, and place a production order. The system will then use this same information to schedule manufacturing in, say, Brazil, requisition materials from inventory, order components from suppliers, and schedule shipments. Simultaneously the system credits the salesperson with his or her commission and records all the costing and financial accounting information. An ERP system also allows a company to shift its manufacturing and distribution plans rapidly in response to changes in supply and demand.
Companies believe that an ERP system is essential to support JIT initiatives because of the effect it has on lead times. For example, using an ERP system, Autodesk, a maker of computer-aided design software, reduced order lead time from 2 weeks to 1 day. Fujitsu, an information technology company, reduced its lead time from 18 days to 1.5 days.
In recent years, providers of ERP systems such as SAP and Oracle have increasingly been offering cloud-based products and providing the software as a service. For example, Oracle expanded its cloud offering with the acquisition of Netsuite in 2016. Cloud-based products require less upfront investment and can be adapted more easily than previous generations of ERP systems, which required customers to purchase licenses and to make hardware investments.