Unit 4 - Enterprise Resource Planning

Define ERP / Meaning of ERP

 Enterprise Resource Planning: An enterprise planning system is an integrated computer based
application used to manage marketing, sales, finance, product planning, purchasing, maintaining
inventories, customer service, including tangible assets, financial resources, material and human
resources.

 In short ERP system integrates all the departments of an organization andprovides a single
database where business transaction are recorded, processed, monitored and reported.

 Also, It is designed to model and automate basic processes across the organization over a
centralized database and eliminates the need of disparate systems maintained by various units of
the organization.

Need an ERP System ( If they ask in Big Question)

i. ERP Helps Process Automation

ERP systems allow companies to achieve actual business process automation, managing important
tasks on a daily basis across an organization and freeing up staff to focus their efforts on more
critical initiatives which require personal attention. This not only boosts the productivity, but also
dramatically reduces operating and overhead costs. Without ERP systems, you can't have cross
departmental collaboration and prudent workflow execution.

ii. Less Errors, More Efficiency

Another reason to deploy an ERP system is to achieve operational efficiency. Error-prone, awkward,
manual processes, etc. can drain companies money and time. And therefore, companies must
automate critical activities and augment the business process efficiency. No matter how big or small
your business is, or what type of business it is; requiring different teams and departments to operate
as a single can be quite challenging.

iii. Better Communication, Higher Productivity

ERP also improve interaction between customers and suppliers. If suppliers can coordinate easily
with finance, marketing and sales or even integrate with an ERP system, then productivity is sure to
increase. Thus, the availability of real-time communication for different groups within an organization
allows rapid responses and managed coordination.
iv. Better Information Management
Many organizations still have inconsistent information across the business. For instance, if accounts
department and call center access two different databases that are not integrated, customers with
a billing question is not likely to get a precise answer if they approach the call center for help. Such
problems may look small on the surface but can add up over time, resulting in bigger customer
satisfaction and retention issues which can adversely affect revenues and market share.
An ERP system automatically processes transactions and generates audit and financial reports. By
implementing ERP solutions, you can make accounting process more accurate, faster and smoother
than before.

v. Better Performance Measurement

Above all, an ERP system makes it easier for company staff at all levels, from front end employees
and team supervisors to senior executives and managers — to measure companies performance
and understand the impacts within the company. The Enterprise Resource Planning system also
empowers organizations to be more receptive to shifts, rapidly changing tactics to address new
customer requirements as they emerge.

vi. Business Integration and Improved Data Accuracy:

ERP system is composed of various modules/ sub modules where a module represents a particular
business component. If data is entered in one module such as receiving, it automatically updates
other related modules such as accounts payable and inventory. This updating occurs at real time i.e.
at the time a transaction occurs. Since, data needs to be entered only once at the origin of the
transaction, the need for multiple entries of the same data is eliminated. Likelihood of duplicate/
erroneous data is, therefore, minimized. The centralized structure of the database also enables
better administration and security provisions, which minimizes loss of sensitive data.

vii. Planning and MIS:

The various decision support tools like planning engines and simulations functions, form an integral
part of an ERP system that helps in proper utilization of resources like materials, human resources,
and tools. Constrained based planning help in drawing appropriate production schedules, thereby
improving the operation of plant and equipment As a part of MIS, an ERP system, contains many
inbuilt standard reports and also a report writer that produce ad hoc reports, as and when needed.
Improved Efficiency and Productivity: In addition to provision of improved planning, ERP system
provides a tremendous boost to the efficiency of day to day and routine transactions such as order
fulfillment, on time shipment, vendor performance, quality management, invoice reconciliation, sales
 realization, and cash management. Cycle time is reduced for sales to cash and procurement to pay
sequences.
viii. Establishment of Standardized Procedures:
ERP system is based on processes of international best practices, which are adopted by the
organizations during implementation. Department silos are purged, and maverick practices are done
away with. Because of topdown view available to management, chances of theft, fraud and
obsolescence are minimized.

ix. Flexibility and technology:

Due to the globalized environment, where production units, distribution centers, and corporate
offices reside in different countries, organizations need multi-currency, multi-language and multi-
accounting modes, in an integrated manner. These provisions are available in most of the ERP
systems, particularly in products offered by tier 1 and tier 2 vendors. ERP vendors are also quick to
adopt latest technologies, from mainframe to client server to the internet Unlike a bespoke system,
Upgrading to latest technology for a running ERP system is uncomplicated, involving mostly adoption
of service packs and patches.

If they ask in Section A then write the below Answer or summarize the above answer

Need for Enterprise Resource Planning:

 Separate systems were being maintained during 1960/70 for traditional business functions like
Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain Management.
 These systems were often incongruent, hosted in different databases and required batch updates.
 It was difficult to manage business processes across business functions e.g. procurement to pay
and sales to cash functions.
 To Centralize the Organization's Data
 To Standardize the Business Process
 To speed up the Manufacturing processes
 To Optimize the HR information
 To Reduce the Inventory Cost
 To Integrate Customer information
 To Integrate Financial Information
 ERP system grew to replace the islands of information by integrating these traditional business
functions.
Enumerate Advantages and Disadvantages of ERP.

The advantages presented by the ERP are:

1. Flexibility
2. Business Integration
3. Better Decision Making
4. Reduced material costs
5. Reduced manpower cost
6. Reduced inventory carrying cost:
7. Efficient financial management
8. Improves sales and customer service
9. Easy to Operate
10. Use of latest Technology

1. Flexibility
The other main advantage of ERP packages is their flexibility. Diverse multi functional
environments such as multiple plant locations in different countries, different languages and
currencies, accounting standards, are covered in one system.

2. Business Integration
ERP packages are integrated, i.e. Exchange of data among related business components is
possible.This business integration capabilities makes it easy to group business details in real
time and carryout various types of management decision in time. The support systems like DSS
can use this common database. Thus information and the data are on the fingertip of top level
management.

3. Better Decision Making

The decision making procedure become easier because of highly structured programmed
process.These processes governs days to day operations and produces reports in structured
form, which are further used by top management of organization to meet with its basic goals
and objectives and to monitor the whole organization.
4. Reduced material costs
ERP Improves procurement practices lead to better vendor negotiations for prices,
typicallyresulting in cost reductions of 5 per cent or better.

5. Reduced manpower cost

Improved manufacturing practices lead to fever shortages and interruptions and to less rework
andovertime.

6. Reduced inventory carrying cost

ERP system allows customers to obtain information on cost, revenues and margins, which
allowit to better, manage its overall material cost structure.

7. Efficient financial management

Improves collection procedures can reduce the number of days of outstanding receivables,
therebyproviding additional available cash.

8. Improves sales and customer service

Improved coordination of sales and production leads to better customer service and increased
sales.Improvements in managing customer contacts, making and meeting delivery promises,
and shorterorder to ship lead times, lead to higher customer satisfaction, goodwill and repeat
orders.

9. Easy to Operate
The system is easy to operate so, that not much computer skills are required to
handle theoperations.

10. Use of latest Technology

The ERP packages itself design in a way that they can incorporate with latest technology such
asDistributed system, open system, client server technology, internet, intranet, E – commerce,
CALS(Computer aided Acquisition and Logistic Support).
Disadvantages of ERP are:

 The installation of the ERP system is costly. ERP consultants are very expensive take
approximately 60% of the budget.
 The success depends on the skills and experience of the workforce, including education and how
to make the system work properly.
 Resistance in sharing internal information between departments can reduce the efficiency of the
software.
 The systems can be difficult to use.
 Change of staff, companies can employ administrators who are not trained to manage the ERP
system of the employing company, proposing changes in business practices that are not
synchronized with the system.
 Having an ERP system has many advantages, but does not guarantee the total success of the
company. Organizational culture, know how to involve staff and anticipate changes that will suffer
the organization using this system of administration, are important elements for the completion of
the implementation.
 The effectiveness of the ERP system may decrease if there is resistance to share information
between business units or departments. Due to strong changes that implementation of the ERP
system brings in the culture of work, there may be poorly trained or disinterested in making use of
the same staff.
 The benefits of having an ERP system are not presented immediately with the implementation of
the software, they will be evident long after the system is running. The culmination of the
implementation depends on the ability and skill of the workforce, also involves education and
training, to make the system is correctly applied.

Discuss about Finance Module in ERP.

The financial module is the core of many ERP software systems.

It can gather financial data from various functional departments, and generates valuable
financial reports such balance sheet, general ledger, trail balance, and quarterly financial
statements.

The Finance Module consists the following major components:

I. General Ledger
II. G/L Security
 III. G/L Consolidations
IV. Accounts Receivables
V. Account Payable
VI. Asset Accounting
VII. Multicurrency
VIII. Intercompany Transactions
IX. Transaction Analysis and Optional Field Creator

I. General Ledger

 It is the foundation of accounting system, with flexibility that meets the current and
future
 financial management requirements of organizations of all types and sizes.
 General Ledger fully integrates with all modules and is the key to maximizing the
efficiency and accuracy.

Actual individual transactions can be checked at any time in real-time processing by

displaying the original documents, line items and monthly debits and credits at various
levels such as:

1. Account

2. Journals

3. Summary of monthly debits and credits (balances)

4. Balance sheet/profit and loss evaluations

II. G/L Security

This enables organizations to control which users can view or use certain general

ledger accounts based on segment validation in G/L Security settings.

III. G/L Consolidations

It helps to transfer and merge General Ledger account and transaction information
between separate company and branch office locations.

G/L Consolidations provides a feature set that allows the company to define the level of
detail to consolidate and provides a comprehensive audit trail.

IV. Accounts Receivables

 It records all account postings generated as a result of Customer sales activity.

 These postings are automatically updated in the General Ledger.
 The Accounts Receivable Module is integrated with the General ledger, Sales and
Distribution, and Cash Management Modules.
V. Account Payable

 It records account postings generated as a result of Vendor purchasing activity.

 These postings are automatically updated in the General Ledger because
ACCOUNT PAYABLE is integrated with the General ledger.

VI. Asset Accounting

The Asset Accounting (FI-AA) component is used for managing and supervising fixed
assets with ERP System. In ERP Financial Accounting, it serves as a subsidiary ledger
to the FI General Ledger, providing detailed information on transactions involving fixed
assets.

VII. Multicurrency

This delivers powerful and comprehensive multicurrency accounting functions.

Sophisticated multi-currency accounting management and the ability to process
transactions in any number of currencies give your business the global competitive edge
required in today's business world.
VIII. Intercompany Transactions

It helps to enter General Ledger and Accounts Payable transactions that affect more than
one company.

Intercompany Transactions simplifies and significantly reduces the amount of work

required for intercompany accounting.

XI. Transaction Analysis and Optional Field Creator

Transaction Analysis and Optional Field Creator allows us to define all the information we
require for each General Ledger account, customer, vendor, item, transaction, and
transaction detail, making it easy to record and track data from the originating transaction
through to our General Ledger.

Discuss about Manufacturing Module in ERP.

 Manufacturing is the process by which raw materials are transformed into finished
products. Manufacturers must respond quickly and effectively to customer
demands.
 Manufacturing module contains necessary business rules to manage the entire
production process.
 The manufacturing module in ERP ensures that machinery, workforce and material
components are available in order to yield the desired finished products as
scheduled.
The Manufacturing Module consists the following major components:

1. Master Production Schedule (MPS)

2. Production Plan
3. Material Requirements Planning (MRP)
4. Quality Management
5. Engineering Data Management
 6. Tooling
7. Serialisation / Lot Control

1. Master Production Schedule (MPS)

 Master Production Schedule (MPS) is a planning process in Manufacturing

Industry.
 Master Production Scheduling (MPS) provides a Plan for the manufacturing
organization ie. for what you need to produce, how much and when to produce it.

MPS gives a formal detail of the production plan such as:

 Which things they should produce

 Exact numbers of products and delivery timings for each end product.
 Which sequence they should produce
 What times they should produce

2. Production Plan

Production Plan provides a Plan for the manufacturing organization regarding the
quantities of final product, subassemblies, parts needed at distinct points in time.

3. Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is used to improve productivity of manufacturing

organization. Companies use material requirements-planning systems to estimate
quantities of raw materials needed and schedule their deliveries.

4. Quality Management

 It tracks quality control activities across the enterprise from intermediate producers
to finished goods.
  These systems allow a wide variety of characteristics and parameters to be
specified in test and inspection operations.
 Also, it maintains an extensive history to improve product quality and identify
recurring problems.

5. Engineering Data Management

 Engineering Data Management is designed to help-reduce errors and increase

design productivity by providing an automated link between engineering and
production information.
 Most packages allow a smooth integration, with popular CAD packages, to simplify
the exchange of information about drawings, items, BOMs and routings.

6. Tooling

 These systems help to ensure that tools and materials arrive together at scheduled
operations by storing tools in inventory, planning, and allocating the required tools as
part of the production order.
 It calculates the remaining useful life of a tool and automatically route tools for
maintenance based on usage.

Serialisation / Lot Control

It will provide the facility for the designation of raw material lots and the serialisation of
component parts made from those lots.
 Discuss about Human Resource Module in ERP.

Human Resource module is used to store and manage the different types of Employee-
related information such as payroll, planning, hiring, Employee Training & Development
Programs and administration.

The Human Resource Module consists the following components:

1. Personnel Management
2. Organisational Management
3. Payroll Accounting
4. Time Management appreciated

1.Personnel Management

This module routinely maintain a complete employee database including contact

information, salary details, attendance, performance evaluation and promotion of all
employees, Recruitment and Travel management.

Personnel Management has the following sub components:

i. Employee Master Data

ii. Recruitment management
iii. Travel management
iv. Benefits Administration

i. Employee Master Data

It is used to store the detail profile of each Employee such as name, address,
designation, salary, Job Skills, Trainings attended.
ii. Recruitment management

 This component helps in hiring the right people with the right job skills.
 Also, This component includes processes for managing open positions
requisitions, applicant screening, selection and hiring, reporting and cost analysis.

iii. Travel management

This module helps us in processing the travel expenses effortlessly, in several currencies
and formats.

iv. Benefits Administration

The Benefits Administration component provides us with the capabilities and flexibility to
manage effectively benefits programs for diverse employee. Also, the benefits
information is used to track the benefits that an employee has elected for the current year
and did have previously.

2. Organisational Management
This module helps to maintain an accurate picture of an organisation's structure.
It helps to review any Promotions, additions, or changes in employee positions.
We can forecast wages, salaries and other cost elements for open and filled positions.

3. Payroll Accounting
Payroll is a list of employees who get paid by the company. Payroll also refers to the total
amount of money employer pays to the employees.

It is used to manage the following functions:

1. Developing organization pay policy including flexible benefits, leave encashment
policy, etc.
2. Defining pay slip components like basic, variable pay, HRA, and LTA
3. Calculation of Gross salary and Net Salary.

4. Time Management
Time Management component helps to automate time schedule generation process
based on location and organisation level.

Also, the Time Evaluation component allows daily analyze and processing of employee’s
time entry data i.e Working Hours and work report.

Discuss about Plant Maintenance Module in ERP.

 Plant Maintenance module covers all maintenance activities of Plant / Machine.

 All maintenance tasks such as inspection, servicing and repair activities are saved
in a historical database.
 Plant Maintenance module used to generate the technical reports and these
technical reports are used to reduce the duration and costs of plant down times.
 Also, It is used to identify the problems in the equipment / plants.

The major sub system of a plant maintenance module are :

1. Preventive Maintenance Control
2.Equipment tracking
3. Component tracking
4.Plant maintenance calibration tracking
5.Plant maintenance warranty claims tracking

1. Preventive Maintenance Control

 Preventive maintenance control provides planning, scheduling and control of

facilities and equipment.
 Equipment lubrication replacement and safety inspection can be planned ,
scheduled and monitored.
  These modes could include tracking by hours of operation , unit of production
,gallons of fuel consumed or the number of day’s operation since the last service
interval.

2. Equipment tracking

 Equipment is an asset that needs to be monitored and protected. In many

situations , equipment maintenance costs constitute the single largest controllable
expenditure of an organization
 It is used to create equipment records ie. each piece of equipment is assigned
with serial number, user and stored in equipment records database for usage
tracking.

3. Component tracking

Component are typically subsets of larger equipment and deserve the same amount of
cost controlling scrutiny. Component tracking enables equipment managers to identify
component with chronic repair problems.

4.Plant maintenance calibration tracking

Plant maintenance calibration tracking allow organization to leverage their investment in

the plant maintenance module by providing for the tracking of equipment calibration in
support of ISO 9000 requirements.

5 .Plant maintenance warranty claims tracking

 Plant maintenance warranty claims tracking is an administrative system designed

to provide control of all items covered by manufacturer and vendor warranties.
 It enables plant management to recover all of the warranty reimbursement.
 It features includes the ability to establish the type and length of warranty and
warranty service provider information.
Discuss about Sales and Distribution Service Module in ERP.

The sales management module is entirely based on helping the user handle customers.
This module can help understand customer requirements, improve and retain customers,
attain new customers, cost reduction, shipping and billing, selling and transportation of
products and services.

The Sales Management Module consists the following major components:

i. Sales Lead
ii. Sales Enquiry
iii. Sales Enquiry Quotation
iv. Sales Enquiry Cancellation
v. Sales Proforma Invoice
vi. Sales Quotation
vii. Sales Pending Quotation
viii. Billing
ix. Shipping
x. Transportation
xi. Customer Complaint Log

i.Sales Lead

A sales lead is essentially a potential customer, client or sales contact. This section allows
the user to input all information about a sales lead and create a profile that can be used
for future business gains.

ii.Sales Enquiry

This section contains about individuals/companies that respond to marketing content and
enquire about products. All details of these individuals/companies and stored in this
section for future sales purposes.
iii.Sales Enquiry Quotation
This section allows a user to create quotations against specific enquiries which include
transaction type, transaction number, client name, transaction date, and so on.

iv.Sales Enquiry Cancellation

This section is used in the event of an enquiry cancellation.

v.Sales Proforma Invoice

A Proforma invoice is used to request advance payments. These invoices contain
information about how much a certain number of goods/services would cost before they
are delivered. This section is used to create such invoices.

vi.Sales Quotation
This section creates a formal statement that includes details about the total cost of
goods/services that the client or customer has enquired about. It also includes the terms
and conditions of sale.

vii.Sales Pending Quotation

This section contains information about, and a summary of, all pending quotations.

viii. Billing
Billing is the key part in any transaction. Consumers prevail the choice of either paying
through online media or else through cash on delivery. This particular module keeps track
of all the billing data in an appropriate manner.

ix. Shipping
A Product needs to be rightly shipped and delivered to the customer. There are different
methods of shipping and this component tracks each product used for each delivery. The
entire process from being shipped to delivered or return back is recorded through this
component.
x. Transportation
This component works hand in hand with the shipping. The mode of transportation for
each product differs and this module keeps track of all the transportation data.

x.ii Customer Complaint Log

This section stores all customer complaints made against sales of products.

Discuss about Inventory Module

ERP inventory module support processes of maintaining the appropriate level of in a warehouse.
It involves-
 Identifying inventory requirements
 Setting targets
 Providing replenishment techniques
 Monitoring item usages
 Reconciling the inventory balance
 Reporting inventory balances
 Reporting inventory status.

Discuss about ERP life cycle Phases.

ERP life cycles, which encompass entire 10 to 20 years of effective operating life, are often
confused with ERP Implementation Life Cycle.
Phases of ERP life cycle is shown in following diagram.
1. ERP Roll out
2. Optimization
3. Maintenance
4. Extending Values
5. Decaying Performance
6. Reimplementation
 Figure : ERP Life Cycle

1. ERP Roll out

your chosen software is first implemented in the workplace after going through an extensive
evaluation. The initial roll out of an ERP system itself consist of various phases commencing
with Request for Proposal (RFP) and vendor selection and ending with go live and hand holding
phase.
2. Optimization
The system is configured to business needs. This includes a customization process. This is to
ensure that productivity is increased from a fluid workflow. After the system is live and rolled
out, there will be a period of turmoil. Due to lack of understanding, a lot of confusion will
prevail amongst users. There will be teething problems and some software bugs will invariably
appear. With retraining, some tweaking of the system and assistance from a responsive help
desk, this phase should be over within six months to one year and the system should start
stabilizing.
3. Maintenance:
This involves taking care of the system on a day to day basis. Creating new reports, changing the
values of taxation to comply with legislation, responding to user requests. This is the longest
period of life cycle, when the organization start realizing value of their investment. Users will get
familiar and start owning the system.

4. Extending Values
Running in parallel with maintenance this involves adapting to business, legislation, and
technological changes as necessary. This phase overlap with the phase of maintenance. New or
changed business processes necessitate minor or moderate changes in the system.

4. Decaying Performance
The first signs that the system is coming to an end. Hard to update, harder to maintain. It simply
can't keep up with demand For an enterprise, business need and technological requirement,
continue to evolve. Cost, Complexity and difficulty to modify and update the existing system
mount. Fixing existing system is no more viable and provides diminishing return. Alternatives are
investigated and decision of reimplementation is taken.

5. Reimplementation
Similar to the initial rollout phase. Based on experience most businesses try and get the features
they need from a vanilla ERP. This reduces customization needs, time, and cost. Similar to Roll
Out phase as mentioned above.

Stages of ERP Implementation:

1. Pre evaluation screening
2. Package Evaluation
3. Project planning phase
4. GAP analysis
5. Reengineering
6. Customization
7.Implementation team training
8.Testing
9.Going live
10. End-user training
11. Post implementation/operation and maintain

1. Pre evaluation screening

Once enterprise has decided to apply ERP system the search for perfect package start.
But there are several of ERP vendors-off many sizes and shapes.
Analyze all the packages before reaching a decision is not an easy process, its very time consuming.
Company should do per-evaluation screening to limit the number of ERP packages that are to be evaluated
by the committee.

2 .Package Evaluation:
 The selection process is the most important stage of the ERP implementation because the selection
will decide the success or failure of the project.
 ERP system cost huge investment, once a package is purchased then it is not easy to switch to
another one.
 The objective of selection process is not to identify a package that covers each and every need but
also find a package that is flexible enough that covers enterprise needs.
Important points to be kept in mind while evaluating ERP software includes: Functional fit with companies
business process
 Flexibility and scalability
 Complexity
 User friendliness
 Quick implementation
 Technology- client server capabilities, database independence, security.
 Amount of customization required
 Total cost, cost of license, implementation, maintenance, customization and hardware
requirements.

3. Project planning phase

The project planning phase is the phase that designs the implementation process. This phase directs about
how follow implementation. Such as time schedules, deadlines etc. In this phase roles are identified and
responsibilities assigned.
4. GAP analysis
In the gap analysis stage, companies create a complex model of their current status i.e. where they are
now and where they want to reach. The trick of gap analysis is vendor covers functional gaps. It is also
estimated that ERP package is fulfilling companies need or not.

5. Reengineering
Implementation of an ERP system involves reengineering of the existing business processes to the best
business process standard. ERP systems are built upon best processes followed in the industry.
Reengineering exhibits the existing way of doing business.

6. Customization
This is the main functional area of the ERP implementation. In this process the existing business processes
synchronized with ERP package. For a good synchronization between processes and ERB all processes
have to be understood and mapped in such a way that the solutions match up with the overall goals of the
company.

7.Implementation team training

In this phase of ERP life cycle implementation team is being trained. At the same time customization is
taking place. Training is given to the team on how to implement ERP system. In the training, company trains
its employees to implement and later run the system. The ERP vendors and consultants will leave after the
implementation of ERP system is over.

8.Testing
This is the phase where you try to test and break the system. Here we will try to test the system with real
case scenarios like- system overloads, multiple users logging on at the same time with the same query,
users entering invalid data, hackers trying to access restricted areas and so on. Test case should be
designed in such a way that it can identify the weak links in the system. All the problems should be fixed
before living.

9.Going live
In this phase ERP is made available for all employees and for the entire organization. The technical side
is almost complete, database is ready and running on the functional side the model is fully configured and
tested and ready to go operational.
10. End-user training
In this phase the actual users are given training how to use the system. The phase starts much before the
system goes live. The employees who are going to use the ERP system are identified, their current skills
are noted and they are divided into groups. Each group is given training on the new system. This training
is very important for the ERP System because now its in the hand of end users.

11 .Post implementation/operation and maintain

This post implementation phase is the most important phase and critical also. Once the implementation is
over the vendors and the hired consultants will go. There should be sufficient employees who are trained
to handle problem that might arise after implementation. People also required who has technical knowledge
that can make necessary enhancement to the system when ever required.

Discuss about the Pre Implementation Issues in ERP.

 An ERP system helps an organization to configure a completely centralized system

that connects all the business processes together.
 But, the following major Pre Implementation Issues are needs to take into account
before implementing an ERP system.

Pre Implementation Issues in ERP

1. ERP Vendors
2. Commitment From The Top Management
3. Adequate Training
4. Implementation Time
5. Proper Project Management
6. Employee Retention
7. Sufficient Testing
8. Maintenance Cost
9. Investment In Internal Hardware

1. ERP Vendors
  In this competitive environment, the selection of the perfect product is necessary
to achieve productivity gains.
 There are over 500 ERP applications in the market. While selecting the perfect
ERP application for a business, one should know the vendor’s previous projects,
industry vertical and experience.

 If you do not understand what they all are it will be very likely that you might end

up choosing what you do not actually want.

2. Commitment From The Top Management

Senior managers play a crucial role in any ERP implementation. Their involvement is
extremely necessary for the success of a project. Any form of ignorance may cause
ineffective decisions and delayed operations.

3. Adequate Training

 After the implementation of an ERP system, resentment from employees is

common. This could heavily degrade the productivity of processes.
 Special training and motivation before the implementation are very helpful. This
would give the teams, some time to get familiar with the software.

4. Implementation Time

Many companies don’t realize the time consumption of an ERP implementation process.
An ERP system is implemented step by step and because it is very standard, it needs to
be designed to a particular business, to handle the processes just the way the company
needs them.

5. Proper Project Management

Companies who want to implement the ERP system, need to assign their best employees
for successful implementation. Generally, companies appoint external help as well but
internal employees are preferred.

6. Implementation Cost

The entire cost of an ERP implementation is much greater than the initial costs. The total
implementation cost depends on the customization cost. Greater the customization,
higher will be the final implementation cost.

7. Employee Retention

It’s been observed that despite of training, many employees leave the organization after
the implementation of ERP system. This can immensely affect the growth rate of a
company.

8. Sufficient Testing

Testing of ERP system doesn’t mean whether it’s working smoothly or not, but to be
delighted by it’s performance and to see whether it’s up to your needs. Insufficient testing
of the system can attract costly unplanned updating.

9. Maintenance Cost

An ERP system has maintenance costs attached to it. If managed casually, it has the
power to fracture an organization. It requires time to time maintenance which adds up to
the recurring cost.
10.Investment in Internal Hardware

Working on a slow system can be very unproductive and frustrating. ERP applications
require sufficient storage and high work performance. Low investment in internal
hardware may result in various software issues.

Discuss about the Post Implementation Issues in ERP.

The following major Post Implementation Issues are needs to take into account after
implementing an ERP system in the Organization.

There following are some of the major Post Implementation Issues:

1. Problem of Transformation due to ERP

2. Enhancement of ERP Functions

3. Organizational Reaction To Change

4. Inflating Resources For ERP Implementation

5. Training & Educate about the Newly Developed ERP System

6. System Maintenance Support

7. Emergencies

1. PROBLEM OF TRANSFORMATION DUE TO ERP

 Employees find it hard to digest the transformations that place in an organization

all on a sudden due to ERP implementation.
 In fact employees exhibit positive signs as everything goes right in the first place.
But as one progresses he finds difficult to work as it gets more complex.
 The initial interest and expectation turns into apprehensiveness in due course of
time.
 There is another category of people who did not encourage ERP right from the
 conceptualization stage.

2. ENHANCEMENT OF ERP FUNCTIONS

 ERP's scope gets wider as it is implemented in an organization.

 This dilutes the ERP Existing system after modifying it a couple of times. Repeated
change in configurations and systems will only add to the confusions.

3. ORGANIZATIONAL REACTION TO CHANGE

 Changes do happen quickly and immediately in the organization after ERP is

implemented.
 But if there is no proper understanding of the process or mishandling of
information, it will affect the business process and create unnecessary confusions.
 So, every member of the organization should be proactively adopt and understand
the ERP system process.

4. INFLATING RESOURCES FOR ERP IMPLEMENTATION

 The implementation time and money always exceeds the promises and stipulated
deadline and amount. This makes companies to lose faith on ERP and ERP
vendors.
 They think that ERP vendors overplay on the costs and time required but it is not
so.
 In fact they are aware of it in the very beginning stage itself but have a different
reason for concealing. They don't disclose it in the beginning because it would look
like exaggerating.
 However many people mistake this to be the cause for ERP implementation failure.

5. TRAINING & EDUCATE ABOUT THE NEWLY DEVELOPED ERP SYSTEM

  Training users requires significant time and effort, especially considering
employees are also expected to carry out their normal responsibilities throughout
the process.
 How long it takes will depend not only on the size and complexity of the ERP
solution, but also on the mentality that employees have about changing the way
they work.

6. SYSTEM MAINTENANCE SUPPORT

 Many companies believe that ERP implementation ends on the go-live date.
 However, it requires ongoing maintenance of the software and support for its
users. Budgeting time and resources to identify issues and fix errors will be
important throughout the entire life cycle of the ERP solution.
7. EMERGENCIES

 Emergency communication channels in case of failure should be prepared.

 There should be proper maintenance of the system
 There should be effective back-up plans in case system failures occur in required
coverage areas.

Describe Business Process Re-engineering.

 Business Process Re-engineering (BPR) is a management approach aiming at

improvements by means of elevating efficiency and effectiveness of the current
business process within the organizations.
 In simple terms, the process of examining current processes and redesigning
those processes to increase the efficiency and effectiveness of an organization is
called BPR.
 More precisely, BPR means the rapid and radical redesign of strategic, value-
added business processes and system, policies and organizational structure that
support them to optimize workflow and productivity in an organization.
Five steps of Business Process Re-engineering (BPR) :

1. Map the current state of your business processes

Gather data from all resources–both software tools and stakeholders. Understand how
the process is performing currently.

2. Analyze them and find any process gaps or disconnects

Identify all the errors and delays that hold up a free flow of the process. Make sure if all
details are available in the respective steps for the stakeholders to make quick decisions.

3. Look for improvement opportunities and validate them

Check if all the steps are absolutely necessary. If a step is there to solely inform the
person, remove the step, and add an automated email trigger.

4. Design a cutting-edge future-state process map

Create a new process that solves all the problems you have identified. Don’t be afraid to
design a totally new process that is sure to work well. Designate KPIs for every step of
the process.

5. Implement future state changes and be mindful of dependencies

Inform every stakeholder of the new process. Only proceed after everyone is on board
and educated about how the new process works. Constantly monitor the key performance
indicators (KPIs).
Discuss about Supply Chain Management
Supply Chain Management (SCM) Definition:

 Supply Chain Management is the Management of the flow of goods and services
and includes all processes that transform raw materials into final products.
 Also, SCM is the management of a network of interconnected businesses involved
in the provision of product and service packages required by the end customers in
a supply chain.

Functions of SCM:

The Supply Chain Management Components help us to governs the following Functions:

 Managing the movement of raw materials into an organization.

 Work-in-process Monitoring ie. transformation of raw material into finished Products.
 Logistics : It helps to transport the Finished Goods from the Manufacturing Plant to Customers.
 It includes the design, planning, execution, control, and monitoring of worldwide logistics,
synchronizing supply with demand, and measuring performance globally.
 Creates better delivery mechanisms for products and services in demand with minimum delay.
 It Helps to select the vendors, negotiation, relations, and performance.
 Assists companies in minimizing waste, driving out costs, and achieving efficiencies throughout the
supply chain process.

Figure : SCM processes and Participants

Why SCM is important for an Organization?

 1.Supply Chain Strategies are the critical backbone to Business Organizations

today.
 2. Effective Market coverage, Availability of Products at locations depends upon
the effectiveness of Supply Chain Strategy of an Organization.
 3. Transportation network design and management assume importance to support
sales and marketing strategy.
 4. When information is shared from retailer down to supplier, everyone doesn't
have to keep stock that much. The result is lower cost for everyone.

Discuss about the Features & Benefits of SCM:

Supply chain management features allow companies to run businesses more effectively.
1. Management of Inventory
2. Managing of Orders
3. Procurement:
4. Planning and Forecasting
5. Managing of Returns

1. Management of Inventory:
One of the main supply chain management’s feature is excellent inventory management. ie.
Accurate tracking of inventory as well as the finished goods. This function should also include the
ability to track materials needed for production and eliminate any excess waste that may be
costing your company extra money. This will not only help with the reducing of cost spent on
materials, but also on the issue of storage.

2. Managing of Orders
Another of the key supply chain management features is the ability to manage orders through
your company. It is enable us to manage an order from the time it is placed until the time it is
delivered as a finished product. This helps make everyone accountable for the work they do as
well as keeping everyone working efficiently. This will improve your customer service abilities
when your customer sees that they are still getting the same quality product but at a quicker rate.
3. Procurement
One key supply chain management feature is the ability to create lasting relationships with your
clients. In doing this you want to make sure that all tasks associated with a particular order are
being tracked properly. This will help you not only in your customer service area but also in the
area of negotiating for sales. If you are able to give a more definite finish date for a product then
you are more likely to earn their trust and win the sale.

4. Planning and Forecasting

If your company produces a product that is popular around holiday times then you want to be able
to predict the demand you may have at a certain time of year. The right supply chain management
features will help you in this battle by looking at years past data and seeing where you will be at
that same time in the year. This is a great asset to have so that your planning and scheduling can
be right on target.

5. Managing of Returns
Finally, the last supply chain management feature to mention is the return management. If your
product is defective or broken when it arrives at your customers‘ location then chances are you
are going to have a very unhappy customer. Let your supply chain management feature handle
this for you. The automatic processing of claims is one way that the software will help eliminate
this headache.

Describe Evolution Of Supply Chain Management in detail.

EVOLUTION OF SUPPLY CHAIN MANAGEMENT (SCM)

MRP grew out of the need to know what to buy and when it is to be delivered. The goal was
always to minimize the level of inventory held yet meet customer demand. MRP, MRPII, and
ERP provided only limited solutions. In order to balance supply with demand, the following
Techniques emerged during the 1980s.

i. Sales and operations planning

ii. Justin-time (JIT)
iii. SCP and APS
iv. MRO
V. SCM Solutions
i. Sales and operations planning
Sales and operations planning provided a high level overview of the match between supply and
demand.

ii. Justin-time (JIT)

Justin-time (JIT) deliveries were based on a card/bin system. This indicated which items were
required and triggered the ‘call-off’ of these items from the supplier, who held an agreement to
have a stock of these items available for requirements. Product development adopted the idea of
collaboration between customer and supplier at the design stage.
Expertise shared at this stage enabled the design out of costs and the development of
standardized parts in order to reduce the size of the component pool and to gain economies of
scale when sourcing.

iii. SCP and APS

supply chain planning (SCP) and advanced planning systems (APS) tools are used to integrate
customer forecasts and demands with operational constraints, including capacity and availability,
to generate production schedules and purchasing requirements.

iv. MRO
Maintenance, repair, and overhaul (MRO) can deal with the large number of part numbers, small
quantities of each part, and a myriad of suppliers associated with equipment maintenance.

V. SCM Solutions
The main objective of supply chain management is to monitor and relate production, distribution,
and shipment of products and services. This can be done by companies with a very good and
tight hold over internal inventories, production, distribution, internal productions and sales and
proactively respond to shorter, less predictable life cycles.