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What is Enterprise Resource Planning (ERP)
#1
Enterprise Resource Planning (ERP)

                                                      
ERP comprises of a commercial software package that comprises the seamless integration of all the information flowing through the company – financial, accounting, human resources, supply chain and customer information.
 
ERP systems, fundamentally, integrate the different processes necessary in a business into a centralized pool that facilitates data sharing and eliminates redundancy.
 
The purpose of ERP technology is to support the business processes that support the company’s strategic opportunities.
 
Advantages
 
·        On-line/ real time information throughout all the functional areas of an organization.
·        Data standardization and accuracy across the enterprise
·        Best practices included in the applications
·        The efficiency they force an organization to undertake
·        The analysis and reporting that can be used for long term planning
 
Core Subsystems of ERP
 
      Export and shipmen
      Materials Requirement Planning
      Capacity Requirements Planning
      Bills of Material
      Purchasing
      Inventory
      Shop Floor Control
      Preventive maintenance
      Costing
      Human Resource Management module
      Financial module which include:
          Accounts Payable/Receivable
            General Ledger
          Cash management
          Fixed assets
          Budgeting
          Forecasting
 
Points to prepare Master Plan for ERP
 
      How do we want to run our business?
      What business problem needed to be solved?
      Do we know and understand our priorities?
      Do we fully understand our as-is condition VS Could-be/should-be processes?
      Have we carefully defined an action plan for
pre-implementation preparation activities?

      What tasks will be accomplished and when?
      What are the missing links in our current system and our software of choice?
      What are the real costs, benefits and timetable going to be?
      Who will implement ERP and make it work?
      Availability of experienced ERP consultants.
 
 
 
 
 
 
 
 
 
Core Business Objectives of doing ERP
 
      Increase Incremental revenue
      Reducing Cost
      Improving Quality
      Improving time-to-market
      Increase customer service levels
      Engineering process improvements
      Overcoming lack of information
 
 
Software Customization Problems
 
Following problems are encountered while customizing the software:
 
      It Slow down the implementation process
      Increases the Project Cost
      Introduces dangerous bugs into the system and
      Difficulty in up gradation of new versions
 
Business Process Re-Engineering (BPR)
 
It must be remembered that ERP is an opportunity for business re-engineering. One gets the opportunity to restructure and reorganize people and departments to meet new challenge and global competition. Information is a vital factor along with quality, cost, and delivery to establish competitive advantage. As such, it calls for attitudinal changes which will help in a smooth transition, learning best practices, and adopting them into the business.  
 
Principle of BPR
 
      Understanding the existing practices
      Simplifying the Processes
      Automate the Process
 
 
Steps of BPR
 
      Study the current system
      Design and develop new systems
      Define Process, organization structure and procedure
      Customize the software, where require
      Train people
      Implement new system
 
Assembling the Right Team
 
      It is a full-time mission-critical effort
      The team must include
   Well-established employees who have a strong grasp of the business
   Who are opinion maker
   Who understand the unique opportunity a system implementation provides
   Who are passionate about making things happen
 
 
Phases of implementation of ERP
 
      Project Planning
      Business & Operational analysis including Gap analysis
      Business Requirement mapping
      Business Process Reengineering
      Project team training
      Installation and configuration
      Module configuration
      System interfaces
      Data conversion
      Custom Documentation
      End user training
      Acceptance testing
      Post implementation/Audit support
 
Hurdles for Small/Medium size Organization
 
The organization will not be able to enjoy the full benefit of ERP:
      Costly Customization
      Long implementation process fetch the precious time of key persons
      Poor training and inappropriate preparation of the personnel
      Resulting poor usage of the system and less ROI
      Over dependence on vendors or consultants
      Success is highly dependent on commitment from upper management
 
Costs of the Project include:
 
      Hardware costs
      Software costs
      Training
      Integration and Testing
      Consultant Fee
      Data Conversion
      Data Analysis
      Post ERP Depression
 
Post ERP Depression Cost
 
      According to Deloitte Consulting survey
      Of 500 companies
      One in Four admitted that they
           “Suffer drop in the performance when their ERP system went live.”
 
However, this trend reversed with the passage of time due to learning curve.
 
 
 
Management Requirements
 
      Commitment
      Global Readiness
      Time Line
      Clear Milestones
      Training
 
Detailed Discussion Phase
Task:-
      Project initialization
      Evaluation of current processes & business practices
      Set-up project organization
 
Deliverables
      Accepted norms and Conditions
      Project Organization chart
      Identity work teams
 
Design and customization Phase


Task:-
      Map organization,
      Map business process,
      Define functions and processes,
      ERP software configuration and, Build ERP system modifications.
 Deliverables:-
      Organization structure
      Design specification
      Process Flow Diagrams,
      Function Model
      Configuration recording and system modification.
 
 
 
Implementation Phase
Task:-
      Create go-live plan and documentation
      Integrate applications
      Test the ERP customization
      Train users
 
Deliverables:-
      Testing environment report
      Customization Test Report and
      Implementation report
Production Phase
Task:-
      Run Trial Production
      Maintain Systems
      Improvement in System
       
Deliverables:-
      Reconciliation reports
      Conversion Plan Execution
 
Ten Mistakes to Avoid
             Hiring inexperienced consultants. You need someone with the intelligence, experience and courage to challenge you.
 
             Being afraid to rock the boat. Quantum improvements always shift the balance of power causing waves of turmoil.
 
             Emotionally "buying" a particular system too soon. Don't let slick sales presentations convince you to skip through a thorough evaluation and selection process.
 
             Underplanning. Thorough planning is a critical success variable.
 
             Undisciplined testing. There is no substitute because it will not operate like it did on the drawing board.
 
             Expecting short-term results. Don't kid yourself. An ERP system initialized today will not assure improvements by tomorrow night.
 
             Underfeeding the system. An ERP system requires a long-term commitment of ongoing resources.
 
             Abdicating too much. A good consultant is no substitute for a knowledgeable, committed team of owners!
 
             Being overanalytical or overintuitive. A system must be rational, but quantum leaps cannot be proven in advance.
 
Finally, it is always remembered that ERP packages are tools to support the business. Close linkage to business must be reviewed and monitored to ensure that the required information is made available to the right people at the right cost and in the right format so as to gain competitive edge in the era of global competition. When a business crosses the boundaries of the nation and becomes multinational, it has no other option but to use ERP so as to standardize operations world wide.
 
 
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