A

Project Report On

Enterprise Resource Planning (ERP) in Improving Operational Efficiency

At

Technisure Solutions

By

Nilesh Appa Raut

Under The Guidance of

Prof. S. M. Jadhav

Submitted to

Savitribai Phule Pune University

In Partial Fulfilment of the Requirement for the Award of the Degree of

M.B.A.

(Batch -2016-2018)

Through

Dr. D. Y. Patil Educational Federation

Dr. D. Y. Institute of Management and Entrepreneur Development

Varale, Talegaon

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 Company Certificate

To whomsoever it may Concern

This is to certify that Mr. Nilesh Appa Raut has completed his project work on the topic

Enterprise Resource Planning (ERP) In Improving Operational Efficiency during the

period from 15th May 2017 to July 2017. He has been sincere, hardworking and punctual in his/her

work. We wish him success in future endeavors.

Authorized Signatory.

Designation.

Company Seal.

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 Declaration of Student

This is to declare that I have carried out this project work myself in partial fulfillment of the MBA

Program of Savitribai Phule Pune University.

The work is original, has not been copied from anywhere else and not been submitted to any other

University/Institute for an award of any degree/diploma.

Date:-

Place:- Nilesh Appa Raut

3
 Declaration of Guide

This is to certify that the work incorporated in this Project Report Enterprise resource planning

(ERP) in improving operational efficiency submitted by Nilesh Appa Raut is his original work

and completed under my guidance. Material obtained from other sources has been duly

acknowledged in the Project Report.

Date:-

Place:- Prof. S. M. Jadhav

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 Acknowledgement

I would like to express word of thanks to all those who have provided me with sincere advice
and information during the course of my training period. It was indeed a great pleasure for me to
work in a very co-operative, enthusiastic and learning atmosphere at Technisure Solutions.

I would like to take this opportunity to thank Mr. Sushant Patil (President Dr. D. Y. Patil
Educational Federation) for giving me an opportunity for doing a project in a corporate firm and
all my faculty members, senior officials and colleagues at Technisure Solutions for their help
and support during the project.

I would also like to express my sincere thanks to Prof. S. M. Jadhav (Faculty Guide- Dr. D. Y.
Patil Educational Federation) for his unstinting guidance and support throughout the project. He
has been a great source of motivation to me.

I would also like to extend my regards to my company guides Mr.Jitendra More, Technisure
Solutions. for helping me and providing me with right direction during the course of my project.
The interaction with him has provided me with the knowledge which will definitely help me to
enrich my career and help me to perform better in future.

With all the heartiest thanks; I hope my final project report will be a great success and a good
source of learning and information.

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 List of Table
TABLES
TABLE NO. TITLE OF THE TABLE PAGE NO.
Literature Review for ERP Implementation
Table No. 3.1
and Impact
Table No. 4.4.1 Sub Factor for ERP impact
Comparison between industry progress before
Table No. 5.1.1
after ERP implementation
Typical improvement and different types of
Table No. 5.1.2
cost saving
Comparison of increase in country wise sales
Table No. 5.1.3
before and after implementing ERP
Current year record of manufacturing process
Table No. 5.1.4 wise order received (report generated through
ERP system)
Data analysis of Customer Relationship
Table No. 5.1.5 Management (CRM) (report generated
through ERP system)
Analysis of industry past year revenues
Table No. 5.1.6
generated (after ERP implementation)

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 List of Figures
FIGURES
FIGURE NO. TITLE OF THE FIGURE PAGE NO.
Basic problems faced by industries in
Figure 3.3
managing operation
Figure 4.1 Stages of ERP Evolution
Figure 4.2.1 Meaning of ERP
Figure 4.3.1 Traditional Stand Alone System
Figure 4.3.2 ERP System
Figure 4.5 ERP System Modules
Figure 4.5.1 Sales Module
Figure 4.5.2 CRM Module
Figure 4.5.3 Account/Finance module
Figure 4.5.4 Human Resource (HR) module
Figure 4.5.5 Manufacturing/Production module
Figure 4.5.6 Inventory Control module
Figure 4.5.7 Purchase module
Figure 4.7.1 Profit Structure Diagram (PSD)
Figure 4.7.2 Top benefits of ERP system

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 List of Graphs
GRAPHS
GRAPH NO. TITLE OF THE GRAPH PAGE NO.
Comparison between industry progress before
Graph 5.1.1
after ERP implementation
Typical improvement and different types of
Graph 5.1.2
cost saving
Comparison of increase in country wise sales
Graph 5.1.3
before and after implementing ERP
Current year record of manufacturing process
Graph 5.1.4 wise order received (report generated through
ERP system)
Data analysis of Customer Relationship
Graph 5.1.5 Management (CRM) (report generated
through ERP system)
Analysis of industry past year revenues
Graph 5.1.6
generated (after ERP implementation)

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 Table of Contents
CONTENTS
CHAPTER TITLE OF THE CONTENT PAGE NO.
Chapter 1 1.1 Executive Summary
1.2 Objective of the Study
1.3 Need of the Study
1.4 Scope of the Study
Chapter 2 2.1 Introduction to Organizational
2.2 Organization Chart
2.3 Organization Process Chart
Chapter 3 3.1 Outline of research
3.2 Literature of Review
3.3 Problem Statement
3.4 Research Methodology
3.5 Data Collection
3.6 Sampling Design
3.7 Questionnaire
4.1 Evolution of Enterprise Resource Planning
Chapter 4
(ERP)
4.2. ERP System Overview
4.3. Outline of ERP system
4.4. Characteristics of ERP system
4.5. Modules of ERP System
4.6 Types of ERP System
4.7 Advantages and Disadvantages of ERP
System
Chapter 5 5.1 Data Analysis
5.2 Interpretation
Chapter 6 6.1 Findings
6.2 Recommendations

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 6.3 Conclusion
6.4 Limitations of the Study
Chapter 7 7.1 Bibliography
7.2 Webliography
Annexures

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Chapter-1 Executive Summary

1.1. Executive Summary

1.2. Objective of the Study
1.3. Need of the Study
1.4. Scope of the Study

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1.1. Executive Summary

The project title Enterprise resource planning (ERP) in improving operational efficiency is
carried out is at Head Office as well as their manufacturing unit in Pune. The major finding of
the project is to overview the effect and benefit of Enterprise resource planning (ERP) in
improving operational efficiency of industry by comparing previous and current data from May
2017 to JULY 2017. The methodology of the project here is to analyze the flow of getting
order from customer to final delivery of order to customer by using ERP system. In this project
I have also included my practical experience during the project internship that is like a process
flow sheet, screen shot of different ERP modules that explains the importance and benefit and
the reasons thereof.

The purpose of the project involves the analysis of benefits that can be gained from
implementing an ERP in industry including: increased productivity due to fewer errors,
integration across all business processes, and overall increase in performance. This also
includes the study of five major components of ERP systems are financial resource
management, human resource management, manufacture resource planning, customer
resource planning.

In the financial management module of an ERP, the companys budgets, cash-flow, accounts
receivable, accounts payable and payment terms will be included and will strengthen the
organizations strategic goals. The human resources component will assist all employees to
enter their timesheets and access all other employee information obtainable from an
organization. The manufacture resource planning component supports all manufacturing
functions of the organization. The customer resource planning component includes
information of public, potential, quoted for, corporate, and VIP customers. Inventory control
system which include material stock information, inventory requested, track on inventory
request to purchase.

Depending upon the industry, these ERP systems can vary according to company/industry use.
Many industries develop their own ERP system according to their need.

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1.2. Objective of the Study

1. To Study the prospects of improving operational efficiency in a manufacturing industry

through enterprise resource planning (ERP).

2. To understand the importance of ERP in manufacturing industry.

3. To investigate problems faced by the organization in managing management processes,

manufacturing processes, customer relationship management and inventory management.

4. To analyze the contribution of ERP system in manufacturing industry.

5. To recommend measures to the problems solved by implementing ERP system.

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1.3. Need of the Study

1. To find out how ERP system increase the efficiency of industry in terms of

operational and administration cost.

2. To study how ERP system provide actual and real-time data about daily operations

that help companies to plan their strategy professionally.

3. To study how ERP system increase the industry productivity.

4. To study how ERP system guide industry to maintain its customer and provide

services to customer.

5. To study how ERP system manage the inventory of industry.

6. To study the different modules of ERP system and internal interaction between

different departments through ERP.

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1.4. Scope of the Study

After valuation of the data we are finding out some positive result for scope of
implementing ERP in manufacturing industry.
In the absence of an ERP system, a large manufacturer may find itself with many software
applications that cannot communicate or interface effectively with one another. Tasks that
need to interface with one another may involve.

1. ERP systems connect the necessary software in order for accurate forecasting to be
done. This allows inventory levels to be kept at maximum efficiency and the
company to be more profitable.
2. Integration among different functional areas to ensure proper communication,
productivity and efficiency.
3. Design engineering (how to best make the product).
4. Order tracking, from acceptance through fulfillment.
5. The revenue cycle, from invoice through cash receipt.
6. Managing inter-dependencies of complex processes bill of materials.
7. Tracking the three-way match between purchase orders (what was ordered), inventory
receipts (what arrived), and costing (what the vendor invoiced).
8. The accounting for all of these tasks: tracking the revenue, cost and profit at a
granular level.
9. ERP systems centralize the data in one place.
10. Permits control of business processes that cross functional boundaries
11. Shorten production lead time and delivery time.
12. Facilitating business learning, empowering, and building common visions.

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Chapter-2 Company Profile

2.1 Introduction to Organizational

2.2 Organization Chart

2.3 Organization Process Chart

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2.1. Introduction to Organization
About Company:-
Technisure Solutions offer a massive range of product development, prototyping and
manufacturing services from their own ISO:9001 accredited modern facilities located in Pune,
Maharashtra.

We are one step solution for various Engineering processes.

Led by committed, young and dynamic professionals, we combine extensive expertise and
experience of independent industry solutions with a strong understanding of the Engineering
Industrys needs to provide effective solutions in the area of Manufacturing, Engineering Design
and many more.

Mission and Values:-

Our mission is to solve Engineering industry problems by delivering high quality services in
engineering sector at the best price.

The following basic principles guide Technisure business:

Focus to every project with every client.

Flexibility and enthusiasm to adopt to clients needs.

Ascertain enduring, long-term business relationships.

Services include:-
CNC Machining
Rapid Prototyping
3D printing
Vacuum Casting
Rapid Tooling
Injection Molding
Export Tooling
Die Casting
Sheet Metal

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 Manufacturing Plant

Companys Happy Customers

2.2. Organizational Chart

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2.3. Organizational Process Chart

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 Chapter-3 Research Methodology
3.1 Outline of research

3.2 Literature of Review

3.3 Problem Statement

3.4 Research Methodology

3.5 Data Collection

3.6 Sampling Design

3.7 Questionnaire

3.1. Outline of Research

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Todays dynamic business is becoming increasingly complex with functional units requiring more
and more inter departmental data flow for decision making, timely and efficient procurement of
parts, management of inventory, accounting, human resources and distribution of goods. In this
regard, efficient information systems would improve competitiveness through cost reduction and
better logistics. There has been also been emphasis of a greater interaction between the customers
and suppliers, in order to achieve production of goods and services that conform to customer
specifications. Enterprise Resource Planning (ERP) is the strategic tool which synchronizes,
integrates, and streamlines data and processes of the organization into one single system to gain a
competitive edge in the uncertain business environment.

The research is carried out to answer following questions:

1. What is ERP?
2. Importance of ERP?
3. How ERP system helps industries to achieve their goals?
4. How ERP system helps industries to increase the operational efficiency?
5. Benefits of using ERP system?
6. Different modules of ERP systems?
7. How ERP system helps industries to maintain inventory and supply chain?

3.2. Literature of Review

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Enterprise resource planning system (ERP) is one of the diversified Information technologies
which are widely used by companies in the recent years. Approximately 90 percent of large
enterprises have administered an ERP system. Moreover, most of medium enterprises have also
administered and used such systems. The task of this system is to create great changes in the
enterprise (change in structure, culture, duties, personnel, etc.). One of the affected areas is the
heart of system, i.e., its accounting section; and one of the key staff involved in the implementation
and application of ERP system is the management accountant. Hence, in the present study we will
investigate the outcome of administrating ERP systems and due changes in the performance,
behavior and skills of management accountants.

Table 3.2: Literature Review for ERP Implementation and Impact

Study Authors
Justify the ERP System based on reliable figures and well Pernille Kraemmerand,
thought through assumptions. Charles Moller, Harry Boer
Use right mix of business analyst, technical experts and Anne Parr & Graeme
users from within the implementation company and Shanks
consultants from external companies.
ERP systems helps in reducing inventory level by 15- Elsiabeth J. Umble &
20% in overall channel. Michael Umble
Financial accounting and treasury management module Fiona Fui-Hoon Nah,
helps in improving cash management Kathryn M. Zuckweller, Janet
Lee-Shang Lau
Identify strategies to re-skill the (IT) workforce and Pernille Kraemmerand,
acquire external expertise. Charles Moller, Harry Boer
Integrated enterprise level applications reduces various Pernille Kraemmerand,
cycle times in different processes Charles Moller, Harry Boer
Top managements advocacy, provision of adequate Anne Parr & Graeme
resources and commitment to project. Shanks
New ERP applications are Y2K compliant Elsiabeth J. Umble & Michael
Umble
Extended ERP with CRM and SCM packages strengthens Fiona Fui-Hoon Nah,
the overall supply chain of the organization Kathryn M. Zuckweller, Janet
Lee-Shang Lau
Top management commitment to restructuring and Mary Sumner
following an enterprise-wide design which supports data
integration.

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ERP reduces organizational business risks and enhances Pernille Kraemmerand,
regulatory compliances Charles Moller, Harry Boer
Organizations commitment for change and determination Anne Parr & Graeme
in face of inevitable problems with implementation. Shanks
ERP systems increases stakeholders confidence in the Elsiabeth J. Umble & Michael
organization Umble
Implementation requires major commitment from an James Walsh
organizations employee.
View ERP as a enterprise-wide venture. Elsiabeth J. Umble &
Michael Umble
ERP package selection is a very important step in whole Elsiabeth J. Umble & Michael
implementation process Umble
ERP system centralizes the overall auditing process in an Anne Parr & Graeme
organization Shanks
Milestones and targets need to be actively monitored to Fiona Fui-Hoon Nah,
track the progress of an ERP project Kathryn M. Zuckweller, Janet
Lee-Shang Lau

Scenario and justification of ERP in India

Having ERP in India is like an investment that most business houses look up to. ERP or
enterprise resource planning can be defined as an integrated, multi-module system that
assimilates all the data and processes of an organization into a unified system. To attain
this goal, it is essential to strike a successful combination of both hardware and software.
The whole concept of enterprise resource planning originated in the large industrial types
of companies where the system was used to simplify their processes and workflow.
However, with the passage of time, ERP has evolved as a more comprehensive system and
now it is largely available to companies of all types and sizes. It serves and supports a wide
range of business functions like manufacturing, order entry, accounts receivable and
payable, general ledger, purchasing, warehousing, transportation and human resources.

In spite of all these, the growth of ERP in India is quite promising. Several well-known
business houses in India like Cadbury India, Mercedes Benz India, Siemens, Haldia
Petrochemicals, L&T, TISCO, and UTI use SAP while Kelloggs India Ltd., Maruti Udyog
Ltd., Sony India Pvt Ltd. and CESC are Oracle users. Indias most valuable contribution

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 to ERP came in 1980s when the country launched the world class ERP product Marshall
from Ramco Systems, by using the technology of the 80s. Marshall is the first successful
large scale software from India and several companies like HDFC Bank, Hyundai, Nestle
Limited and Standard Chartered Bank use this ERP package. Actually, this product is a
formative ERP called virtual splat. A virtual splat enables merging of accounting and
manufacturing practices in an easy-to-use, implemented package and is used by small start-
up companies.

ERP System Benefits on the Balance Sheet

Benefits from improved business processes and improved information provided by an ERP
system can directly affect the balance sheet of a manufacturer. To illustrate this impact, a
simplified balance sheet is shown in figure 1.3 for a typical manufacturer with annual
revenue of $10 million. The biggest impacts will be on inventory and accounts receivable.
In the example, the company has $3 million in inventory and $2 million in outstanding
Accounts receivable. Based on prior research concerning industry averages for
improvements, implementation of an ERP system can lead to a 20 percent inventory
reduction and an 18 percent receivables reduction.

3.3. Problem Statement

The purpose of this study was to determine the following:

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(a) The benefits sought from implementing ERP system,

(b) The extent to which ERP system help industry to improve operational efficiency,

(c) The level of satisfaction with the performance of ERP system.

(d) The perceptions of project managers and team members as to the benefits and concerns

of implementing ERP.

(e) The number of modules used commonly in industries.

(f) The management of bulk inventory.

(g) The management of purchase order and track on it.

(h) CRM (customer relationship management).

Figure 3.3: Basic problems faced by industries in managing operation

3.4. Research Methodology

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Research Methodology refers to search of knowledge. One can also define research methodology
as a scientific and systematic search for required or relevant information on a specific topic. In
fact, research is an art of scientific investigation.

Research is a process of collecting, analyzing and interpreting information to answer questions,

But to qualify as research, the process must have certain characteristics: it must, as far as possible,
be controlled, systematic, valid and verifiable, empirical and critical.

Types of Research Methodology

There are four different types of research design approaches: descriptive, explanatory, explorative
and predictive. The descriptive approach is primarily used when the researcher is interested in
showing the facts and characteristics of a specific and often well-defined problem area. The
explanatory approach implies that the researcher wants to establish causal relationships between a
number of variables in order to show connections and influences between these variables. The
explorative approach is used when the re-searcher only has limited knowledge of the subject area
and there is a need to identify what research issues to address. Therefore, this approach is also
commonly used during the initial phase of larger research projects, i.e. the researcher aims to
specify the research problem. The predictive approach is used when the researcher aims to make
a prognosis of the future development of a phenomenon

Choice of Research Design Approach

The type of research conducted for this project is Descriptive research.

Descriptive research includes fact findings enquiries of different kinds. The major purpose of
descriptive research is description of the state of affairs as it exists at present condition. In business
research, descriptive research is often used by researcher. The main characteristic of this method
is that the researcher has no control over the variables; he can only report what has happened or
what is happening.

3.5. Data Collection

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In dealing with any real life problem it is often found that data at hand are inadequate and hence.
It becomes necessary to collect data that are appropriate. Data is basic input to any decision making
process. The data taken into consideration is basically the annual reports and various books
pertaining to the subject. This helps in getting a better understanding of the main element of the
project.

There are two fundamental categories of data available: primary data and secondary data

Primary data:

Primary data is information gained from original sources that has been collected for a specific
research question and that is used for the first time. Consequently, primary data is collected by the
researchers and has not been gathered for other purposes. Examples of such information can be
interviews or observations. The most frequently used method of collecting primary data is through
interviews.

Secondary data:

Secondary data is data that has been collected prior to the specific research project by someone
else for some other purpose. Examples of secondary data are books, research reports and articles.
Secondary data can be divided into internal and external data. Internal secondary data originates
from inside an organization, e.g. annual reports, sales statistics etc. The benefits of this kind of
information are that it generally has a low cost and a high availability. External secondary
information, on the other hand, is information gathered outside an organization, e.g. official
statistics, articles, books etc. Possible dis-advantages of secondary data may be the difficulty of
finding information that suits the specific needs of the actual research, as well as the reliability,
accuracy and actuality of the information.

The research data used for this project is Primary as well as Secondary data

Primary Data- The research is to a large extent based on primary data collected during face-to -
face interrogations with respondents at the selected companies. However, in one case we
considered the geographical distance too large to be able to conduct a face-to-face interview.
Consequently, a telephone interview was conducted in this case. Furthermore, two complementing
interviews were made by telephone. Moreover, complementing questions to the respondents were

28
also sent and answered by e-mail. The respondents of the interviews are presented later on in this
chapter, as well as the companies they represent.

Secondary data- The secondary data used in this research is primarily different articles and books
dealing with Enterprise Resource Planning Systems and related subjects. This secondary data is
mainly used to form the theoretical framework, but also to form the methodology of the research.

3.6. Sampling Design

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There are two principal types of sampling procedures, probability sampling and non-probability
sampling. The choice between these two methods depends on the purpose of the study. When using
probability sampling, every unit of the entire population stands a known chance of being selected.
Therefore, this procedure makes it possible to calculate statistical inferences. When using non-
probability samples, the sample is, to some extent, based on the researchers subjective judgments
and the method is also based on more qualitative and intuitive estimations. Judgment sample is a
non-probability sample that implies that the sample is chosen on the basis of specific criteria that
beforehand are judged to be of particular importance to the study.

The sampling procedure used for this project is a non-probability judgment sample.

I have chosen criteria on the basis of the objective of the study. These criteria are stated below.

Target Population

The target population of the Project is companies that have implemented at least six of the twelve
modules at a minimum two years ago and have experienced effects of the system. The number of
modules is important in order for us to be sure that the system operates as an Enterprise Resource
Planning System within the company integrating functions and processes. Therefore, we have
required more modules than just the two modules.

3.7. Questionnaire

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During the in-depth interviews, i have used a questionnaire as a checklist, of the categories that
were to be dealt with. The purpose of the questionnaire is to simplify the interviews. The
questionnaire consists of questions dealing with the subjects we need to gain information of in
order to be able to answer our research problem.

The questionnaire used for this project is MCQS type.

This ERP questionnaire samples contain total 18 MCQS related to ERP (Enterprise Resource
Planning).

Question No.1: Which ERP is your company using? What is the name?

1. SAP R/3 and B1

2. LN/Baan
3. Microsoft Dynamics NAV and AX 2009
4. Oracle E-Business Suite
5. Using own Developed ERP

Question No.2: What is the principal region of the business?

1. USA and North America.

2. UK and Europe
3. Australia and New Zealand
4. South East Asia
5. India

Question No.3: Industry or business sector belongs to?

1. Business Services
2. Construction
3. Manufacturing
4. Wholesale/retail
5. Other

Question No.4: Any ERP systems is implemented or in the phase of implementation in your
organization?

1. Yes
2. No

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Question No.5: Which department of the organization initiated the idea of adopting an ERP
system?

1. IT Department
2. Senior Management
3. Finance Department
4. Manufacturing Department.
5. Third Party Consultancy/ERP Vendor

Question No.6: Did organization use outside consultant to assist with ERP implementation?

1. Yes
2. No
3. May Be
4. Dont Know

Question No.7: What is/was the motivation for ERP implementation in organization?

1. Technical
2. Business / Strategic
3. Functional
4. Cost saving and other financial reason

Question No.8: What were the benefits of the ERP system for the organizations?
1. Increase overall productivity and better customer satisfaction
2. Reduced cycle time and Inventory levels
3. Reduced head count and Return on investment
4. All of the above

Question No.9: What managerial problems, if any, were faced during or after the ERP
implementation?
1. Project cost overrun/Project delays
2. Conflicts with business strategy/Employee resistance to change
3. Conflicts with Consultants/Internal conflicts/Conflict with vendors
4. All of the above
Question No.10: How much the ERP system fulfills your companys business strategy?
1. 81% 100%
2. 61% 80%
3. 41% 60%
4. Below 40%
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Question No.11: How long was the implementation of the ERP system?
1. 6 to 9 months
2. 1 year to 2 years
3. 2 year to 3 years
4. Over 3 years

Question No.12: What type of training after ERP implementation in your organization is
provided?
1. Project team training
2. End user training
3. Traditional training
4. Web-based training
Question No.13: What are the benefits of using ERP?
1. Centralization and Security in terms of usage by authorized personnel only.
2. Eliminate data redundancy/reduced manpower
3. High speed of operation/Effective MIS Reporting
4. Better control over management functions
5. All of the above
Question No.14: Does due to Business Process Restructuring goals and task are clearly defined
for increasing productivity?
1. Yes
2. No
Question No.15: Does the problems are resolved in an efficient manner with the help of ERP
Solution of the company?
1. Yes
2. No
Question No.16: Are employees satisfied with information sharing within the organization due to
ERP Solution Implemented in the organization?
1. To a great extent
2. To some extent
3. To a very little extent
4. Not at all
5. No comments

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Question No.17: Rate your satisfaction with ERP and Business Process Restructuring in the
organization?
1. Highly Satisfactory
2. Satisfactory
3. Average
4. Dissatisfactory
5. Highly Dissatisfactory

Question No.18: The ERP project was worth the money you spend on it?
1. Strongly Agree
2. Agree
3. Disagree
4. Strongly Disagree
5. Dont know

34
Chapter-4 Theoretical Concept
4.1. Evolution of Enterprise Resource Planning (ERP)

4.2. ERP System Overview

4.3. Outline of ERP system

4.4. Characteristics of ERP system

4.5. Modules of ERP System

4.6. Types of ERP System

4.7. Advantages and Disadvantages of ERP System

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4.1. Evolution of Enterprise Resource Planning (ERP)
4.1.1 Pre Material Requirement Planning (MRP) stage

Enterprise resource planning (ERP) has evolved as a strategic tool, an outcome of over four
decades. This is because of continuous improvements done to the then available techniques to
manage business more efficiently and also with developments and inventions in information
technology field.

Prior to 1960s businesses generally relied on traditional ways of managing inventories to ensure
smooth functioning of the organizations. These theories are popularly known as Classical
Inventory Management or Scientific Inventory Control Methods. Most popularly used among
them were Economic Order Quantity (EOQ); Bill of Material (BOM) etc. However these systems
had very limited scope.

ERP system has evolved from the Material Planning System of 1980s. There are various phases
through which this evolution process has gone through. The various phases of development of
resource planning system in relation to time and evolution of concept of ERP as shown in figure
Figure 4.1: Stages of ERP Evolution

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4.1.2 Material Requirement Planning (MRP)
MRP was the fundamental concept of production management and control in the mid- 1970s and
considered as the first stage in evolution of ERP. Assembly operations involving thousands of
parts such as automobile manufacture led to large inventories. The need to bring down the large
inventory levels associated with these industries led to the early MRP systems that planned the
order releases. Such planned order releases ensured proper time phrasing and accurate planning of
the sub-assembly items, taking into account complex sub-assembly to assembly relationships
characterized by the Bill of Materials. A typical example is a bicycle manufacture. To manufacture
100 units of bicycles, one needs 200 wheels, 100 foot-pedals, and several thousands of spokes. On
a given day, a plant may have 40 units of complete bicycles in stock, 57 units of wheels, 43 units
of foot-pedals and 879 units of spokes. If the plant is to assemble 20 units of bicycles for the next
4 days of production, wheels and spokes-is a non trivial problem. If the independent demand of
the spare parts is also to be taken into account, one can visualize the complexity of it. A typical
automobile plant with hundreds, if not thousands of parts, has to face problems that are in order of
magnitude even more difficult. MRP systems address this need. Using the processing power of
computers, databases to store lead-times and order quantities and algorithms to implement Bill-of-
Material (BOM) explosion, MRP systems brought considerable order into the chaotic process of
material planning in a discrete manufacturing operation. Essentially MRP addresses a single task
in manufacturing alone. Material requirement planning (MRP) system was adopted by firms for
creation and maintenance of master data and bill of material across all products and part within an
organization. MRP on the other hand was an outgrowth of bill of material (BOM) processing,
which is purchase order management that utilizes parts list management and parts development.

4.1.3 Manufacturing Resources Planning II (MRP- II)

A natural evolution from the first generation MRP systems was the manufacturing planning
systems MRP II that addressed the entire manufacturing function and not just a single task within
the manufacturing function. MRP II went beyond computations of the materials requirement to
include loading and scheduling. MRP II systems could determine whether a given schedule of
production was feasible, not merely from material availability but also from other resource point
of view. Typically, the resources considered from MRP II systems would include production
facilities, machine capacities and precedence sequences. The increased functionality enabled MRP
II systems provided a way to run the system in a loop. First it was used to check the feasibility of
37
a production schedule taking into account the constraints; second to adjust the loading of the
resources, if possible, to meet the production schedules; third to plan the materials using the
traditional MRP II systems. Both MRP system and MRP II systems were fairly successful in
industry. Due to the power of information systems-databases, algorithms and their integration,
organizations did find real support for efficiently managing the manufacturing function in the
eighties.

4.1.4 Enterprise Resource Planning (ERP)

The nineties saw unprecedented global competition, customer focus and shortened product life
cycles. To respond to these demands corporations had to move towards agile (quick moving)
manufacturing of products, continuous improvements of process and business process
reengineering. This called for integration of manufacturing with other functional areas including
accounting, marketing, finance and human resource development. Activity-based costing would
not be possible without the integration of manufacturing and accounting. Mass customization of
manufacturing needed integration of marketing and manufacturing. Flexible manufacturing with
people empowerment necessitated integration of manufacturing with the HRD function. In a sense
the 1990s truly called integration of all the functions of management. ERP systems are such
integrated information systems build to meet the information and decision needs of an enterprise
spanning all the functions of management

4.1.5 Extended ERP (E-ERP)

Further developments in the enterprise resource planning system concept have led to evolution of
extended ERP (E- ERP) or web - enabled ERP. With globalization on one hand and massive
development in the internet technology on the other, need for web based IT solution was felt. Thus
E- ERP is development in the field of ERP which involves the technology of Internet and World
Wide Web (WWW) to facilitate the functions of an organization around the web.

4.1.6 Enterprise Resource Planning II (ERP- II)

ERP II is the advanced step of E-ERP. It is the software package which has strengthened the
original ERP package by included capabilities like customer relationship management, knowledge
management, workflow management and human resource management. It is a web friendly

38
application and thus addresses the issue of multiple office locations. It is capable of delivering
information in an instant to people who need it, no matter wherever they are.

39
4.2. ERP System Overview
4.2.1 Meaning of ERP
Enterprise resource planning is an integrated information system which is considered a vital
backbone information system of the enterprise. A cross functional enterprise system integrated and
automates all the internal cross functional business processes such as production, order processing,
logistics, sales, distribution, accounting, finance and human resource. It helps the enterprise to
achieve efficiency, agility and responsiveness. The meaning of ERP system is very well explained
in figure

Figure 4.2.1: Meaning of ERP

4.2.2 Definition of ERP

Researchers and practitioners have defined ERP in many different ways. Minahan (1998) defines
ERP as a complex software system that ties together and automates the basic processes of a
business. ERP has been defined by various authors but with few differences.

Nah et al. (2001) defines ERP as An enterprise resource planning (ERP) system is typically
defined as a packaged business software system that facilitates a corporation to manage the
efficient and effective use of resources (materials, human resources, finance, etc.) by providing a
total integrated solution for the organizations information processing requests, through a process-
oriented view consistent across the company.

Wallace and Kremzar (2001) describes ERP as an enterprise- wide set of management tool that
balances demand and supply, containing the ability to connect customers and suppliers into a

40
complete supply chain, employing proven business processes for decision making and providing
high degree of cross functional integrations among sales, marketing, manufacturing, operations,
logistics, purchasing, finance and new product development and human resources, thereby
enabling people to run their business with high level of customer service and productivity and
simultaneously lower cost and inventories; and providing the foundation for effective e-commerce.

It is seen that with passage of time the definition of ERP has undergone changes as these systems
were further extended to include inter-firms activities through integration of front-office and back-
office business applications such as supply chain management and customer relation management.

4.3. Outline of ERP system

41
Enterprise resource planning (ERP) is a planning philosophy which is enabled with software
technology that successfully attempts to integrate all the business process to different department
and functions across a company onto a single computer system. Before ERP implementation each
department within the organization had its own computer system optimized for the requirements
of that departments needs alone. As shown in figure 2.3 each department will maintain separate
database and design application as per their functionalities. This may result in good performance
of the departments individually but it may not maximize the overall performance of all the
departments together or the company as a whole.

Figure 4.3.1: Traditional Stand Alone System

ERP system program combines all the business requirements of the company together into a single
integrated software program that runs of a single database so that various departments can easily
share information and communicate with each other. Figure 2.4 show that ERP conceptually
replaces the old stand-alone computer system with a single software program that facilitates
various functional modules. Thus everybody from different departments will get their own
advantages of software along with the added features of availability of information across other
departments to improve decision quality and overall performance of the organization.

42
Figure 4.3.2: ERP System

43
4.4. Characteristics of ERP system
Study of various definitions of ERP put forth by various researches suggests that ERP system is
an integrated system that operates in real time. ERP system creates common database which
support all applications facilitating the organizational functions, activities and services. ERP
system also facilitates analytical planning and has the capability to bridge the information gap
across the organization.

According to OLeary (2000), ERP systems have the characteristics like: ERP systems are
packaged software designed for a client server environment, whether traditional or web-based;
ERP systems integrate the majority of a businesss process; ERP systems process a large majority
of an organizations transactions; Use an enterprise-wide database that typically stores each piece
of data once; It allow access to the data in real time.

Thus the features of ERP system can be listed as follows:

a) Flexibility: An ERP system should be flexible to respond to the changing needs of an

enterprise. The client server technology enables ERP to run across various data base back
ends through Open Data Base Connectivity.

b) Modular and open: ERP system has to have open system architecture. This means that
any module can be interfaced or detached whenever required without affecting the other
modules. It should support multiple hardware platforms for the companies having
heterogeneous collection of systems. It must support some third-party add ones also.

c) Comprehensive: It should be able to support variety of organizational functions and must

be suitable for a wide range of business organizations.

d) Beyond boundaries: It should not be confined to the organizational boundaries, rather

support the on-line connectivity to the other business entities of the organization.

e) Best business practices: It must have a collection of the best business processes
applicable world-wide.

f) Simulation of reality: ERP system must stimulate the reality of business processes on the
computer system. In no way it should have the control beyond the business processes and
it must be able to assign accountabilities to the users controlling the system.

44
4.5. Modules of ERP System
Early implementers deployed ERP system modules that addressed key intra-firm activities
pertaining to the finance, logistics, and human resources functions. Typically firms deployed
modules such as financial accounting, controlling, personnel administration, personnel
development, general logistics, materials management, procurement, inventory control production
planning, and sales and distribution. Each of these modules in turn comprised of numerous sub-
modules that accessed a common database.

Modules and sub-modules can be deployed by firms either individually addressing the specific
business activity as per the need. Another way of deployment is they deployed one or more
modules and/or sub-modules as a partially integrated solution that addressed a group of business
activities. Firms can also choose to leverage the full integration potential of the ERP system by
implementing all the modules and sub-modules to form a complete ERP system. As firms
stabilized their intra-firm deployments, they then extended their implementations with the addition
of modules that addressed inter-firm activities across the supply chain. ERP modules that
commonly found implemented are:

Human Resource
Inventory
Sales & Marketing
Purchase
Finance & Accounting
Customer Relationship Management(CRM)
Engineering/ Production
Supply Chain Management (SCM)

45
 Figure 4.5: ERP System Modules

4.5.1 Sales Modules:

Typical sales process includes processes like Sales queries & enquiry analysis & handling,
quotation drafting, accepting sales orders, drafting sales invoices with proper taxation,
dispatch/Shipment of material or service, tracking pending sales order. All these sales transactions
are managed by sales module of ERP. CRM module can take help of Sales module for future
opportunity creation & lead generation.

It is key functions are order placement, order scheduling, shipping and invoicing. This is key as
Revenues from sales are the live blood of the organizations.

46
 Figure 4.5.1: Sales Module

4.5.2 Customer Relationship Management (CRM) module:

CRM department is helps to boost the sales performance through better customer service &
establishing the healthy relationship with customers. All the stored details of customer is available
in CRM module.
CRM module helps to manage & track detailed information of the customer like communication
history ,calls, meetings, details of purchases made by customer, contract duration etc. CRM
module can be integrated with Sales module to enhance sales opportunities.

CRM module can be classified into multiple categories:

Public Customer
Potential Customer
Quoted Customer
Corporate Customer
VIP Customer

47
 Figure 4.5.2: CRM Module

4.5.3 Account/Finance module:

Whole inflow & outflow of money/capital is managed by finance module. This module keeps track
of all account related transactions like expenditures, Balance sheet, account ledgers, budgeting,
bank statements, payment receipts, tax management etc. Financial reporting is easy task for this
module of ERP. Any Financial data that is required for running business is available on one click
in Finance module.
Both for-profit organizations and non-profit organizations benefit from the implementation of ERP
financial module. 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.

48
 Figure 4.5.3: Account/Finance module

4.5.4 HR module:

HR (Human Resources) is another widely implemented ERP module. HR module streamlines the
management of human resources and human capitals. HR modules routinely maintain a complete
employee database including contact information, salary details, attendance, performance
evaluation and promotion of all employees. Advanced HR module is integrated with knowledge
management systems to optimally utilize the expertise of all employees.
Human Resource module helps to HR team for efficient management of human resources. HR
module helps to manage employee information, track employee records like performance reviews,
designations, job descriptions, skill matrix, time & attendance tracking. One of the important sub
module in HR module is Payroll System which helps to manage salaries, payment repots etc. It
can also include Travel Expenses & Reimbursement tracking. Employee Training tracking can
also managed by ERP.

49
 Figure 4.5.4: Human Resource (HR) module

4.5.5 Manufacturing/Production module:

Production module is great help for manufacturing industry for delivering product.

This module consist of functionalities like production planning, machine scheduling, raw material
usage,(Bill of material)preparation, track daily production progress production forecasting &
actual production reporting.
Production planning module supports production planning, manufacturing processes execution,
analysis and production control. This application covers the production process from the creation
of master data to production planning, MRP, and capacity planning, right down to production
control and costing. It supports a variety of manufacturing processes including repetitive, make-
to-order and assemble-to-order production. Quality management, laboratory information systems
and data analysis functions are also available.

50
 Figure 4.5.5: Manufacturing/Production module

4.5.6 Inventory management module:

Inventory module facilitates processes of maintaining the appropriate level of stock in a

Warehouse. The activities of inventory control involves in identifying inventory requirements,
setting targets, providing replenishment techniques and options, monitoring item usages,
reconciling the inventory balances, and reporting inventory status. Integration of inventory control
module with sales, purchase, finance modules allows ERP systems to generate vigilant executive
level reports.
Inventory module can be used to track the stock of items. Items can be identified by unique serial
numbers. Using that unique numbers inventory system can keep track of item and trace its current
location in organization.

51
 Figure 4.5.6: Inventory Control module

4.5.7 Purchase module:

Purchase module streamlines procurement of required raw materials. It automates the processes of
identifying potential suppliers, negotiating price, awarding purchase order to the supplier, and
billing processes. Purchase module is tightly integrated with the inventory control and production
planning modules. Purchasing module is often integrated with supply chain management software.
Purchase modules take care of all the processes that are part of procurement of items or raw
materials that are required for organization. Purchase module consist of functionalities like
supplier/vendor listing, supplier & item linking, sending quotation request to vendors, receiving &
recording quotations, analysis of quotations, preparing purchase orders, tracking the purchase
items, preparing GRNs(Good Receipt Notes) & updating stocks & various reports . Purchase
module is integrated with Inventory module & Engineering/production module for updating of
stocks.

Figure 4.5.7: Purchase module

52
4.6. Types of ERP System

53
The type of system best suited for business will depend on the size of business and the functions
that will support business requirements.

Different types of ERP software available are:

SAP R/3 AND B1

SAP is probably the best known supplier of ERP software. SAP offers two solutions. The
first is the R/3 suite and the second is the B1 suite, sometimes called "business one." R/3
is an integrated software system that can support everything from very small companies to
very large corporations. R/3 is customizable to meet specific business needs. B1 is targeted
more at small and medium-sized businesses and offers pre-built modules for finance,
warehousing, customer relationship management (CRM), e-commerce, purchasing and
reporting.

LN/Baan
Baan ERP software was originally created by The Baan Corporation in The Netherlands.
It was purchased by Infor Global Solutions in 2003. Baan ERP software is designed for
manufacturing industries working on complex products with complex supply chains that
work on different methodologies. Baan is especially suited for large made-to-order and
engineering-to-order companies. Baan is used by companies like The Boeing Company,
Ferrari, Solectron, Fiat, Flextronics, Evenflo, Navistar and British Aerospace &
Engineering Systems.

Microsoft Dynamics NAV and AX 2009

Microsoft offers two ERP software packages. Microsoft NAV is targeted toward small and
medium-sized businesses and offers modules for analysis, e-commerce, CRM, supply
chain management, manufacturing and finance. Microsoft AX 2009 is designed for
medium to large organizations and has functions that are useful for companies doing
business in multiple countries. It is focused on improving individual productivity and is
best suited for service organizations, manufacturing companies, wholesalers and retail-
oriented companies. AX 2009 is more customizable than NAV.
Oracle E-Business Suite Financials and PeopleSoft Enterprise

54
 Oracle offers two other ERP products. The first is E-Business Suite Financials. The other
is PeopleSoft. E-Business Suite Financials is an easy to use package targeted to the
financial services industry. It supports distributed organizations and offers modules for
financial and operational information, dynamic planning, budgeting, forecasting and
multidimensional profit analysis. PeopleSoft is a highly customizable suite that can support
complex business requirements.

4.7. Advantages and Disadvantages of ERP System

55
4.7.1 Advantages of ERP

ERP system selection and implementation is a major capital intensive strategic decision for any
organization. The business drivers impacting ERP strategies are cost reduction, customer service
and growth. Organizations go in for this decision to standardize their business process, as well as
to integrate and co-ordinate the people, processes and technology that can have a significant impact
on the benefits achieved by the organizations.
Vendors of EPP packages mention and promise potential benefits of improved process flow, better
data analysis, higher quality data for decision making, reduced inventories, improved coordination
throughout the supply chain, and better customer service etc. Studies that surveyed the impact of
ERP systems in the performance of organizations indicated that company size and industry
segment do not affect the results. Benefits have been indicated for large and small firms, whether
they make standard or custom products or are in the service sector. These benefits can be broadly
classified into direct benefits and quantifiable benefits.
In other words, ERP has to provide timely and accurate productions- oriented information for long-
range planning and day-to-day operational planning and control. It has to improve productivity
and enhance the competitive edge by optimizing the use of resources, i.e. Men, Material, Machines
and Money. It is a tool in the hands of management to balance the demand and supply and to stay
competitive.

Some of the important advantages are pointes below:

Better organizational control, especially in large companies, where the volume of

information is more than in a small company.
Duplication of information is avoided.
Improved communication, both internally and externally.
Company profitability analysis can be carried out to analyses where costs are higher and
where there are more sales.
Improved decision-making process within the company.
The company is able to react better to any unforeseen problem or situation.
Better use of time.

56
In context of profitability, the interdependencies of various functions in an enterprise which are
required in order to improve profits and stay competitive.

Figure 4.7.1: Profit Structure Diagram (PSD)

57
 Table 4.7.1 Sub Factor for ERP impact
1. Tangible Benefits after ERP Implementation
Inventory Reduction
Personal reduction
Productivity improvement
Order management improvement
Technology cost reduction
Procurement cost reduction
Cash management improvement
Revenue/profit improvement
Transportation/ logistics cost reduction
Maintenance reduction
On time delivery improvement
2. Intangible Benefits after ERP Implementation
New/improved business processes
Customer responsiveness
Cost reduction
Integration
Standardization
Flexibility
Globalization
Business performance
Supply/ demand chain
Information/visibility
3. Business Performance factor
Reduced organizations business risks
Enhanced organizations regulatory compliance
Facilitate improved services to customer and suppliers
Allows new services to customer and suppliers
Enhanced primary users knowledge and skills
Increased shareholders confidence in organization
Enhanced support to organizational activities
Decreased work load in various departments
Decreased workload in central department

58
There are many advantages to implementing an Enterprise Resource Planning (ERP) software
solution. Among countless other advantages, implementing ERP software can improve
productivity, increase efficiencies, decrease costs and streamline processes.

Figure 4.7.2: Top benefits of ERP system

59
4.4.2 Disadvantages of ERP

While advantages usually outweigh disadvantages for most organizations implementing an ERP
system, here are some of the most common obstacles experienced:

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.

60
Chapter-5 Data Analysis & Interpretation
5.1. Data Analysis
5.2. Interpretation

61
5.1. Data Analysis
5.1.1 Comparison between industry progresses before after ERP implementation

Table 5.1.1 Comparison between industry progresses before after ERP

implementation

Parameters Before ERP(in % ) After ERP (in % )

Improve Integration 54 61
Improve CRM 45 47
Control on production 10 24
Control on inventory 10 30
Company growth 19 27
Improve accounting 16 25
Regulatory compliance 5 15
Getting new business 10 35

Graph 5.1.1 Comparison between industry progresses before after ERP

implementation

Getting new business

Regulatory compliance

Improve accounting

Company growth
After ERP (in % )
Control on inventory Before ERP(in % )

Control on production

Improve CRM

Improve Integration

0 10 20 30 40 50 60 70

62
5.1.2 Typical improvement and different types of cost saving
Table 5.1.2 Typical improvement and different types of cost saving

Parameters Improvement and cost savings (in %)

Savings in administration cost 15%
Increase in total product output 16%
Reduction in cycle time 20%
Savings in absolute inventory 18%
Inventory cost savings 21%
Savings on operational cost 19%
Improvement in delivery time 23%

Graph 5.1.2 Typical improvement and different types of cost saving

Improvement & Cost Savings

Savings in
administration cost
Improvement in 11%
delivery time
18% Increase in total
product output
12%

Savings on
operational cost
14%

Reduction in cycle
time
15%

Inventory cost
savings Savings in absolute
16% inventory
14%

63
5.1.3 Comparison of increase in country wise sales before and after implementing ERP
Table 5.1.3 Comparison of increase in country wise sales before and after
implementing ERP

Countries Sales before ERP(no. of orders) Sales after ERP(no. of orders)

South East Asia 55 65
Eastern Europe 45 47
India 10 24
UK and Western Europe 10 30
USA and North America 19 27
Australia and New Zealand 54 61

Graph 5.1.3 Comparison of increase in country wise sales before and after
implementing ERP

70

60

50

40

30 Sales before ERP(no. of orders)

Sales after ERP(no. of orders)
20

10

0
South Eastern India UK and USA and Australia
East Asia Europe Western North and New
Europe America Zealand

64
5.1.4 Current year record of manufacturing process wise order received (report generated through
ERP system)

Table 5.1.4 Current year record of manufacturing process wise order received (report
generated through ERP system)

Machining Process Order Received (in numbers)

SLS 100
SLA 60
CNC Machining 170
Vacuum Casting + SLA 55
Vacuum Casting + SLS 15
Vacuum Casting + CNC 30

Graph 5.1.4 Current year record of manufacturing process wise order received (report
generated through ERP system)

Manufacturing Process Wise Order Recived

7%
3%
23%
SLS
13%
SLA
CNC Machining
Vacuum Casting+SLA
14% Vacuum Casting+SLS
Vacuum Casting+CNC

40%

65
5.1.5 Data analysis of Customer Relationship Management (CRM) (report generated through
ERP system)
Table 5.1.5 Data analysis of Customer Relationship Management (CRM) (report generated
through ERP system)

Customer Criterion Customer Category

If not active for more than 6 months Public Customer
Active but not give any order Potential Customer
Active and requested for quote Quoted Customer
Accept quote and give order Corporate Customer
Active and give high amount order(more than $50,000) VIP Customer

Type of Customers No. of customer (current year)

Public Customer 85
Potential Customer 112
Quoted Customer 150
Corporate Customer 60
VIP Customer 22

Graph 5.1.5 Data analysis of Customer Relationship Management (CRM) (report

generated through ERP system)

Data analysis of CRM (current year)

160
140
120
100
80
60 No. of customer (current year)

40
20
0
Public Potential Quoted Corporated VIP
Customer Customer Customer Customer Customer

66
5.1.6 Analysis of industry past year revenues generated (after ERP implementation)
Graph 5.1.6 Analysis of industry past year revenues generated (after ERP implementation)

Profit/Revenue (in $)
53000

52000

51000

50000
Profit/Revenue (in $)
49000

48000

47000

46000
2010 2011 2012 2013 2014 2015 2016 2017

67
5.2. Interpretation
By observing and analyzing above data i can interpret that ERP is use full tool to increase
operational, management efficiency.
The above tables and graphs show that any industry using ERP system can able to grow their:
Business
Market share
Customers
Profit/Revenue

Overall we find that, controlling for industry, ERP adopters show greater performance in terms of
sales per employee, profit margins, return on assets, inventory turnover (lower inventory/sales),
asset utilization (sales/assets), and accounts receivable turnover. That is they are generating more
revenue per unit of input and managing inventories and accounts receivable more aggressively.

68
 Chapter-6 Conclusion and Suggestions

6.1. Findings

6.2. Recommendations

6.3. Conclusion

6.4. Limitations of the Study

6.1. Findings (Learning by Student)

69
After studying so much concept and data I learn many new things by observing ERP system and
its different modules.

I observe that a well-designed and implemented ERP system should help reduce the production
managers problems. However not at all ERP implementations succeed fully.

To achieve good results from an ERP system, top management has to review the ERP
implementation, support the efforts of key through the ERP implementation and take proactive
action to enhance the utility of ERP.

Overall I find that, controlling for industry, ERP adopters show greater performance in terms of
sales per employee, profit margins, return on assets, inventory turnover (lower inventory/sales),
asset utilization (sales/assets), and accounts receivable turnover. That is they are generating more
revenue per unit of input and managing inventories and accounts receivable more aggressively.

Below is the list of observations:

ERP system is interactive in nature. It allows all departments (internal or external) to

interact with each other. For example, the ordering and receiving processes can
automatically trigger payment processes.
ERP system decreases the total process time by processing all information in real time and
allows more immediate feedback to management.
ERP system tracks each and every order and provides real time status of any order.
Track the inventory stocks and provide full information related to inventory like out of
stock material, wastage of material etc.
Helps in managing customer relationship by timely delivery of order.
Helps production manager to plan and control over production.

Along with benefits there are many risk and expenditures also involved in ERP system

Give training to employees.

Selection of ERP software.
Maintenance of ERP system.

6.2. Recommendations (Contribution to the Organization)

70
I believe that this survey may increase the awareness of ERP effects. Companies that are in a
situation when deciding whether or not going ERP may benefit from the result of the study.

Since there is study that has listed the aspects most frequently pointed out in theory, and thereafter
investigated these in a company, I believe that this study may function as a starting point in further
research.

Following are some of points which I recommend:

In order to use ERP software, the computer hardware structure had to be upgraded to
Pentium 4 (P4s) with large capacities, which were compatible with ERP software.
Also the number of computer had to be increased to appreciably reduce paper work and
improve faster flow of information and quick decision making processes.
Other areas that ERP could improve is the elimination of all resource wastages in form of
material, energy, inventory, defects or wasted capacity, through labor control and work in
progress control.
The reducing of product cycle time could be achieved through minimization of waiting and
processing time.
Waiting time could be reduced by better coordinating the flow of material.

6.3. Conclusion

71
The project has come up with the implementation of ERP system, and it was shown how the
implementation was going to improve the operational efficiency of the manufacturing system at
this manufacturing company. The ERP system improved the employee efficiency as data and
information could now be captured and updated at one point with no duplication of effort which
could waste resources. Operational efficiency resulted from greatly improved communication and
corporation from all departments. Online updates on inventory levels enabled informed decisions
to meet the products delivery dates. ERP requires consensus from the entire enterprise to re-
engineer core business processes by taking advantage of software to automate information update
and incorporate best practices to facilitate rapid decision making, cost-reduction, and greater
managerial control for improved organizational competitiveness.

The study shows that all of the identified categories from the ERP literature are also the categories
taken into consideration within the responding companies.

6.4. Limitations of the Study

72
1. Time Factor:
Since the time period of the project is only 60 days which are limitation to understand
the overall operations in detail manner.

2. Employee Opinion:

The opinion differs from one person to other regarding any problems. So for a particular
problem there are lots of suggestions.

3. Unwillingness:
Unwillingness of the employees or workers to provide information properly.

73
 Chapter 7 Bibliography and Webliography
7.1 Bibliography

7.2 Webliography

7.1. Bibliography

74
 Holland C, Light B. A Critical Success Factor Model for ERP Implementation, IEEE
Software 1999. Vol .9, Issue3, p30-36.
Carstensen, W. (2003). "Making your ERP system work for you." Strategic HR Review
2(4): 18.
Cardoso, J., R. P. Bostrom, et al. (2004). "Workflow Management Systems and ERP
Systems: Differences, Commonalities, and Applications." Information Technology and
Management 5(3-4): 319.
Burn, J. and C. G. Ash (2002). MANAGING THE CHALLENGE OF E-BUSINESS
CONVERGENCE THROUGH E-ERP SYSTEMS. Eighth Americas Conference on
Information Systems.
(2000). "From ERP to E-Commerce." Information Week 802.
(2000). "Smart Manufacturing Software." Information Week 812: 216-224.
(2001). "Enterprise Resource Planning: Tier 3." Managing Automation 16(6): 38-43.
(2003). "Implementing an Enterprise Resource Planning System." Gatfworld 15(3): 34.
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Technology, 15, pp 317-327, 2000.
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7.2. Webliography

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 https://en.wikipedia.org
www.mauriziostorani.wordpress.com
www.comp.hkbu.edu.hk
www.esds.co.in
www.techrepublic.com
www.webopedia.com
www.sciencedirect.com
www.mdtmag.com
www.winman.com
www.nickmutt.com
www.nsacom.com
www.exactlly.com
www.erpfocus.com
www.industryweek.com

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