ASSIGNMENT:MIT

IMPLEMENTATION OF ERP IN MANUFACTURING SECTOR

Gagandeep singh Finance GM II 11010121072

DATE:12 FEB 2012

DEFINATION
Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.[1] ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.

ERP IN MANUFACTURING INDUSTRY

ERP is the watchword in the manufacturing industry and more and more companies are turning to ERP solutions. With almost all the global players present in the country, the stage is set for the launch of Indian manufacturing sector into the age of integrated applications. ERP is a high impact area because it leads to a bottom-up change in the organization i.e., it is by no means an incremental technology. The move to ERP is a high investment proposition with accompanying investments in hardware, connectivity and implementation services, apart from a lot of invisible costs involved in process change, change management and training. In today's aggressive business environment it is essential to be prepared to face a vast and competitive world. Like any other industry manufacturing companies also are facing so much competition. To withstand the competition, organization must have a proper system and software that supports whole system with integrity. Enterprise Resource Planning is one of the ways to improve and streamline the system.

ERP for manufacturing company gives supports in term of data availability, decision making time, and information based decision. It gives a seamless connectivity between product planning, product development, material sourcing, inventory, and shop management. ERP integrate all data of an organization into a unified system and synchronize them .The software uses multiple components of computer software and hardware to achieve the desired integration of a companys different departments.

ERP for Manufacturing industry consists of following modules.

Sales and Distribution ManagementThis Module comprises of Contact Management and Sales Order Processing Management. It is an integrated solution comprising of marketing and sales activities. Organization can act immediately to improve sales, service and marketing effectiveness by using this Module. Eresource Sales Management module is all about retaining customers, improving customer loyalty and gaining customer insightPurchase Management Module. Purchase Management module in eresource ERP streamlines procurement of required raw materials, packaging material, sub assembly and other non-inventory materials. It automates the processes of identifying potential suppliers, Supplier Evaluation, Supplier Quote Evaluation, awarding purchase order to the supplier, and billing processes. Purchase module is tightly integrated with the inventory control and production planning modules.

Manufacturing, Planning and ControlManufacturing, Planning and Control Module in eresource ERP optimizes the utilization of manufacturing capacity, parts, components and material resources using historical production data and sales forecasting.

Total Quality Management Moduleeresource ERP Quality Control Module not only monitors quality by control plans in purchasing and manufacturing but also provides realtime process capability index for quick review. Quality Control in eresource facilities are versatile and offer support for every phase of your operations, from receipt and acceptance of raw materials, through production of intermediates, to inspections of finished goods before shipment to customers. Inventory and Material ManagementInventory Management Module in eresource ERP provides a powerful and flexible set of features to help you manage and report your inventory information. eresource Inventory Management facilitates processes of maintaining the appropriate level of stock in a warehouse. The activity 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. Plant and Machine MaintenanceThe time has changed, machine breakdown and idle repair is no more accepted practice. The plant maintenance module in eresource ERP provides an integrated solution for supporting the operational efficiency. The plant maintenance module covers all equipment / machines of the plant. Excise ManagementThe Excise module in eresource ERP will enable the organization to ensure Excise compliance to manage all transactions of Sales, Purchase, Production, Warehouse Transfer etc., This module will help the organization fulfill its statutory requirements according to latest government regulations. Human Resource ManagementHuman Resource module in eresource ERP streamlines the management of human resources and human capitals. It comprises of four broad sections, mainly Training, Recruitment, Payroll and Attendance. HR module in eresource routinely maintains a complete employee database including contact information, salary details, attendance, performance evaluation and promotion of all employees. Finance Resource ManagementFinance Resource Management in eresource ERP gathers financial data from various functional departments and generates valuable financial reports such as Balance Sheet, Trial balance, General Ledgers, Quarterly Financial Reports, Account Statements, Gross Profit Analysis, Cost Center wise Analysis, Branch wise Profit Analysis, profitability report, Asset and Depreciation Management, Tax Management, ABC Analysis and many more.

Implementation
ERP's scope usually implies significant changes to staff work processes and practices.[12] Generally, three types of services are available to help implement such changesconsulting, customization, and support.[12] Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise consumes about 14 months and requires around 150 consultants.[13] Small projects can require months; multinational and other large implementations can take years.[citation needed] Customization can substantially increase implementation times.[13]

Process preparation
Implementing ERP typically requires changes in existing business processes.[14] Poor understanding of needed process changes prior to starting implementation is a main reason for project failure.[15] It is therefore crucial that organizations thoroughly analyze business processes before implementation. This analysis can identify opportunities for process modernization. It also enables an assessment of the alignment of current processes with those provided by the ERP system. Research indicates that the risk of business process mismatch is decreased by: linking current processes to the organization's strategy; analyzing the effectiveness of each process; understanding existing automated solutions.[16][17] ERP implementation is considerably more difficult (and politically charged) in decentralized organizations, because they often have different processes, business rules, data semantics, authorization hierarchies and decision centers.[18] This may require migrating some business units before others, delaying implementation to work through the necessary changes for each unit, possibly reducing integration (e.g. linking via Master data management) or customizing the system to meet specific needs.[19]

A potential disadvantage is that adopting "standard" processes can lead to a loss of competitive advantage. While this has happened, losses in one area are often offset by gains in other areas, increasing overall competitive advantage.[20][21]

Configuration
Configuring an ERP system is largely a matter of balancing the way the customer wants the system to work with the way it was designed to work. ERP systems typically build many changeable parameters that modify system operation. For example, an organization can select the type of inventory accountingFIFO or LIFO to employ, whether to recognize revenue by geographical unit, product line, or distribution channel and whether to pay for shipping costs when a customer returns a purchase.[22]

Customization
ERP systems are theoretically based on industry best practices and are intended to be deployed "as is"[23][24]. ERP vendors do offer customers configuration options that allow organizations to incorporate their own business rules but there are often functionality gaps remaining even after the configuration is complete. ERP customers have several options to reconcile functionality gaps, each with their own pros/cons. Technical solutions include rewriting part of the delivered functionality, writing a homegrown bolt-on/add-on module within the ERP system, or interfacing to an external system. All three of these options are varying degrees of system customization, with the first being the most invasive and costly to maintain[25]. Alternatively, there are non-technical options such as changing business practices and/or organizational policies to better match the delivered ERP functionality.

Benefits of ERP in manufacturing industry

INITIALLY Enterprise Resource Planning (ERP) solution was developed for the big organizations. It has also involved huge investment which was out of reach of small and medium sized industries (SMEs). However considering the benefits the ERP solutions have, the smaller organizations also explored the way to implemented it. This attitude has paved the way for many locally made ERP solution providers entering the market with very effective applications which have turned to be ideal for small and medium sized companies. As the local ERP vendors were targeting the SMEs, they also kept the price tag in mind, which ultimately resulted in existence of some effective and affordable ERP products in the market.

Manufacturing was one of the sectors that have benefited most from ERP solution. It was due to timely implantation of ERP. Other sectors also followed suit. Today, all industry segments are taking advantage of ERP solution and it is becoming a necessity rather than a luxury to have ERP implemented in an organization for its successful business operation. Before the evolution of ERP, manufacturing sector were running on manufacturing resource planning system. The manufacturing resource planning included all the sources in relation to the manufacturing such as material, human resource, equipment and finances. When the competitive strategy changed from low price and great variety to speed, ERP found the right place to give profit to this new strategy. Contrary to the other applications, the ERP system connects to all the offices of a group of business throughout the entire world. ERP system allows the organizations to design products with the entrance of engineers all over the globe, installing factories in various areas to produce pieces and components for many countries, and the information of all the parties involved. ERP offers solution that enables manufacturers to compete in the prevailing market atmosphere. It has the capacity of both finite and infinite planning capabilities which assist manufacturers to develop original schedule. ERP solution can also transform the supply chain to achieve production plan with sales plan, manufacturing, finance and customers. ERP is changing the competitive landscape for SMB manufacturers. Small to midsize manufacturing companies can benefit from a fully integrated solution designed to reduce costs, improve customer service, increase margins and generate new revenue streams. Further, SMB manufacturers can improve business performance with a deeply functional, yet easily affordable, ERP solution. As the technology changed ERP solution also found its way to the web. Today web-enabled ERP solutions are the most effective solution available in the market. What is to be cautious about the selection of an ERP system is, before you commit to any ERP system, you should first evaluate the system such as what your organization needs and wants to accomplish with its ERP strategy. The outcome of this evaluation will help you determine which applications and what kind of functionality your organization requires as well as go a long way toward easing the implementation