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Before the industrial revolution, very few companies were doing the business in

an organized way. The decisions were made keeping in mind the overall company

objectives and the available resources. In most of these companies a single

person was managing all the operations and related functions.

Slowly, the market demand and manufacturing scale grew, and it has been

realized that managing entire operation can not be handled by a single person.

Thus, in larger organizations each senior person was provided with next levelpeople to assist him or her and the various departments. Now, the size of

departments become to increase

As the department concept became popular, it was designed to be specific to a

function. Thus, the Account Department was made responsible for all the financial

transaction of the management, and Purchase Department was made responsible

for procurement of goods and services only. It was also common that necessary

information for one department could be waste for the other.

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The time has changed. Now, the difference between market leaders and followers,

or successful companies and other companies is defined as the way companiesmake use of generated information.

In fact, it is said that companies have to manage the future by

sustaining today through managing the current and future business

information.

The huge investments in computers and software made by companies is only due

to the best possible use of information. Initially, IT has provided with good results

by automating the existing business functions.

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He who looks to stars should not forget the heat of sun.

----- Chinese Proverb

Using I.T. does not mean setting up computers to manage jobs. It is also

does not mean getting streamlined. Creating transparent departments andimproving workflow IT deployment is all this and much more.

If one were to choose a single word to define the relevance of IT to

organization it is oneness.

ERP is a definition for this great commonalty that IT intends to transform

most business process into.

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"MAGIC CARPET SYNDROME"

Managing anything at an enterprise level is challenging--rough roads, no

water, bandits--so let's buy that magic carpet we've heard so much about

and just fly over the problems to our goal.

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Initially, IT has provided with good results by automating the existing business

functions and procedures. This phenomenon was started in 1970s. Most of thishappened by implementing a range of software in various departments, but

without its complete integration with the corporate strategy.

Examples of such IT systems are:

MRP: Material Requirements Planning

BOM: Bill of Materials (Purchase Order management)

MRP II ( Manufacturing Resource Planning) ERP is a term originally derived from MRP II

SCADA: Supervisory Control and Data Acquisition

FinanceManagement

Integrated Materials Management Systems

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An Enterprise is a group of people with a common goal, having resources

to achieve that goal. Resources include money, manpower, materials,

machines, technology etc. Planning is putting necessary functions in place

and putting them together.

Enterprise Resource Planning covers the techniques and conceptsemployed for the integrated management of business as a whole, from

the viewpoint of the effective use of management resources, to improve

the efficiency of an enterprise. ERP packages are integrated software

packages that support the need of any organization.

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ERP is the planning of the fourMs of an

enterprises resources:

1. M: MAN

2. M: MONEY

3. M: MATERIALS

4. M: MACHINES

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QUES: What is ERP ?

ANS: It attempts to integrate all departments and functions across

a company onto a single computer system that can serve all those different

departments particular needs.

ERP vanquishes the old standalone computer systems in finance, HR, manufacturingand the warehouse, and replaces them with a single unified software program divided

into software modules that roughly approximate the old standalone systems. Finance,

manufacturing and the warehouse all still get their own software, except now the

software is linked together so that someone in finance can look into the warehouse

software to see if an order has been shipped.

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QUES: How can ERP improve companys business

performance ?

ANS: ERPs best hope for demonstrating value is as a sort of battering

ram for improving the way your company takes a customer order and

processes it into an invoice and revenueknown as the order fulfillment

process.

That is why ERP is often referred to as back-office software. It doesnt handle

the up-front selling process (although most ERP vendors have developed

CRM software or acquired CRM providers that can do this); rather, ERP takes

a customer order and provides a software road map for automating the

different steps along the path to fulfilling it.

CONT

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When a customer service representative enters a customer order into an ERP

system, he has all the information necessary to complete the order .

For example the customers credit rating and order history from the finance

module, the companys inventory levels from the warehouse module and the

shipping docks trucking schedule from the logistics module.

People in these different departments all see the same information and can

update it. When one department finishes with the order it is automatically routed

via the ERP system to the next department. To find out where the order is at any

point, you need only log in to the ERP system and track it down. With luck, the

order process moves like a bolt of lightning through the organization, andcustomers get their orders faster and with fewer errors than before. ERP can

apply that same magic to the other major business processes, such as employee

benefits or financial reporting.

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QUES: Why do ERP projects fail so often ?

ANS: At its simplest level, ERP is a set of best practices for performing

different duties in a company, including finance, HR, manufacturing and thewarehouse. To get most from the software , organization has to get people

inside the company to adopt the work methods outlined in the software.

If people in the different departments using ERP dont agree that the work

methods embedded in the software are better than the current ones, they will

resist using the software or will want IT to change the software to match theways they currently do things.

The mistakes companies make is assuming that changing peoples habit willbe easier than customizing the software. Its not. Getting people inside your

company to use the software to improve the ways they do their job is by far

the harder challenge. If your company is resistant to change, then your ERP

project is more likely to fail.

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Reasons for ERP failure

No clear definition of why ERP is needed.

Unrealistic expectations on the part of senior management (BLACK BOX or

Technology Solution)

No clear linkage with business strategy

No strategy map to define the cause and effect linkages

Inappropriate measures

Inadequate consultation, communication and training through the whole

implementation process

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SALES & DISTRIBUTION

QUALITY MANAGEMENT

MATERIALS MANAGEMENT

MANUFACTURING

STRATEGIC & OPERATIONAL

PLANNING

FINANCE

HUMAN RESOURCES

LOGISTIC MANAGEMENT

MAINTENANCE MANAGEMENT

PC

PC

PC

PC

PC

PC

PC

PC

PC

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SALES & DISTRIBUTION

QUALITY MANAGEMENT

MATERIALS MANAGEMENT

MANUFACTURING

STRATEGIC & OPERATIONAL

PLANNING

FINANCE

HUMAN RESOURCES

LOGISTIC MANAGEMENT

MAINTENANCE MANAGEMENT

DATABASE

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Design and develop a Business Case

Quantify and validate the Business Case

Communicate and implement the Business Case

Conduct a post-implementation audit to track and report progress

against the Business Case

Identify root causes and implement solutions to obstacles undermining

benefits

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Help reduce operating costs : The major benefits of ERP are improvedcoordination across functional departments and increased efficiencies of doing

business. The immediate benefit from implementing ERP systems we can expect

is reduced operating costs, such as lower inventory control cost, lower

production costs, lower marketing costs and lower help desk support costs.

Facilitate Day-to-Day Management : ERP systems offer better

accessibility to data so that management can have up-to-the-minute access toinformation for decision making and managerial control. ERP software helps track

actual costs of activities and perform activity based costing.

Support Strategic Planning : ERP software systems is designed tosupport resource planning portion of strategic planning. In reality, resource

planning has been the weakest link in ERP practice due to the complexity of

strategic planning and lack of adequate integration with Decision Support

Systems (DSS).

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A few of the major drivers of the ERP popularity are as follows:

1. To enable improved business performance

Cycle Time reduction

Increased business agility

Inventory Reduction

Order fulfillment improvement

2. To support business growth requirements

New product / product lines, new customers

Global requirements including multiple languages and currencies

3. To provide flexible, integrated, real time decision support

Improve responsiveness across the organization

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4. To eliminate limitations in legacy systems

Century dating issues

Fragmentation of data and processing

Inflexibility to change

Insupportable Technologies

5. To take advantages of the untapped medium size organizations

Increased functionality at a reasonable cost

Client server / open systems technology

Vertical market solutions