Enterprise Resource Planning and its Presence in Organization Prepared by NEXTERS Name Moktadir 2006-55 Masud 2006-46 Jamshed 2006-45 Shathy 2006-79 Rima 2006- Contribution (%age) 21% 20.5% 20.5% 19% 19% Allocation of works to members & managing organization for opinion collection. Questionnaire preparation and data collection for report. Analyzing the articles and preparation of a complete report layout. Works description Md. Gulam Mokta Dhir Md. Masudur Rahman Md. Jamshed Alam Kamrun Naher 2006-55 2006-46 2006-45 2006-79 Sharmin Akther 2006-108 Typing and making ERP implementation and selection part. Typing and shaping the raw data to prepare the aggregate report. Prepared for Mohammad A Jahed BBA MBA MS (Michigan, USA) Associate Professor Department of Management University of Chittagong 1 Preface This present study is an empirical study about the use of ERP in our organization and their approach towards the ERP. This investigation was conducted on a shoe manufacturing organization in Chittagong to identify there attitude towards ERP and its future prospect. We all know that business all around the world is increasing their reliance on ERP programs as a cost efficient alternative to their current manual procedures or other piecemeal software application. However, current ERP programs suffer from a number of shortcomings which make it especially difficult for the small/mid size organization to enjoy the tremendous benefits of ERP. Here we tried to take executive opinion on how they treat the ERP and how they overcome any problem in the process of ERP implementation. The report is prepared under Mohammad A Jahed, Assistant Professor Department of Management Studies. We are grateful to him for his cooperation and giving us the opportunity to have such a report project. Data were collected through two executives of maf shoes. We are also thankful to them for their cooperation and sacrifice. We hope that the knowledge acquired from this report and its preparation will help in our career. NEXTERS 4th year Department of Management studies University of Chittagong 2 ACKNOWLEDGEMENT The success of this report depends on the contribution of many people, especiall y those who spare time to share their suspicious art of judging of merits and faults and have given valuable suggestions. We have tried our best to complete the report based on Enterprise Resource Planning at Map shows Limited. We would like to give thanks to all members who gave us the possibility to complete this report. We would especiall y like to thank our department guide honorable teacher Mr. Mohammad A Jahed, Associate Professor, Department of Management Studies, Universit y of Chittagong whose inspiration and consideration during the entire program made it possible to prepare this report. We would like to extend our thanks to the contributors of generous help from whom we have received much information about Map shows limited. We are grateful to Mr. Md. Anusur Rahman, Senior Executive IT. 3 Abstract The present study is an attempt to identify major challenges and developments for SCM and its related issues in selected company and to have better idea about how ERP software use in our country. This report is an analysis of how ERP works in our organizations and what are the executive’s opinion about the pros and cons of ERP culture. We (Nexters) have tried here to draw some important issues to implement ERP and how they can be managed. We have designed our report with the general introduction of ERP. Then this report proceeds into the introduction of major ERP vendors of the world and their products. We visited an organization (maf shoes Ltd.) which is in the process of ERP implementation. Synesis synergy ERP, the ERP vendors of concerned organization has gotten special preferences here. Afterward we draw some important questions from the questionnaire responded by the executives to have proper idea about the current practices of ERP. Then we move towards different factors that are related to the ERP selection and implementation like ERP selection criteria, implementation cost, technical requirement, implementation phases and challenges of ERP implementation etc. At the last part of the report we portrayed some findings on benefits and applicability of ERP in terms of cost, time, quality and flexibility. How does it effect in different parts of the organization. How to get rid of the obstacles? Lastly we sketched the future of ERP culture in chittagong. 4 Introduction We mean ERP as software that integrate all departments and functions across a single computer system that serve all those departments particular needs. These sets usually include a set of mature business applications and tools for financial and cost accounting, sales and distribution, materials management, human resource, production planning and computer integrated manufacturing, supply chain, and customer information. These packages have the ability to facilitate the flow of information between all supply chains Processes (internal and external) in an organization. Furthermore, an ERP system can be used as a tool to help improve the performance level of a supply chain network by helping to reduce cycle times. If we consider Bangladesh perspective then use of ERP is becoming new culture. Not only established organizations are using ERP but also new entrance of the different markets are using ERP to have better application of their resources and rendering service to customers. Benefits of ERP Organization actually introduce ERP due to high levels of inventory, mismatched stock, lack of coordinated activity, excessive need for reconciliation, flouting of controls, poor customer response levels and operations falling short of industry benchmarks in terms of cost controls and general efficiency. The tangible benefits due to ERP adoption include: reduction of lead time by 60 per cent, 99 per cent on-time shipments, increased business, increase of inventory turn over by 30 per cent, reduction in cycle time by 80 per cent and work in progress reduced to 70 per cent. The intangible benefits include: better customer satisfaction, improved vendor performance, increased flexibility, reduced quality costs, improved resource utility, improved information accuracy and improved decision-making capability. 5 6 Figure: ERP system modules 7 Our selected organization for data collection was maf shoes. Is a new organization in the field of shoe manufacturing. It is mostly an export oriented organization. It has another unit which produces paper. They are in the ending stage of ERP implementation. In response to the question of the importance of ERP, they are strongly agreed about the importance of effective supply chain management and ERP is introduced to accelerate the supply chain management. maf shoes is in the process of introducing ERP software(Synesis Synergy ERP). Let’s have primary idea about synesis IT. About Synesis IT Synesis IT is a US based Multinational IT Company that operates 8 places around the glove. Synesis is a MS Certified Gold Partner. It has also partnership with IBM, Cisco, Citrix, Oracle, Avaya etc. Synesis IT does not work for IT, it makes IT work for you and your business by reducing TCO to make ROI significantly higher. It is a first locally developed ERP implementer in BD Telecom industry. Synesis is one of the leading Small Business Solution Specialist in BD ranked by Microsoft. Key Benefits Synesis Synergy ERP delivers a comprehensive set of integrated, cross-functional business processes. With Synesis Synergy ERP, you can gain the following benefits: Improve alignment of strategies and operations o Run your enterprise in accordance with strategy and plans, accessing the right information in real time to identify concerns early. o Pursue opportunities proactively. o Achieve corporate objectives by aligning workforce and organizational objectives. o Find the best people and leverage their talent in the right job at the right time. Improve productivity and insight o Leverage self-services and analytics across your organization. o Improve operational efficiency and productivity within and beyond your enterprise. Reduce costs through increased flexibility o Use enterprise services architecture to improve process standardization, efficiency, and adaptability. 8 o Extend transactions, information, and collaboration functions to a broad business community. Support changing industry requirements o Web-based technology to integrate your end-to-end processes seamlessly. Reduce risk o Solve complex business challenges today with Synesis Synergy ERP Improve financial management and corporate governance o Gain deep visibility into your organization with financial and management accounting functionality combined with business analytics. o Increase profitability, improve financial control, and manage risk. Optimize IT spending o Integrate and optimize business processes. o Eliminate high integration costs and the need to purchase third-party software. Gain higher ROI faster o Install Synesis Synergy ERP using rapid-implementation techniques that cost less than half what traditional approaches cost. o Leverage preset defaults and prepackaged versions available for specific industries. Retain top performers o Retain your top performers through clearly defined career and development plans. o Link employees' performance to compensation programs such as variable pay plans and long-term incentives. Provide immediate access to enterprise information o Give employees new ways to access the enterprise information required for their daily activities. 9 Leading ERP vendors SAP AG SAP AG is the world’s leading ERP software provider &the world’s third largest software provider. Its flagship product is known as R/3.More then 17,500 organizations in 120 countries have used. Its products are including major multinational firms such as Chevron, Colgate - Palmolive, Exxon, IBM, & Microsoft. CORE FUNCTIONS The core functions in R/3 include financial accounting, Cash Mgt. Fund Mgt. personnel Administration & payroll, Investment Mgt., Plant maintenance, Treasury, Real estate Mgt. Materials Mgt. production planning, Logistics, Sales & distribution, Quality Mgt Service Mgt., Plant Mgt., Human resources, Product life cycle & workflow. ORACLE The oracle corporation was founded in the late 1970s by Larry Ellison, Bob Miner, & Ed Oates. The focus of the company has been to provide business applications that utilize relational data bases for storing information. Oracle technology is used in nearly every industry aground the world & in almost all fortune100 Companies. Today, Oracle continues to be the world’s leading supplier of information mgt. software. It is the world’s second largest independent software company after Microsoft. CORE FUNCTION Oracle e-business suite offers, solution in product life cycle mgt. supply chain planning, procurement, manufacturing resource mgt. & other fulfillment. PEOPLE SOFT The primary focus of the company has been to built client/server business Applications instead of focusing on application for the traditional mainframe Computers people soft serves customer around the glove, including analog devices corning. CORE FUNCTIONS HRM, Financials Supply chain Mgt. Customer relationship Mgt. & supplier relationship Mgt. J.D.EDWARDS J.D.Edwards founded in 1977 by Jack Thompson. It is one of the worlds leading Developers of agile software solutions, providing cutting- edge, collaborative Technology that runs global business & integrates process across multiple systems &supply chain partners. It has over 6500 Customers world wide, which includes Boston properties, Casio computer company ltd. Chevron chemical company, City of Orlando, Swiss Army. In august 2003, J.D.Edwards was acquired by People Soft. 10 CORE FUNCTION This family of modular enterprise Software product & services consists of seven products lines enterprise resource planning, supply chain Mgt, CRM, SRM, Business intelligence, collaboration & integration,& tools &technology. BAAN Bann was founded in 1978, with headquarters in the Netherlands and a current workforce of approximately 2,800 employees a world wide customer base. It is a part of the production Mgt. division of invests PLC, a global provider of e- business and automation solutions. Bann provide application solutions to more than 15,000customer sides worldwide, many of which are world leaders in the manufacturing industry, including Del Monte, Volvo, solectron, flextronics, landini. CORE FUNCTION Enterprise, CRM, product lifecycle Mgt, supply chain Mgt, business intelligence, & dynamic enterprise modeling. Market share of the ERP vendors This institution choosing the ERP vendors because product features and functionality are best fit their requirements. Leading ERP vendors include: Consona Epicor SAP Global Shop Solutions IFS Intacct UNIT4 Microsoft Dynamics Netsuite Plex Systems Sage Syspro VAI Solarsoft Fig 1: Percentage of Global ERP Revenue by Vendor (2008) 11 Factors affecting the implementation process Although companies spend millions on ERP packages and the implementation process, there is extensive evidence that they experience considerable problems, particularly during the actual implementation project. If the following 11 factors are not treated wisely then the implementation process will hamper these are 1. ERP teamwork and composition. 2. Change management program and culture. 3. Top management support. 4. Business plan and vision. 5. BPR with minimum customization. 6. Project management. 7. Monitoring and evaluation of performance. 8. Effective communication. 9. Software development. 10. testing and 11. Troubleshooting; project champion; appropriate business and IT legacy systems. In ERP selection criteria The system selection process is deceptively difficult. While most ERP packages have similarities, they also have fundamental design differences. The selection involves listening to the views of various people whose involvement would be essential and the criteria to go beyond technical issues such as proven experience of the supplier in the desired industry, along with support infrastructure. Selecting a system that is simple offers smart tools for system administration, a consistent interface and supports graphical and character interfaces that could reduce the implementation time. Some selection criteria on the basis of the size of the Org. are given below: Large size: Stability and history of the ERP supplier, Last 12-month track record of ERP sales Implementation support from suppliers, Improvement in ERP packages including stability of the product and functionality, Applicability, Integration, Adaptability, Competitive strategy, Vendor evaluation and functional and technical aspects of the software. Mid size: Fit with business process, Flexibility, User-friendliness, Costs, Scalability, Supplier support and training, Product functionality and quality, Implementation speed Interface with other systems, Price, Market leadership, Corporate image, international orientation and implementation time. SME: Affordability, Domain knowledge of suppliers, Local support, Technical upgradable, Incorporation of latest technologies, Price and Cost. 12 Critical implementation factors Key success factors of ERP implementation include cross-functional team approaches, organizational experience of similar scale IT or organizational change projects, and understanding of the key issues relating to ERP implementations. The failure factors including top-down or consultant-driven implementations, IT department-driven implementations, or implementations where the ERP is seen as a quick technological fix to problems within the operation of the firm, rather than as a strategic investment. The following are important for ERP implementation: 1. Top management support. 2. Effective project management. 3. Implementation strategy. 4. Technical software configuration. 5. Selecting an appropriate ERP strategy. 6. ERP teamwork and composition. 7. Change management program and culture. 8. Top management support. 9. Monitoring and evaluation of performance. 10. Effective communication. 11. Cross-functional team approaches. 12. Deep understanding of the key issues relating to ERP implementations. 13. Strong committed leadership. 14. Balanced and empowered implementation team. 15. Extensive education and training. Technical Requirements There are two different strategic approaches to ERP software implementation. In the first approach, an Organization has to re-engineer the business process to accommodate the functionality of the ERP system, which means deep changes in long-established ways of doing business and a shake up of important peoples’ roles and responsibilities. This technique will take advantage of future ERP releases, benefit from the improved processes, and avoid costly irreparable errors. The other approach is customization of the software to fit the existing process, which will slow down the project, introduce dangerous bugs into the system and make upgrading the software to the ERP vendor’s next release excruciatingly difficult, because the customizations will need to be torn apart and rewritten to fit with the new version. However, the former approach has proven to be more logical and effective; historically, ERP implementations have had to deal with the critical issue of changing the business process or modifying the software. Since each alternative has drawbacks, the solution can be a compromise between complete process redesign and massive software modification. However, many companies tend to take the advice of their ERP software vendor and focus more on process changes. 13 Implementation phases Bancroft et al. (1998) presented a view of the implementation process which was derived from discussions with 20 practitioners and from studies of three multinational corporation implementation projects. The Bancroft model has five phases: 1. focus. 2. As is. 3. To be. 4. Construction and testing and 5. Actual implementation. Focus The focus phase is essentially a planning phase in which the key activities are the set-up of the steering committee, selection and structuring of the project team, development of the project’s guiding principles and creation of a project plan. As is The as is phase involves analysis of current business processes, installation of the ERP, mapping of the business processes on to the ERP functions and training of the project team. To be To be phase entails high-level design and then detailed design subject to user acceptance followed by interactive prototyping accompanied by constant communication with users. Construction and testing The key activities of the construction and testing phase are the development of a comprehensive configuration, the population of the test instance with real data, building and testing interfaces, writing and testing reports and finally, system and user testing. Actual Implementation Finally, the actual implementation phase covers building networks, installing desktops and managing user training and support. In summary, the model of implementation extends from the beginning (focus) of the project proper to the cut-over of the live system. Challenges of ERP implementation challenges in managing enterprise wide project can be as follows. 1. The challenge of re-engineering business processes to “fit” the process which the ERP software supports. 2. Investment in recruiting and reskilling technology professionals. 3. The challenge of using external consultants and integrating their applicationspecific knowledge and technical expertise with the existing teams, 14 4. The risk of technological bottlenecks through client/server implementation and the challenge of recruiting and 5. Retaining business analysts who combine technology and business skills. Current limitation of erp system: Lack of awareness of the importance of Enterprise resource planning system(erps) of organization owner. Employees limitation of understanding Enterprise resource planning systems(erps). High installation cost. Difficult to cope with current business practice. Traditional mentality of the owner of the organization about supply chain management and customer relationship management. Employees fear of unknown for the implementation of enterprise resource planning (erps) system. Time consuming process. Need specific data of supply chain management (SCH) & customer relationship management (CRM). Related person isn’t careful about enterprise resource planning (erp|) system in a democratic system. Lake of expert in the field of enterprise resource planning (erp) system. Enterprise resource planning (erp|) system is based on software and computer related system so it’s difficult for those shareholder and stockholder whose literacy level is low. Sometime there is a possibility to failure enterprise resource planning (erp|) system. Projected future impacts of ERP: Enterprise resource planning system (ERPs) critically evaluates the success factor of enterprises. Affective prime target picture and processing of enterprise resource planning system. The performance effects of latent factors of assimilation of commercial open source ERP software. Enterprise resource planning (erps) system will reduce cost and increase revenue of the organization. Enterprise resource planning system ensures sustainable growth and economic development. Identifying critical issue of enterprise resource implementation. Valuation and operability 0f valuation drivers and future stock return. It will increase the productivity of organization work. It will smooth the organizational task. Within a short time any information collects from the database. 15 Shipment failures of RMG sector are going to be low. Employees of the organization will motivate with readymade database system. Business will held faster than current system. Software organization is going to generate more profit through this system in the earlier year. Traditional business supply chain management and customer relationship management system will vanish at an earlier time. IT experts get job with a attractive salary scale. Recommendation: There are some recommendations about enterprise resource planning systems (erps) which must be critically explained here: Increase the awareness of the importance of enterprise resource planning systems (ERPs) in the industrial unit to industry owner. Create a favorable environment for the employees to implement enterprise resource planning systems. Cost must be reducing to install Enterprise resource planning system in the organization. Establish Enterprise resource planning systems (erps) learning center. Creates available expert to get solution of Enterprise resource planning systems(ERPs) problem Conclusion ERP systems are sets of integrated applications that can provide a total solution to an organization’s information system needs by addressing a large proportion of business functions including financial, accounting, human resources, supply chain and customer information. They support a process-oriented view of the business as well as business processes standardized across the enterprise. Although ERP packages provide generic off-the-shelf business and software solutions for customers, there is growing evidence that failure to adapt ERP packages that are implemented in companies with different corporate and national cultures, to fit these cultures, leads to projects that are expensive and overdue. ERP technology faces additional challenges in developing countries related to economic, cultural and basic infrastructure issues. Most ERP systems still lack the more advanced product costing techniques, such as activity-based costing (ABC), life-cycle costing and target costing. Also, they lack the capabilities of the advanced techniques for dealing with uncertainties such as fuzzy logic. Furthermore, state-of-the-art techniques such as neural networks and genetic algorithm should also implement in the existing ERP systems. ERP software still requires many resources and efforts to integrate all of the major business functions in the initiating firm. Some of the topics will be on the impact of ERP on organizational alignment, organizational learning, infrastructure, mass customizations, competitive advantage and organizational structure. A customer relation management (CRM) module should be included in the ERP packages. 16 References Adam, F. and O’Doherty, P. 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(1999), “SAP R/3 implementation issues for small to medium Enterprises”, Proceedings of the 5th Americas Conference on Information Systems, Milwaukee, WI, pp. 779-81. Gardiner, S.C., Hanna, J.B. and LaTour, M.S. (2002), “ERP and the re-engineering of industrial marketing processes: a prescriptive overview for the new-age marketing manager”, Industrial Marketing Management, Vol. 31, pp. 357-65. 17 TABLE OF CONTENTS 1. Preface .....................................................................................................02 2. Acknowledgement....................................................................................03 3. Abstract.....................................................................................................04 4. Introduction and benefits of ERP..............................................................05 5. Drawbacks of ERP....................................................................................06 7. ERP System Modules................................................................................07 8. Synthesis IT ............................................................................................8-9 9. Leading ERP vendors................................................................................10 10. Market Share of the ERP Vendors..........................................................11 11. Factor affecting the ERP implementation process.............................12-14 12. Current Limitation of ERP......................................................................15 13. Recommendation and Conclusion...........................................................16 14. References...............................................................................................17 18