ERP Introduction

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|
0
A
Project
Report
on
Submitted
By:
MBA
I
SEC
A
Anit
Kumar
Roy
11202008

2. Page
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1
Executive
Summary
To
survive,
thrive
and
beat
the
competition
in
today’s
brutally
competitive
supersonic
world
one
has
to
manage
the
future;
and
the
key
to
managing
future
lies
in
one’s
ability
to
effectively
manage
the
wide
influx
of
information.
In
order
to
deliver
high
quality
information
to
decision
makers
at
right
time,
in
order
to
automate
the
process
of
data
collection,
collation
and
refinement,
organizations
have
to
make
Information
Technology
an
ally.
Enterprise
Resource
Planning
(ERP)
is
an
extremely
powerful
tool
which
provides
a
seamless
information
system
to
support
various
functional
business
modules
of
an
enterprise.
ERP
packages
if
chosen
correctly,
implemented
judiciously
and
used
efficiently
will
raise
the
productivity
and
profits
of
companies
dramatically.

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Table
of
Content
Executive
Summary
............................................................................................................................................
1
Table
of
Content
.................................................................................................................................................
2
Introduction
........................................................................................................................................................
3
Benefits
of
ERP
...................................................................................................................................................
4
Risk
in
ERP
...........................................................................................................................................................
4
Scope
of
ERP
.......................................................................................................................................................
5
ERP
Packages
......................................................................................................................................................
5
ERP
in
Production
...............................................................................................................................................
6
Features:
.........................................................................................................................................................
6
Detailed
description
.......................................................................................................................................
6
Departments
involved
in
process:
..................................................................................................................
7
ERP
Modeling
......................................................................................................................................................
8
Blueprint
of
a
Business
ERP
Model
.....................................................................................................................
9
ERP
IMPLEMENTATION
.....................................................................................................................................
12
ERP
IN
TISCO
.................................................................................................................................................
12
Why
ERP
in
TISCO?
.......................................................................................................................................
12
Information
Systems
for
a
Quickly
Changing
Steel
Industry
.........................................................................
12
Integrated
IT
Model
for
Steel
Plant
..............................................................................................................
13
The
Outcome
................................................................................................................................................
14
Conclusion
........................................................................................................................................................
15

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Introduction
Enterprise
Resource
Planning
(ERP)
covers
the
techniques
and
concepts
employed
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
(covering
all
business
functions)
software
packages
that
support
the
above
ERP
concepts.
In
this
brutally
competitive
supersonic
world,
the
only
permanent
thing
is
“Change”.
Winners
always
gather
crucial
information,
act
quickly
on
it
and
derive
complete
competitive
advantage
out
of
the
opportunity
against
their
counter
parts.
ERP
is
a
result
of
the
modern
organizations’
attitude
towards
how
their
information
systems
are
to
be
configured
to
the
new
business
focuses.
ERP
is
a
“Total”
solution
for
this
“Change”.
It
answers
all
the
traditional
problems
of
island
of
information,
lack
of
integration
and
difficult
data
consolidation
and
difficulty
in
managerial
control.

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4
Benefits
of
ERP
Integrated,
uniform,
relevant,
and
up-­‐to
date
information
is
vital
for
the
very
existence
of
an
enterprise.
It
gives
the
power
to
the
right
person
to
make
decision
at
the
right
time.
This
is
only
possible
in
the
entire
organization
shares
the
same
information
and
views
in
the
same
perspective.
Lack
of
integration
affects
other
flows
like
men,
machines
and
money.
ERP
brings
together
people
who
work
on
share
tasks
within
the
same
enterprise
or
in
their
dealings
with
suppliers
and
customers.
Enterprises
have
to
ensure
a
smother
flow
of
information
at
all
levels
and
between
all
parts
of
their
organization;
to
access
up-­‐to
date
information.
Workflow
integrates
business
processes.
Some
of
the
tangible
benefits
reported
by
industry
are:
ü Reduction
of
lead
time
by
60%
ü 99%
on
time
shipment
ü Doubled
business
ü Increase
of
inventory
turns
to
over
30%
ü Cycle
time
cut
to
80%
ü WIP
reduced
to
70%
Apart
from
these
tangible
benefits,
there
are
intangible
benefits
like:
ü Better
customer
satisfaction
ü Improved
vendor
performance
ü Increased
flexibility
ü Reduced
quality
cost
ü Improved
resource
utility
ü Improved
information
accuracy
and
integrity
ü Improved
decision
making
capability
ü Best
business
practices
in
the
world
ü Best
solution
in
terms
of
E-­‐Commerce
Risk
in
ERP
ü Changed
business
processes
ü Hurried
implementation
ü User
adaptation
ü High
time
in
money
investment

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Scope
of
ERP
v Financials
ü Financial
accounting
ü Treasure
management
ü Enterprise
control
ü Assert
management
v Logistic
ü Production
planning
ü Materials
management
ü Plant
maintenance
ü Quality
management
ü Project
system
ü Sales
and
distribution
v Human
resources
ü Personal
management
ü Training
and
development
ü Skill
inventory
v Work
flow
ü Flexible
assignment
of
task
and
responsibility
ERP
Packages
ü SAP
ü Oracle
ü JD
Edwards
ü PeopleSoft
ü Baan
ü SSA
(System
Software
Associate)
ü Indian
products

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ERP
in
Production
Planning
system
and
production
tracking
has
the
purpose
to
maintain
the
production
functionality
in
quality,
quantity
and
time
limits
which
were
assign
by
the
fundamental
production
objectives.
The
main
objective
of
the
Production
application
is
to
aggregate
direct
and
discontinuous
elements
into
a
continuous
production
process
which
is
capable
to
ensure
the
efficient
use
of
production
capacities,
maximum
use
of
main
materials
base
and
superior
use
of
work
force.
Through
its
flexibility,
the
system
can
apply
successfully
in
different
industries
with
serial
production
or
unique
products,
continuous
production
or
work
projects
and
services.
The
main
features
of
the
application
are:
flexibility,
security,
easiness
in
use.
Production
flow
can
be
tracked
online.
To
be
fast
and
easy
to
use
this
production
application
is
based
on
catalogs.
This
application
can
be
used
through
standalone
client
application
or
through
web
browsers
like
Firefox,
Internet
Explorer,
Opera
or
Safari.
Features:
ü Production
orders
management
ü Automated
creation
of
production
order
history
ü Create
and
manage
technical
drawing
archives
ü Create
and
manage
technical
documents
ü Price
calculation
based
on
product
composition
specification
ü Planning
and
simulation
of
production
processes
ü Create
the
documentation
for
the
production
release
ü Complete
production
information
management
ü Monitoring
all
production
orders
ü Additional
modules
that
can
be
integrated
with
production:
ü Customers,
sales,
stocks,
assets,
accounting
Detailed
description
Production
module
includes
all
successive
situations
through
which
a
production
order
is
passing.
ü Production
order
ü Production
orders
planning
ü Product
design
ü Creation
of
technical
documentation
ü Cost/Price
calculation
ü Production
scheduling
ü Production
release
ü Product
execution
ü Execution
tracking
and
costs
management
ü Inventory
ü Product
delivery

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Departments
involved
in
process:
Process
Overview:
Production
Planning
and
Control

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ERP
Modeling
Before
we
go
ahead
with
ERP
modeling
we
should
know,
types
of
information
management
systems.
Basically
Information
system
can
be
widely
categorized
into
three:
v Transaction
processing
systems
(TPS)
collect
and
record
the
routine
transactions
of
an
organization.
Examples
of
such
systems
are
sales
order
entry,
hotel
reservations,
payroll,
employee
record
keeping,
and
shipping.
v Management
information
systems
(MIS)
produce
fixed,
regularly
scheduled
reports
based
on
data
extracted
and
summarized
from
the
firm’s
underlying
transaction
processing
systems
(TPS)
to
middle
and
operational
level
managers
to
provide
answers
to
structured
and
semi-­‐structured
decision
problems.
v Decision-­‐support
systems
(DSS)
are
computer
program
applications
used
by
middle
management
to
compile
information
from
a
wide
range
of
sources
to
solve
problems
and
make
decisions.
v Executive
support
systems
(ESS)
is
a
reporting
tool
that
provides
quick
access
to
summarized
reports
coming
from
all
company
levels
and
departments
such
as
accounting,
human
resources
and
operations.
A
Typical
information
system
model

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Blueprint
of
a
Business
ERP
Model

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Planning
ü set
up
the
production
order
ü manage
the
production
order
ü tracking
the
production
order
ü create
reports
based
on
customer’s
production
orders
ü create
reports
of
open
production
orders
Design
ü set
up
drawing
catalogs
for:
products,
modules,
guide
marks
ü defines
the
product
composition
specification
ü establish
modules
structure,
defines
products
catalog
features
ü set
up
production
orders
documentation
in
design
stage
Technical
ü set
up
technical
documentation
for:
product,
module,
guide
mark
ü defines
material
and
necessary
quantity
for
production
ü set
up
production
orders
documentation
in
technical
stage
Price
calculation
ü calculate
cost
price
for
production
orders
in
cost/price
stage
ü calculate
product
cost
price
depending
on
lot
ü manage
calculated
prices
ü defines
costs
that
are
influencing
product
price
ü defines
fee/
hour
Programming
ü planning
production
order
by
each
department
ü program
order
execution
by
production
department
ü defines
execution
workshop
ü defines
time
line
for
order
completion
Release
ü create
synoptic
table
ü create
route
cards
ü create
materials
requirements
ü consumption
bills
Inventory
ü supply
scheduler
based
on
materials
requirements
ü processing
consumption
bills
ü bills
management
ü create
reception
notes

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11
ü create
delivery
notes
ü manage
materials
stocks
by
locations
ü input-­‐output
balance
Production
ü product
execution
based
on
received
documentation
ü manufacturing
deduction
for
the
order
ü annex
number
ü operation
number
ü operator
ü pieces
Tracking
ü create
manufacturing
scheduler
ü tracking
departments
production
order
history
ü tracking
order
execution
stage:
released
pieces/
delivered/remained
to
be
executed
pieces
ü tracking
order
operations:
released/executed/
remained
to
be
executed
ü tracking
manufacturing:
released/
executed/
remained
to
be
executed
ü tracking
operators
deducted
manufacturing,
tracking
on
each
operator
the
deducted
manufacturing:
order,
document,
operation,
date
ü tracking
delivers
from
value
and
quantity
point
of
view
ü tracking
unfinished
production
ü tracking
the
post-­‐calculation
for
delivered
products
Setup
and
catalogs
ü production
orders
categories
ü production
orders
priorities
ü production
orders
situations
ü production
orders
types
ü rejected
products
catalog
ü costs
types
ü consumption
note
setup
ü departments
ü workshops
ü machines
ü operations
ü tools
ü measurement
and
control
tool
ü operators
ü qualifications
ü materials

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ERP
IMPLEMENTATION
ERP
IN
TISCO
TISCO
deserves
lot
of
credit
for
implementing
ERP
because
of
the
fact
that
many
organizations
in
the
global
level
have
given
up
the
very
idea
of
ERP
due
to
the
fact
that
there
are
lots
of
failures
associated
with
it
even
in
the
implementation
stage.
ERP
implementation
did
in
wrong
manner
have
caused
havoc
to
organizations
more
than
bringing
profits.
This
being
the
case
it
is
natural
to
expect
a
large
company
(in
terms
of
Size
and
volume
of
operations)
like
TISCO
to
discourage
the
idea
of
Enterprise
resource
planning.
However
TISCO
proved
to
be
different
from
the
others
by
choosing
ERP
in
the
right
time
and
implementing
it
in
a
proper
manner.
They
have
also
reported
a
whooping
profit
and
reduction
of
costs
in
the
whole
process.
Another
amazing
fact
is
that
they
implemented
it
into
the
whole
systems
in
one
single
spree.
The
method
of
implementing
it
in
one
spree
carries
a
lot
of
risks
especially
for
a
bigger
company.
Infact
the
success
rate
of
this
method
itself
is
low
in
general
and
very
low
as
far
as
bigger
companies
are
concerned.
In
case
of
the
rare
success
organizations
will
experience
effective
results
in
their
enterprise
operations.
TISCO
has
achieved
that
by
way
of
meticulous
handling
and
professionalism.
The
net
results
of
their
ERP
software
have
been
described
to
be
path
breaking
and
a
trendsetting
one.
Why
ERP
in
TISCO?
TISCO
faced
two
major
problems
from
the
systems
that
existed
for
a
long
time.
Firstly
they
were
not
customer
friendly.
The
whole
system
was
tuned
to
the
process
and
very
little
attention
was
paid
to
the
customer
demands.
Secondly
the
systems
were
outdates
and
the
modalities
of
operation
were
too
complex
and
not
error
free.
In
order
to
rectify
these
issues
which
would
otherwise
prove
to
be
major
setbacks
to
the
company
the
organization
resolved
to
take
up
ERP.
This
was
instigated
by
the
concerned
departments.
Leading
consultants
were
hired
and
the
business
structure
was
studied
and
suitable
plans
were
drafted
accordingly.
Information
Systems
for
a
Quickly
Changing
Steel
Industry
In
a
quickly
changing
industry
like
steel,
one
need
information
systems
which
quickly
provide
them
the
data
they
need.
We
believe
that
ERP,
especially
in
its
mature
implementations
today,
is
the
crucial
component
for
a
company’s
IT
data
backbone.
ERP
can
play
an
essential
role
in:
ü Driving
accurate
and
fast
decisions
(product
profitability,
procurement
spend)
with
consistently
defined
data
ü Running
broadly
known
and
supported
applications
ü Harmonizing
and
optimizing
back-­‐office
processes
across
the
enterprise
that
comply
with
finance
requirements
such
as
SOX
and
IFRS
ü Enabling
best-­‐practice
demand
planning
for
supply-­‐chain
processes
ü Future-­‐proofing
global
applications
that
support
global
enterprises

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13
Integrated
IT
Model
for
Steel
Plant
An
integrated
IT
model
as
in
Figure
3
is
important
because
it
lets
you
see
the
systems
involved
in
planning
and
production.
A
typical
flow
would
be:
ü The
Supply
Chain
Management
(SCM)
application
provides
the
rough-­‐cut
planning
in
“Demand
Planning.”
The
result
is
planning
blocks
of
similar
products
which
are
then
handed
over
to
production
planning.
ü When
orders
are
being
entered,
availability
checks
assign
the
order
to
a
block
(unless
inventory
already
exists
that
meets
the
order)
and
feeds
back
a
promise
date
(at
the
end
of
the
block
to
allow
for
the
flexibility
of
possibly
moving
to
an
earlier
date).
ü The
mill
optimizer
then
typically
would
re-­‐shuffle
orders
in
between
the
blocks,
and
feed
results
back
into
the
SCM
application
in
order
to
optimize
the
load
balancing.
ü Right
before
production
starts,
planned
orders
from
the
SCM
application
are
converted
into
production
orders
and,
via
the
ERP
system,
are
transferred
into
the
MES
layer.
It
is
at
that
time
when
quantities
are
being
translated
into
pieces
(slabs,
coils
etc.).
ü Detailed
scheduling
then
takes
place,
sequencing
and
combining
pieces
from
various
orders
throughout
the
mill
into
lots
for
optimization.
ü Production
completion
then
posts
an
updated
status
of
the
orders
into
the
ERP
system,
including
stock
receipts
of
finished
products,
and
so
forth.

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14
The
Outcome
SAP
ERP
solutions
produced
a
remarkable
result
to
the
company
in
terms
of
financial
technical
and
managerial
parameters.
The
effective
handling
and
speed
delivery
resulted
in
greater
sales
.Similarly
there
was
a
drastic
fall
in
the
amount
owned
to
creditors.
The
systems
were
made
more
user
friendly
without
any
complexities
and
procedural
lacunas.
This
improved
the
quality
of
work
and
lessened
the
time
taken
for
work
and
thereby
increased
the
productivity.
This
was
followed
by
a
massive
change
in
terms
of
accountability
administration
and
control.
"Post
the
introduction
of
the
ERP
solution,
the
results
have
been
terrific.
Tisco
has
spent
close
to
Rs
40
crore
on
its
implementation
and
has
saved
Rs
33
crore
within
a
few
months,"
said
Ramesh
C.
Nadrajog,
Vice
President,
and
Finance.
"The
manpower
cost
has
reduced
from
over
$200
per
ton
two
years
ago,
to
about
$140
per
ton
in
2000.
The
overdue
outstanding
has
been
brought
down
from
Rs
5,170
million
in
1999
to
Rs
4,033
million
by
June
2000.
The
inventory
carrying
cost
has
drastically
deflated
from
Rs
190
per
ton
to
Rs
155
per
ton.
To
add
to
this,
there
have
been
significant
costs
savings
through
management
of
resources
with
the
implementation
of
SAP.
With
SAP's
solution
Tata
Steel
can
now
update
their
customers
on
a
daily
basis
and
provide
seamless
services
across
the
country
improving
customer
management.
The
availability
of
online
information
has
facilitated
quicker
and
reliable
trend
analysis
for
efficient
decision-­‐making.
Besides
the
streamlined
business
process
reduces
the
levels
of
legacy
system
and
also
provides
consistent
business
practices
across
locations
and
excellent
audit
trail
of
all
transactions.

16. Page
|
15
Conclusion
ERP
is
a
key
backbone
application
for
companies.
Given
an
awareness
of
the
best
practices
and
a
good
understanding
of
the
project
complexities,
the
risks
in
an
ERP
implementation
are
usually
outweighed
by
the
benefits.
The
ERP
discussion
is
often
one
of
mindset
more
than
one
of
standalone
business
cases.
While
implementing
ERP
can
be
challenging
and
demands
sustained
commitment
from
top
executive
levels,
it
is
fundamental
to
enhancing
the
competitive
position
of
a
company
in
the
dynamic
environment
of
the
industry
today.