dissertation defence

PIM – Procurement and Inventory ManagementIn-Module Work – Final Presentation

AN EVALUATION OF THE ERP BENEFITS FOR PROCUREMENT FUNCTION: A CASE STUDY IN INDIAN AUTOMOTIVE INDUSTRY

Name: Abhijay Singh Sisodia

Course: M. Sc. - Engineering Business Management

Supervisor: Mr. Graham Warren

Examiner: Dr Adrian Watt

Date: 24th September 2010

Dissertation Project Presentation

Introduction

Research Question and Objectives

Literature Review

Research Methodology

Case Study – Force Motors Ltd. India

Data Analysis

Results

Conclusion

Recommendations for Case Study Company

Proposed for Future Work

Questions

Outline

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• The present research is carried out in the context of emerging economies.

• The field of procurement and ERP benefits have been well researched for the developed countries.

• Additionally the research study was started with a focus on automotive industry where the procurement function has significant importance.

Introduction

3

RESEARCH QUESTION

What are the benefits for the procurement function for an automobile company arising with the use of ERP systems?

RESEARCH OBJECTIVES

Identify the expected benefits from ERP for procurement function of organisation by literature review.

Investigate the present perceived benefits of ERP for procurement function in an actual automotive company.

Research Question and Objectives

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Literature Review - Introduction

5

ERP Study

Information Systems

Business Benefits

ERP Benefits

ERP Implementation

ERP Investment Valuation

Organisational Collaboration

Performance Measurement

Shang and Seddon (2000) Benefit Classification was adopted to identify ERP benefits for procurement function in each of the categories.

The literature review identified ERP benefits into five categories following the Shang and Seddon classification:

Operational benefits (please refer Table 2-2 on Pg. 14)

Managerial benefits (please refer Table 2-3 on Pg. 19)

Strategic benefits (please refer Table 2-4 on Pg. 25)

IT- related benefits (please refer Table 2-5 on Pg. 28)

Organisational benefits (please refer Table 2-6 on Pg. 29)

Literature Review - Identified ERP benefits

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Topics identified from Literature Review for interview

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ERP benefiting Procurement function

Operational Process• Production planning

and control• Materials

Management• Procurement

Managerial processes• Purchase order/

contract management

• Supplier Management

• Decision Making• Procurement

performance measurement

• Supplier performance measurement

Strategic Benefits• Strategic Alliance• Supplier

collaboration• NPD

Information Technology related benefits• Database availability• Enabling e-

procurement

Organisational benefits • Cross functional

integration• Business learning• Communication• Common vision

Source: Dissertation Book Pg. 39 Figure 3-3


Tasks Techniques adopted for the study

Purpose Descriptive and exploratory studies

Research strategy implemented A single case study

Data collection QualitativeInterviews based agenda developed from the literature reviewManagers at Force Motors Ltd. India.

Data analysis Please see Pg. 39-40 of dissertation.

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Conclusion

Present brief conclusion of what has been acheived

DiscussionClassify the evidence with relevance to research question

Data reduction and analysisSummarize gathered evidence across major categories according to framework

Data presentationSummarize each interview

Data collectionNote taking

Data collection agendaDevelop agenda for interview questions based on expected benefits

Literature ReviewIdentify the expected benefits for procurement

Source: Dissertation Figure 3-2 Pg. 35

Site – Pithampur Assembly plant

Product line – Ambulances, 10 seated LCVs, 3 wheelers pickup and auto rickshaw, Tractors, Armoured vehicles.

Plant setup – 1987

Purchasing is more centralised in nature and is directed by headquarters base at Pune, India.

Case Study Force Motors Ltd. India

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Data analysis

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The gathered data was presented in tables (4-1 to 4-5) for each benefit category and identified similar responses for measures from each respondent.

The ERP benefits were re-arranged in decreasing order of recognition.

The observation of figures (5-1 to 5-5) enabled grouping into• Strongly recognised benefits• Moderately recognised benefits• Poorly recognised benefits

Observation of these benefits in comparison with the literature review helped reached conclusion.

Operational ERP benefits

Lead/ Cycle time reduction

Materials requrement planning

Calculation of order quantity

Production planning

Managerial ERP benefits

Monitor supplier perforamance

Evaluate supplier against KPIs

Track Orders

Strategic ERP benefits

Information sharing

Collaborative forecasting

IT related ERP benefits

Helps reach better suppliers

Automatically update material movement

ERP as an enabler to e-procurement

Organisatinal ERP benefits

Coordination among departments

Embedding organisational policies in processes

Efficient internal communication

Data recording

Results- Strongly recognised benefits

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Source: Dissertation Fig 5-1 Pg. 77


Monitor inventory quantity and value

Intimation of receipt

Demand management

Low work-in-progress


Database of existing suppliers

Scheduling

Track rejection, rework and claims

Automated invoice processing and payment

Monitor delivery


Supplier collaboration

New Product Development Documentation

IT related ERP benefits

Detect rate and area of consumable stock

Easier and cheaper sourcing

Organisational ERP benefits

Documentation for knowledge management

Results- Moderately recognised benefits

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Error reduction

Quality improvements

Productivity improvements


Batch size calculations

Re-order point calculations

Maintaining supplier days

Alert new requirements to supplier

Manage schedule agreements

Spend analysis


Supports Innovation

Harmonises policies

Gain/Risk sharing

IT realted ERP benefits

Updated product catalog

Organisational ERP benefits

Process standardisation

Collaborative external communication

Results- Poorly recognised benefits

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Dissertation study was found standing in line with the earlier research findings on ERP benefits.

The study identified a total of forty five criteria for measuring ERP benefits for procurement.

The data gathered through interviews and following analysis recognised the ERP benefits to be recognised by the respondents.

The responses also helped recognise the difference in time related with each category of ERP benefits.

Some benefits are realised immediately with the implementation of ERP system

Certain ERP benefits are realised with the requirement of managerial effort. A few ERP benefits are require implementation of strategic organisation

policies in synchronisation with the ERP system.

These results are in conformance with reports from Deloitte-Consulting (2002) and James & Wolf (2000).

Conclusion

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Avoid simultaneous use of paper work and ERP for reporting.

Implementation of quality management and assurance tools and techniques with suppliers.

EDI and bar coding can be introduced for better collaboration with suppliers.

More autonomy to managers from centralised procurement.

Procurement performance measurement using Spend analysis.

Recommendations for Company

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The findings of the research study can be reviewed the company.

1. The research could additionally use quantitative data for better accuracy in measurement.

2. Multiple case studies can be conducted to reconfirm the reliability of results.

3. The sample of data source could be expanded to include ERP and purchasing software vendors, consultants from different industry sectors.

Proposed Future Work

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References

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Deloitte-Consulting. (2002, April 20). ERP's Second Wave-Maximizing the Value of ERP Enabled Processes. New York: Deloitte-Consulting.

James, D., & Wolf, M. L. (2000). Second wind for ERP. the McKinsey Quarterly, 2, 99-108.

Shang, S., & Seddon, P. (2000). A comprehensive framework for classifying the benefits of ERP systems. Proceedings of the Sixth Americas Conference on Information Systems, (pp. 1005-1014). Long Beach, CA.

Dissertation Book- An evaluation of the ERP benefits for procurement function: A case study in Indian automotive industry.

Questions

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Thank you.

Abhijay Sisodia