final erp project-26dec

FINAL TERM PROJECT 2012

ACKNOWLEDGEMENT

We would like to express our deepest gratitude to Almighty ALLAH for kindness, forgiveness and help that lead to the completion of this project.

We acknowledge that this project was only possible due to the comprehensive knowledge imparted to us by SIR IMRAN TASEER and THE TEAM OF PEPSICO in most friendly, participated and innovative manner. Continued guidance and motivation encouraged us to complete this project in positive and professional manner. We would like to thank SIR IMRAN TASEERfor his kind support. Without his valuable help, advice and inspiration, this project would have not been completed.

Special thanks to SIR IMRAN TASEER & the PEPSICO TEAM.

2 ENTERPRISE RESOURCE PLANING


DEDICATION

First of all we will thanks to ALLAH Almighty who has given us wisdom to do this Assignment.

We may never forget our Parents and Teachers who supported us throughout our life span. Without them it would have been really impossible for us to complete our project. We dedicate our assignment to them.



EXECTIVE SUMMRY



TABLE OF CONTENTS

ACKNOWLEDGEMENT________________________________________________________1

DEDICATION________________________________________________________________2

HISTORY___________________________________________________________________4

PEPSI PAKISTAN_____________________________________________________________5

History of Pepsi__________________________________________________________________5

PRODUCTION PROCESS_______________________________________________________6

PRODUCTION PLANNING______________________________________________________7

Production Process Of Pepsi________________________________________________________7

Raw material for Soft Drink Pepsi____________________________________________________8

Quality Control for Raw Material Purchasing__________________________________________10

FORECASTING______________________________________________________________11

Forcasting Method Of Pepsi_______________________________________________________12

Challenges during Forecasting______________________________________________________12

PRODUCT COSTING METHOD__________________________________________________13

Product Costing Method Of Pepsi___________________________________________________14

INVENTORY________________________________________________________________15

Inventory Management Of Pepsi___________________________________________________16

QUALITY CONTROL__________________________________________________________17

Quality Control Departement of Pepsi_______________________________________________18

SUPPLY CHAIN______________________________________________________________19

MANAGEMENT_____________________________________________________________19

Supply Chain Management of Pepsi_________________________________________________20

COORDINATION WITH MARKETING & FINANCE___________________________________23

Marketing Department___________________________________________________________24

Marketing and production_________________________________________________________24

PRICING STRATEGIES_____________________________________________________________25

APPENDICES_______________________________________________________________28

REFERENCES_______________________________________________________________29



HISTORYPepsi PAKISTAN

Introduction of Pepsi

Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo. Invented in

1883 and introduced as "Brad's Drink", it was later renamed as Pepsi-Cola on June 16, 1903.

Pepsi is a world renowned brand. It is a very well organized multinational company, which

operates almost all over the world. In Pakistan It also has proved itself to be the No.1 soft

drink. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of Pepsi

was constructed in Multan, and from there after Pepsi is going higher and higher. Pepsi is the

choice soft drink of every one. It is consumed by all age groups because of its distinctive

taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to

its liking by all. Consumer’s survey results explain the same outcome and Pepsi has been

declared as the most wanted soft drink of Pakistan.

Pepsi's greatest competitor is Coca Cola. Coca Cola has an international recognized brand.

Coke’s basic strength is its brand name. But Pepsi with its aggressive marketing planning and

quick diversification in creating and promoting new ideas and product packaging, is

successfully maintaining is number one position in Pakistan.

When Pepsi was introduced in Pakistan, it faced strong competition with 7up, lemon and

lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and

lime, "Teem" to compete with 7up. It successfully, after some years, took over 7up, and this

enhanced Pepsi's profits and market share.

Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are

Pepsi's strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute and

help in promoting the brand. Pepsi which is mainly a company of soft drinks after

establishing a brand in Pakistan Pepsi came into new product categories like Pepsi-Cola,

Mountain Dew, Lay's, Gatorade, Tropicana, 7Up, Doritos, Lipton Teas, Quaker Foods,

Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max, Tostitos, Sierra Mist, Fritos, and

Walker's. Pepsi has different slogans in different time now a day in Pakistan there is a slogan

"Badal Do Zamana".


http://en.wikipedia.org/wiki/PepsiCo


PRODUCTION PROCESS


Filler Machine

Raw Material Blow Mold Machine

Labeler Machine

Mixing Of Raw Material

Raw (base) material reception & handling

Granular sugar reception & storage

Sugar dissolving

Sugar syrup clarification & storage

Powder dissolving & purification

Pasteurization

Beverage water desecration

Water treatment

Continuous in-line blending

Final syrup preparation

Continuous final beverage

Carbonation

CIP (Cleaning-In-Place)

Automation and process integration

Packaging

Final Product


PRODUCTION PLANNINGProduction Process Of XYZ

The production process is concerned with transforming a range of inputs into outputs. Any

production process involves a series of links in a production chain. At each stage value is

added in the course of production. Adding value involves making a product more desirable to

a consumer. The production process of Pepsi is shown in the following diagram.

This is the production process of Pepsi cola. In this production process there are four main

processes Blow mold, Filler, Labeling and packing machine. All these process are



automatically attached with each others. There are total three plants of production two plants

for plastic bottles and one is for glass bottles. If any problem occurs in machine the

production is stop. So to avoid bottle neck machine are continuously monitored and data

about machine performance has been recorded.

Raw material for Soft Drink Pepsi

Raw (base) material reception and handling

Granular sugar reception and storage

Sugar dissolving

Sugar syrup clarification and storage

Powder dissolving and purification (for ingredients like starch and artificial

sweeteners, acidifiers, thickeners, salts, preservatives, and anti-oxidants)

Pasteurization

Water treatment (membrane filtration, candle filters, activated carbon filtration)

Beverage water deaeration

Final syrup preparation

Continuous in-line blending

Continuous final beverage preparation

Carbonation

CIP (Cleaning-In-Place)

Automation and process integration

Raw Material of Plastic Bottle

Parison Tube (Plastic Tube)

Processing of Plastic Bottle

First production department purchase the raw material bottle making material from supplier.

Then parison tube is placed in a machine and heated and placed into another mold which

shape like bottle with screw top. A steel rod is slid into the parison. Highly pressurized air

then shoots through the steel rod and fills the parison, pressing it against the inside walls of

the mold. The pressure of the air stretches the plastic both side. And shape the bottle in the

standard size.



Raw Material of Glass Bottle

There is no raw material for the glass, they just recycle the bottle, but in case of

manufacturing the new bottles the supplier took the order and fills the order.

Process in Mixing Machine

The ingredients of drink are moved into tanks where they are carefully mixed. Carbonated

water constitutes up to 94% of a soft drink. Carbon dioxide adds that special sparkle and bites

to the beverage and also acts as a mild preservative. Carbon dioxide is a uniquely suitable gas

for soft drinks because it is inert, non-toxic, and relatively inexpensive and easy to liquefy.

The second main ingredient is sugar, which makes up 7-12% of a soft drink. Used in either

dry or liquid form, sugar adds sweetness and body to the beverage, enhancing the "mouth-

feel," an important component for consumer enjoyment of a soft drink. Sugar also balances

flavors and acids.

The overall flavor of a soft drink depends on an intricate balance of sweetness, tartness, and

acidity (pH). Acids add sharpness to the background taste and enhance the thirst-quenching

experience by stimulating saliva flow. The most common acid in soft drinks is citric acid,

which has a lemony flavor. Acids also reduce pH levels, mildly preserving the beverage. The

syrup may be sterilized while in the tanks, using pasteurization which involves quickly

heating and cooling the mixture. The water and syrup are carefully combined by machines

which regulate the flow rates and ratios of the liquids. The vessels are pressurized with

carbon dioxide to prevent aeration of the mixture. Carbonation is generally added to the

finished product. The temperature of the liquid must be carefully controlled.

Finished Product

The finished product is transferred into bottles at extremely high flow rates and crown caps

are put on it. Labels are then paste on the bottles to provide information about the brand,

ingredients, shelf life, and safe use of the product. Finally bottles are packed into cartons and

product is ready for sale.



Quality Control for Raw Material Purchasing

For the raw material purchases, there is Production Manager, Quality Control Manager,

approving a list of suppliers and Procurement Manager based on their product quality. The

procedure is that product samples are tested in the laboratory and then after complete

satisfaction of quality, supplier is approved and sends his quotation.

Production department sends monthly demand and quotations for the quantity net of current

stock and wastage is invited.

Material requirement by Production dept.

Opening/closing stock adjustment by Stores.

Material to be purchased by Procurement dept.

Some time purchase quantity decisions are made on the space available in the store. After the

material is purchased and Gate checking, it is again send to quality laboratory by FIFO rule.

Raw materials are approved by following:

No. Material Manufacturer/ Supplier(s) Approved from

1. Pepsi ConcentratePepsiCo Inc. Ireland & PepsiCo Factory in Hattar Estate.

Approval at the factory

2. Caps & Closures Gatron Pakistan LimitedApproved form PepsiCo China.

3. Plastic Bottles Galtron Pakistan LimitedApproved from PepsiCo China.

4. Glass BottlesBalochistan Glass Mills

Tariq Glass Limited

Approved by PepsiCo China.

5. Carbonated Water Pakistan Bottlers (Pvt) Ltd.Approved from PepsiCo U.A.E, Dubai.



FORECASTING



Forcasting Method Of Pepsi

Forecasting is the establishment of future expectations by the analysis of past data, or the

formation of opinions. A sales forecast is a projection of the expected customer demand for

products or services.

Incase of PepsiCo forecasting is done by the Marketing and sales department whereas

Operation department only helps them.

As PepsiCo is using naive forecasting that is “the forcast for any period equal to the previous

period’s actual value”. Their naive forecasting is done on dauly basis. That means sales of the

coming day is equal to the sales of the previous day.

Nive Forecast: Stable time series data

F(t) = A(t-1)

Daily base forecasting help them in avoiding over production, short range of forecasting is

more accurate. It helps to respond quikly to change in customer‘s demand. That also provides

a competitive edge.

Challenges during Forecasting

There are many problem and challenges which manager face during forcasting:

Variation in sale.

Variation in demand.

Country circumstances.

Natural disaster

Bottle neck

Target:

Target of the production is depend upon the effeciency of machine because all the machines

are automatic. Shifts and over time of employees are also conducted to meet the production

target.



PRODUCT COSTING METHOD



Product Costing Method Of Pepsi

Every product have different requirement of material and cost. In Pepsi they consider

different expenses while calculating the product cost. In the one bottle of Pepsi they include

the following expenses:

Raw Material. Gas.

Man Power. Water.

Utilities expenses. Electricity.

Transportation.

Other Expenses Interest expense.

Miscellaneous expenses

The base price of the Pepsi cola is decided by PI (Pepsi International). In the base price all

the expenses and profit of company is included. When bottle is sold in Pakistan the Tax

imposed by the government is also included in the price of bottle. Plus Advertisement

expense like Refrigerators and discounts given to the retailers after approval from Pakistan

International added to the product’s cost.

Price of Bottle = Base Price by Pepsi International + Government Tax + Advertisement

Challenges which are faced during costing are the pricing of products depends on the

competition in the market, and the current situation of the country.



Inventory Management Of Pepsi

An inventory is a stock or store of goods. Inventory is a vital part of business. Not only they

are necessary for operations but also they contribute to customer satisfaction. The major

source of revenues for retailer and wholesale business is the sale of inventory. A

manufacturing firm carries different kind of inventories like raw material, work in process

(WIP), finish goods. Inventory serves a number of functions. It helps to meet customer

demand, smooth the production process.

Inventory management is a very critical area for any beverage organization. It serves the role

of coordinator or middleman between production and sales. Ensuring appropriate quantity

and on time availability of material is most important. Any defect in storage, supply to plants,

stock and distribution directly affects sales. This is a complete chain and any bottle neck or

disturbances will slowdown the whole operations.

Pepsi Ware Houses

Names of Inventories Ware Houses

Raw Material Storage 2

Work-In-Process Inventory 1

Finish Goods Inventory 1

Pepsi cola has four warehouses in which two of them for raw material storage, one for

work-in-process inventory and one for finish goods inventory.

Management of production and procurement takes the decision of

when, from where and in what quantity to buy. After approval, the

purchased raw material is identified with quality control passed

stickers and placed in godown. Raw Material is placed in

controlled temperature 25 degree. While work in process

inventory and Finish Goods Inventory is placed at normal

temperature. Finished goods storage is secured against sunlight, rainfall, moisture and other

intimidation. Goods are issued on FIFO method (first in, first out) [This method assumes

that the first unit making its way into inventory is the first sold.] basis via validity of

production dates. It ensures that product is not expired, bad taste and visually unattractive.

Shift wise record of daily transactions is maintained.



QUALITY CONTROL



Quality Control Departement of Pepsi

Quality control is a process by which entities review the quality of all factors involved in

production. In Pepsi cola quality control department is responsible for testing raw material,

testing in process inventory, finish good testing, market complaints handling, market

rejections, customer rejections.

For the raw material purchases, there is Production Manager, Quality Control Manager,

approving a list of suppliers and Procurement Manager based on their product quality. The

procedure is that product samples are tested in the laboratory and then after complete

satisfaction of quality, supplier is approved and sends his quotation.

After the purchases of raw material quality control inspector check the material randomly in

case of boxes they check few boxes. If quality control department pass the sample the raw

material is moved for other processes. Quality of raw material is check at every delivery.

Quality control department also check the quality during the

processing of bottle to insure better outcome. Finish goods are

also inspected according to standard. Pepsi cola is not working

under the rules of international Organization for Standardization

(ISO). The standard of Pepsi is settled by Pepsi International

(PI). The production department produces Pepsi according to the

standard of Pepsi International and inspection is also according

to standard. After sale the team of quality control also takes action on the complaints of

customers. To ensure the best quality and customer satisfaction teams of Pepsi International

survey the market and check the standard by picking the product from the market. Pepsi

international also collects product samples from market, tests them in their labs against

standards, sends monthly test results summary to their franchisers.



Supply Chain Management of Pepsi

Supply Chain Management is the management of a network of interconnected businesses

involved in the ultimate provision of product and service packages required by end

customers. Supply chain activities transform natural resources, raw materials and components

into a finished product that is delivered to the end customer. Supply Chain Management is

one of the most important strategic aspects of any business enterprise. Decisions must be

made about how to coordinate the production of goods and services, how and where to store

inventory, whom to buy materials from, and how to distribute them in the most cost-effective,

timely manner. Supply chain of Pepsi cola are as follows:


Supplier

Raw Material

Blow Mold Machine

Shaping Of Bottle

Labeler Machine

Printing on the Bottle

Filler Machine

Packing

Transportation

Retailer

Consumer

Quality Control Department Plant Manager

Quality Check

Quality Check


Supply Chain Management



Detail:

This is the supply chain of Pepsi cola. First the management of production and procurement

takes the decision of when, from where and in what quantity to buy raw material. After the

purchases of raw material and delivered by supplier quality control department check the

quality of material randomly in case of boxes they check few boxes. If quality control

department pass the sample, the raw material is moved for other processes and if raw material

sample is not passed then quality control department inform the plant manager and raw

material is moved back to supplier. At every point of process there is a quality control check

to insure the best quality of Pepsi cola. Then parison tube is placed in blow mold machine

and heated to make a shape like bottle with screw top. The mold must then cool. After the

making of bottle the raw material of soft drink is mixed and final syrup is ready and filled in

the empty bottles. At filler machine there is a quality check point which check the quality of

final product which is going to fill in bottles. The filled bottles are then move toward the

labeling machine where labels are then paste on the bottles to provide information about the

brand, ingredients, shelf life, and safe use of the product. The quality of product is also

checked at the packing at that point the look of bottle is checked. Finally bottles are packed

into cartons and then transported toward the distributors. Which customers can purchase and

consumed easily.

Production department of Pepsi use ERP (Oracle base software) to track the material. The

function of this software is that they tag the materials which help him to keep eye on it. With

the help of it they trace the location of material and monitor it when they needed.



COORDINATION WITH MARKETING & FINANCE



Marketing Department

Contributing to this industrial revolution among other industries were Manufacturing,

Agricultural, Automotive, Chemical, Hotel, Banking Business Services, Real estate, Tourism

and information Technology to name a few. But on such industry that has been holding onto

its share of the market since its inception note in the Pakistan- its birthplace - but all across

the globe as well as the Beverage Industry. It has introduced icons that very few are oblivious

to.

Marketing and production

A. Role of Marketing before and During Production

Marketing provides timely and accurate information to the design and production department

about the nature of needs. They also give the feedback about the product for quality purposes.

Information from sales dept. also helps in providing information regarding sales of the units

that helps in forecasting, and estimates for market demand for efficient production and

control.

B. Role of Marketing after Production

Once the products have been designed and produced in the required quantities, they

must be efficiently marketed to identify target markets. After purchase, marketing

must monitor customer attitudes to the company’s products; any adverse comments

or complaints must be noted and, if necessary, passed back to the production

department for action.

C. Making a New Product

Where an entirely new product is involved, it is usual for the

manufacturing department to produce a quantity to be

introduced to the customers on a sample basis. Such sampling

frequently reveals flaws, either in the production technique or in

the quality of materials used, which can be easily rectified before mass production



begins. Whilst it is essential to avoid the overproduction of a new line before it is

satisfactorily established, it is equally undesirable to accept orders for large

quantities of a new product when such quantities will not be available at time.

D. Sales & Marketing Department

This department makes different efforts to increase the sales of the Company by sponsoring

different social programs and advertising their products.

PRICING STRATEGIES

1. Competitionbased pricing approach

Pepsi has intense competition with the coca cola the largest soft drink company world wide.

So its pricing cant exceed too much nor decrease to much as compared to the price of coca

cola. If price of the Pepsi exceed too much from the coke customer will shift to the coca cola

and on the other hand if the price of Pepsi decreases people might get the impression that

quality of the is also low.

2. Promotional Pricing Policy

Pepsi has offered promotional prices very frequently. Especially on some occasion Pepsi

reduces its rates. like in Ramazan Pepsi reduces its rate unto 5 rs on 1.5 litter bottle.

3. Market Penetration Pricing Policy

Prices in beverage industry are determined by the consumer. In an economy like that of

Pakistan, consumers tend to switch towards a low priced product. Pepsi objective is to target

every consumer of the country so Pepsi has to set its prices at such a level which no one can

offer to its consumers. That is why Pepsi Cola charges the same prices as are being charged

by its competitors. Otherwise, consumers may go for Coca Cola in case of availability of

Pepsi at relatively very heigh.



4. Discounts

Pepsi Cola offers various discounts to those retailers who have the maximum sales of Pepsi

products on daily, monthly and on seasonal basis. Same of the main discounts given to the

retailers are as follows:

Following are discounts offered by Pepsi.

Seasonal Discount

Pepsi also offers seasonal discounts schemes by reducing price in Ramadan and on Eid. Pepsi

also offers trade in allowance for retailers.

3 B – F Discount

Some Times, especially in the off-season duration, in order to increase the sale of Mirinda

and Teem, 3-BF discount is given (i.e.) 3 bottles free on purchasing every case of Teem and

Mirinda.

5. Incentives

Mainly two types of incentives are given by the Pepsi Cola:

Incentive to Retailers

Pepsi Cola provide various incentives to retailers on the best sales and achieving the

predetermined sales targets. These incentives are in the shape of:

A. Deep Freezers

B. Return Tickets

C. Free Transportation Services.

D. Incentive to Dealers

E. The best dealer of the year is awarded with a brand new Suzuki Pickup. The second

best is awarded with Motor Cycle. The third best is awarded with Return Ticket to

Middle East.



6. Special Offers

Pepsi Cola gives special offers to consumers on special occasions like Ramadan and Eid days

instead of decreasing the price of the products, some special packs like Pakkora Mix, Chat

Massala, or Free Drinks with Liter Bottles are offered.

Product costing is the process of tracking and studying all the various expenses that are

accrued in the production and sale of a product, from raw materials purchases to expenses

associated with transporting the final product to retail establishments. It is important

component in evaluating and planning overall business strategies. Possible costs include in

product costing are transportation costs, packaging, raw material, man power, utilities and

quality costs.



Identify the need of ERP system

SAP:

Sap is integrated ERP software that target business software requirement of mid size and

large companies. SAP is a product of SPA AG. It allows open communication within and between all

companies.

SAP AG is German software house. SAP is the market leader software for the business solution. The

main benefit of SAP is it requires 7% data entry and 93% is automated. In was found in June 1972

and at that’s time the SAP stand for System Analysis and Program Development. Later on in is

changed to Systems, Applications and Products in data processing.

2.1: Development

SAP R/3 through version 4.6c consisted of various applications on top of SAP Basis, SAP's set

of middleware programs and tools. When SAP R/3 Enterprise was launched in 2002, all applications

were built on top of the SAP Web Application Server. Extension sets were used to deliver new

features and keep the core as stable as possible. The Web Application Server contained all the

capabilities of SAP Basis. A complete architecture change took place with the introduction of my SAP

ERP edition 2004. R/3 Enterprise was replaced with the introduction of ERP Central Component (SAP

ECC).

2.2: Implementation

Identify the need of ERP system

SAP ERP consists of several modules including:

a) Utilities for marketing and sales

b) Field service

c) Product design and development

d) Production and inventory control

e) Human resources

f) Finance and accounting.

SAP ERP collects and combines data from the separate modules to provide the company or

organization with enterprise resource planning.



2.3: Deployment and maintenance costs

SAP ERP systems effectively implemented can have cost benefits. Integration is the key in

this process. "Generally, a company's level of data integration is highest when the company uses one

vendor to supply all of its modules."

Large companies can also spend $50 million to $100 million on upgrades.

Midsized companies (fewer than 1,000 employees) are more likely to spend around $10 million to $20 million.

3: ERP :

Enterprise resource planning (ERP) integrates 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. Its purpose is to facilitate the flow of information between all

business functions inside the boundaries of the organization and manage the connections to outside.

3.1: History:

In 1990 Gartner Group first employed the acronym ERP as an extension of material

requirements planning (MRP), later manufacturing resource planning and computer-integrated

manufacturing. Without supplanting these terms, ERP came to represent a larger whole, reflecting

the evolution of application integration beyond manufacturing. Not all ERP packages were

developed from a manufacturing core.

3.2: Advantages:

1. Sales forecasting, which allows inventory optimization

2. Order tracking, from acceptance through fulfillment

3. Revenue tracking, from invoice through cash receipt

4. Matching purchase orders (what was ordered), inventory receipts (what arrived), and

costing (what the vendor invoiced).

3.3: Disadvantages:

1. Customization is problematic.

2. Re–engineering business processes to fit the ERP system may damage

competitiveness and/or divert focus from other critical activities



3. ERP can cost more than less integrated and/or less comprehensive solutions.

4. High switching costs increase vendor negotiating power vis a vis support,

maintenance and upgrade expenses.

5. Overcoming resistance to sharing sensitive information between departments can

divert management attention.

6. Integration of truly independent businesses can create unnecessary dependencies.

7. Extensive training requirements take resources from daily operations.

4.0: Integrated Data Modeling:Integrated data modeling means all the department of organization work together not only

that the organization is likened to the customer. Means until unless customer never purchase the

product the sale is set to be logical. With the help of integrated data modeling the organization can

check the status of their product at any time.

We can give a unique code to every item through which we can find the product. The code is

set in such a way that all the data related to that product is find out.

The example of integrated data modeling is code of the item through which organization can route

the item.

4.1: Item Code:

01-Jan-2011-0001-01-00-00-04-01-01-1


Batch num

Item

Reproduction

Warranty

Dealer

Distributer

Retailer

Customer


4.2: Values of Integrated System:

Integrated system helps organization in many ways some of them are following.

1. Unique code

2. Easy to detect item

3. Check the route of the item

4. Check the production level

5. Easy to find warranty clam

6. Easy to find reproduction level

7. Store became automated

8. Integrated with supply chain

1: Unique code:

In this system the every item have its unique code.

2: Easy to detect item:

Due to this unique code item can be detect easily that it can belong to which batch.

3: Route of item:

We can easily check the route of the item that where and who get this item. Or it is sale or

not. Through this we can find easily our logical sale and physical sale.

Logical sale:

Logical sale means the item is not purchased by the customer but move out from the

organization but still mentioned as logical sale. Normally retailer is the last level of logical sale.

Physical sale:

Physical sale means when the end users purchase that item than it is mentioned as physical

sale.

4: Check the production:

The organization can easily find out the product or item is actually fall in the production.

5: Easy to find warranty claim:



Through this integrated system we can easily find out how many time the item claim the

warranty. No one can claim the warranty more than the organization provide.

6: Reproduction:

It is easy to find the reproduction of the item or the organization has to transfer it to the

scrap.

7: Automation:

Through this our store became automated and when the production department want any

material store can easily find out we are out of stock or we have to order for purchased before the

next production.

8: Integrated with Supply chain

Supply chain is automated with this unique code and integrated system. Means we can

check the sale of our item and also check where the and who is the best dealer.

5.0: Production:

In SAP-ERP production is divided in four parts

1. Production plan

2. Production

3. TQM

4. Reproduction

a. Reproduction plan

b. Reproduction

1: Production Plan

A production plan is that portion of your intermediate-range business plan that your

manufacturing / operations department is responsible for developing. The plan states in

general terms the total amount of output that the manufacturing department is responsible to

produce for each period in the planning horizon.

This production plan needs to be translated into a master production schedule so as

to schedule the items for completion promptly, according to promised delivery dates; to avoid



the overloading or under loading of the production facility; and so that production capacity is

efficiently utilized and low production costs result.

Production plan is not an easy job it will take a lot of time. SAP uses the three in one method

for calculating the cost. SAP uses the new method of calculating the cost of the product. SAP

calculates the cost of the process means it will never calculate the finish good cost but it calculates

the process cost.

1.1: 3 in 1 Process:

Three in one method means man power, material, equipment.

Process 1

Man Power

Code Worker type No of Employ` Avrg. Salary Time Amount

100 Worker 10 45 1 hr 450

101 Sup 2 53 1 hr 106

556

How to find Salary:In 1 hr the organization make a batch of 100 items.

So find out the average salary of the employer.

Average salary= 4000+700+6000……… =8000

10

8000= 364 364 = 45

22 8

Material



Code Material type UNIT RATE Unit Qty Amount

201 Abc 100 Kg 0.5 50

202 Def 500 Kg 2 1000

1050

Equipment

E code Type Rate Amount

301 AB 10 10

302 AA 50 50

60

How to find Equipment cost

Machine price =10000

Num of batch made=1000

Than per Batch cost for the machine is=10000 = 100 Rs

100

Per unit cost= 100 =10 Rs

10

Total cost for process 1=556+1050+60= 1666 Rs

Process 2

Man Power

Same work is done in this as we done in process 1

Material




Equipment


Why is it important to have a carefully developed production plan?

Production planning is one of the planning functions that a firm needs to perform to

meet the needs of its customers. It is a medium-range planning activity that follows long-

range planning in P/OM such as process planning and strategic capacity planning. Firms need

to have an aggregate planning or production planning strategy to ensure that there is

sufficient capacity to meet the demand forecast and to determine the best plan to meet this

demand.

A carefully developed production plan will allow company to meet the following objectives:

• Minimize costs / maximize profits

• Maximize customer service

• Minimize inventory investment

• Minimize changes in production rates

• Minimize changes in work-force levels

• Maximize the utilization of plant and equipment

2: Production:

After making a production plan production is very smooth. We can find the cost of any

product at any level. It will also help in future casting and store will be automated. Because every

time when the organization want to manufacture any product they can easily find out the exact cost

of that product and the material required for the manufacturing. If the material is available in store

it issue to the production department or if the material is not available in store than it will generate

the request to the purchase department. So that if the production plan is good then it will

automatically help the sore and purchase so that all departments are integrated.

Production Planning Cycle



The Production Planning Cycle refers to Production Planning Control which has 3 phases:

Production planning, Planning, Controlling.

The Pre-Planning Phase consists of product development, sales forecasting, factory or plant layout, equipment selection policy, and preplanning of production just prior to large scale production. The Planning Phase consists of planning of the 4 M's (methods, materials, men and machines), routing, estimating, scheduling, and despatching. The Controlling Phase consists of follow up, inspecting, and evaluating.

Planning is the process of gathering information that helps the planner overcome present or future hurdles.

In production planning following steps are followed:

Product Definition: here we define the name and the size of the product. It’s the identity of the product through which it is recognized in market.

Item Bio-data: here we specify te raw material required to produce a quality product. Product Description: highlights specifications like

Size Color Design Length Width Height Weight Packing style Etc.

Equipment Bio-data: In today’s era we all know that equipment is preferred more than manpower since it makes work easy and fast. So here we specify which equipment to be used for product manufacturing.

Manpower: is of two types: Skilled Unskilled

And here we specify how much skilled and unskilled manpower is required in product manufacturing.

Packing: is a very essential part of the all production planning as it enhances the outlook of the product which helps in attracting the customer.

ERP Vendors • Vendors are the people who have developed the ERP packages . They are the people who have invested huge amounts of time and effort in research and development, to create the packaged solutions . • Choosing the right vendor and the right ERP package is one of the most critical tasks of ERP implementation .



• Vendor selection is not a popularity contest and bigger does not always mean better . While selecting a vendor the factors like track record, quality of the product, the financial stability, longevity, after sales service, contribution in implementation, training, and maintenance should be considered . • The vendor should supply the product and its documentation as soon as the contract is signed . Once the contract has been exchanged the vendor will guide the company through a series of events culminating in the use of the tool . • The vendor is responsible for fixing any problems that the implementation team encounters in the software . • Another role the vendor has to play is that of the trainer—to provide the initial training for the company ’s key users, people who will play lead roles in the implementation of the system

• Vendor training should achieve the goal of showing the key users how the package works, what the major components are, how the data and information flow across the system, what is flexible and what is not, what can be configured and what cannot, what can be customized and what should not, the limitations, the strengths and weaknesses, and so on . • The objective of vendor training is to show how the system works , not how it should be implemented . • The trainees should use these training sessions to question the vendor on all aspects of the system . • The project manager should monitor and control the costs incurred by the vendor . • Problems and bugs should be brought to the vendor's attention for resolution, for which there should be a provision within the contract regarding the withholding of payment . • The vendor should supply the product and its documentation as soon as the contract is signed . • The vendor is responsible for fixing any problems in the software that the implementation team encounters . • The ERP software might have to be customized to suit the company ’s needs . Customizing means altering the product so that it is suited



for the company ’s purposes . It is the vendor who is responsible for the customization .

Importance of Preparation • Preparing your company for implementation is almost as important as the project itself. • It is important to let everyone know that after many months of implementation preparation, implementation may not go smoothly and the pain can last as long as three to four months more even if everything has been done correctly . • Some of the most common things that are often overlooked : 1. Availability of the skill set necessary for completing the implementation 2. The ever- changing technological environment 3. Technological obsolescence 4. Length and complexity of the implementation project 5. Time taken to realize the benefits from the ERP system 6. Employee resistance and how to deal with it 7. Training and relocation of employees 8. Transition strategies

How to Successfully Implement ERP Systems ? Some of the things that an organization can to do to ensure the success of an ERP implementation are : 1. A well - defined project organization structure that details the project planning, execution and monitoring mechanism 2. An attitude that stresses on business transformation instead of process automation 3. An approach that brings about the proper integration of people, process and technology through effective management of change • Some other things that will ensure success are : 1. A well thought out, comprehensive process to help plan, guide and control the entire ERP implementation effort . 2. Evaluating the ERP plan before you commit to software acquisition and installation .



3. Ensuring that the resources required for the implementation are in place 4. Constant monitoring and management 5. Top management participation and support 6. Reviews and corrective actions

Pre-implementation Tasks • The main tasks that should be performed during this session are : 1. Assembling the participants — One of the first steps of the project planning session is to assemble the critical stakeholders of the project . This should include all people who have a direct influence over the project . 2. Feasibility study and need analysis review – Feasibility study report contains the factors that will affect the ERP implementation . The needs analysis is the justification for the project . Review of these two documents will give an idea on what could be the potential problem areas and where more attention and resources will be needed . 3. Project mission and vision statements creation – The vision should be a global statement that is continuous and ongoing . The mission statements will consist of the major milestones of the project . 4. Determination of organizational structure – The organizational structure is determined to decide how the implementation is to proceed . 5. Determination of the modules to be implemented 6. Creating the core team – Project sponsor, executive committee, project manager, work teams, etc . are created in this step . 7. Establishing the training needs – Determine how much education will be required, the type of education and the number of participants .

9. Establishing the data conversion strategy – The goal in this step is to establish what needs to be converted/ migrated and how it is going to be done . It is best to have experienced people from the legacy system working together with application consultants to fully understand the complete need . 9. Establishing interfaces – The goal of this step is to identify any interfaces that require development . This section is for the



required interface programs between systems for which none exist . 10. Determining work estimates – The work estimates for all the activities from planning sessions to training and maintenance after installation of the ERP project should be determined in advance . 11. Cost of consultants – In this step, the areas where the services of external consultants are needed are identified and the cost of hiring the consultants are calculated . 12. Calculation of implementation time – The scope, time and resources are decided and based on that the implementation time is calculated . 13. Identifying constraints – All constraints of the project should be identified and documented . 14. Establishing policies and guidelines – Project policies and guidelines form consistent methods for dealing with situations and events are established and documented

CONCLUSION AND FINDINGSThe report highlights the importance of Enterprise Resource Planning (ERP) systemand how it helps the firm to improve their Operational efficiency. A successful ERPsystem helps a firm to achieve cost efficiency and thus leading to competitiveadvantage.The report analyses how pepsi Corporation's strategy to be a low cost supplier andhow the implementation helped them to be in that position. It also gives a brief aboutthe problems company faced while implementing the process and steps they adopted toovercome that.Timescales are also provided to understand the year by year updates of theimplementation process. The process of successful implementation and postimplementationof the whole ERP project saw a positive change in the overall scenarioof Indian Oil Corporation.The benefits of ERP implementation are both tangible benefits and intangible benefitsas experienced in IOCL.Some of the tangible benefits which IOCL got were inventory reduction, personnel



reduction, productivity improvement, order management improvement, financial cycleimprovement, information technology cost reduction, procurement cost reduction, cashmanagement improvement, revenue/profit increase, and transportation/logistics costreduction, maintenance reductions, and on-time delivery improvements.The intangible benefits were information visibility, new/improved processes, customerresponsiveness, cost reductions, integration, standardization, flexibility, globalization,

supply/demand chain, business performance, dismantling inefficient legacy systems.


APPENDICES




REFERENCES

Ravi Babar (Production Engineer, Pepsi Lahore Pakistan)

Zahid Abbas (Human Resource Executive, Pepsi Lahore, Pakistan)

www.google.com.pk

http://www.pepsi.com/

http://en.wikipedia.org/wiki/Pepsi

http://www.pepsiworld.com.pk/


http://www.pepsiworld.com.pk/

http://en.wikipedia.org/wiki/Pepsi

http://www.pepsi.com/

http://www.google.com.pk/

final erp project-26dec

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