introduction to erp

April 13, 2023 Tata Consultancy Services Calcutta 1

INTRODUCTION

TO

ENTERPRISEWIDE RESOURCE PLANNING


The 3-C CrisisThe 3-C Crisis

CustomerCustomer

CompetitionCompetition

ChangeChange


Evolution of Business Evolution of Business systemsystem

Inventorycontrol

MRP

MRPII

ERP

Dynamic Models

1960 1970 1980 1990 2000

Value Chain View

Functional View


What is ERP?What is ERP?

A way of doing BusinessA way of doing Business- With more clear and accurate - With more clear and accurate

information available at right timeinformation available at right time

- Without constraints of distance and- Without constraints of distance and

timetime

- With optimal resources- With optimal resources


Defining ERP...Defining ERP...

An Accounting oriented Information An Accounting oriented Information System for identifying and planning System for identifying and planning

the enterprise wide resources tothe enterprise wide resources to

taketake

makemake

shipship

account foraccount for

customer orders.customer orders.


Why ERP? -- Why ERP? -- the objectivethe objective

Better visibility and tracking of operationsBetter visibility and tracking of operations

Lower costs across the value chainLower costs across the value chain

Reduction of lead-timesReduction of lead-times

Better PlanningBetter Planning

Low inventoryLow inventory

Expand and improve product/service Expand and improve product/service offerings to achieve customer satisfactionofferings to achieve customer satisfaction


Why ERP ?Why ERP ?

Dynamic marketplaceDynamic marketplace

New markets across the globeNew markets across the globe

Increased competitionIncreased competition

Higher customer expectationsHigher customer expectations

Manage business across geographically Manage business across geographically

dispersed market locationsdispersed market locations


What is an ERP package ?What is an ERP package ?

Major business processes combined into a Major business processes combined into a single & integrated software solutionsingle & integrated software solution

Inbound Logistics Production Outbound

Logistics

Infrastructure & Human Resources

Accounts Finance


SOP

ForecastMaster

SchedulingOrder Entry

RCCP MRP BOM

InventoryShop Floor

Purchase

ARAR

APGLPA

CRP

FACash MtH

RD

Reporting


Attributes of a true ERP Attributes of a true ERP packagepackage

FlexibilityFlexibility

ComprehensiveComprehensive

Open & ModularOpen & Modular

IntegratedIntegrated

Low implementation Low implementation life-cyclelife-cycle

IntercompanyIntercompany

Planning provisionPlanning provision

Adaptable to new Adaptable to new technologiestechnologies

New millenium New millenium compliantcompliant


Phases in implementationPhases in implementation

Analysis of client’s business requirementsAnalysis of client’s business requirements Demonstration/evaluation of different Demonstration/evaluation of different

packagespackages Conference room pilotConference room pilot Gap AnalysisGap Analysis Customization developmentCustomization development Identification of interfacesIdentification of interfaces Implementation on the pilot siteImplementation on the pilot site Go liveGo live


Other Side Other Side

One Third of ERP projects failed, One Third of ERP projects failed, globallyglobally

Companies Like HLL and Reliance Companies Like HLL and Reliance have stumbled once before coming have stumbled once before coming through successfullythrough successfully

Some corporate still struggling to Some corporate still struggling to complete the implementationcomplete the implementation


Areas of concern….Areas of concern….

BPR changes should be well thought ofBPR changes should be well thought of

Improper setting of business parametersImproper setting of business parameters

Resistance to change from employeesResistance to change from employees

Loss of patience in implementation phaseLoss of patience in implementation phase

Improper phasing of module Improper phasing of module implementationimplementation


Stumbling Blocks in Stumbling Blocks in implementationimplementation

Lack of top management involvementLack of top management involvement Lack of preparationLack of preparation Improper package selectionImproper package selection Inappropriate use of the ERP packageInappropriate use of the ERP package Too high ExpectationsToo high Expectations Too much CustomisationToo much Customisation Cost & Schedule OverrunCost & Schedule Overrun Scale of OperationScale of Operation


Conclusion...Conclusion...

An ERP is much more than an An ERP is much more than an application that supports a few application that supports a few essential enterprise functions like essential enterprise functions like finance, payroll, inventory etc. It is an finance, payroll, inventory etc. It is an application that promises toapplication that promises to induce a induce a certain way of lifecertain way of life within the within the organization where it gets organization where it gets implemented, irrespective of LOB & implemented, irrespective of LOB & sizesize


Attributes of the ERPAttributes of the ERPpackagepackage

A total solution towards a definite A total solution towards a definite visionvision

A powerful business tool to manage A powerful business tool to manage the business processes efficiently.the business processes efficiently.

Renders tangible and intangible Renders tangible and intangible benefits.benefits.

Package features known before handPackage features known before hand


Attributes of ERPAttributes of ERP

The implementation life cycle less.The implementation life cycle less. Adaptable to business changes and Adaptable to business changes and

needsneeds Upgradable with the Latest Upgradable with the Latest

TechnologyTechnology Supports EDI/ECSupports EDI/EC


Legacy systemLegacy system Plant/site specificPlant/site specific Not process orientedNot process oriented Functionally basedFunctionally based Ineffective support of EC/EDIIneffective support of EC/EDI Proprietary mainframe and minicomputer Proprietary mainframe and minicomputer

architecturearchitecture Supplier hardware and software Supplier hardware and software

dependentdependent


Legacy systemLegacy system

Lacking in Basic IT Strategy, VisionLacking in Basic IT Strategy, Vision

Lengthy, complex, costly Lengthy, complex, costly development, implementation and development, implementation and re-engineering processre-engineering process

- Difficult to document- Difficult to document- Old technology- Old technology- Home Grown- Home Grown

Limited flexibility and adaptability to Limited flexibility and adaptability to changes in business environmentschanges in business environments


Legacy SystemLegacy System

Features of Legacy systemFeatures of Legacy system Multiple systems and sources of Multiple systems and sources of

information for same functions and datainformation for same functions and data LimitedLimited

- Data availability/accessibility- Data availability/accessibility

- Data continuity- Data continuity

- Data timeliness- Data timeliness


Present ScenarioPresent Scenario

150 150 Indian Companies including Indian Companies including Reliance, Telco, HLL, UTI, L&T, M&M Reliance, Telco, HLL, UTI, L&T, M&M and Blue Star, Kirloskar, spent over and Blue Star, Kirloskar, spent over 130 crores on software to put their 130 crores on software to put their organisation through ERPorganisation through ERP

World Over 20,000 companies spent World Over 20,000 companies spent $13 billion$13 billion


Major Enterprise SolutionsMajor Enterprise Solutions

Company Application Application sites

SAP AGGermany

SAP R3 Over 15000 sitesRs. 2.5 lakhs perlicence

OracleSoftwareIndia Ltd

Oracle ApplicationsSC 10.7

Over 3000sites

BaanInfoSystemIndia Pvt Ltd

BaaN lV Upto 4800 sites


Major Enterprise SolutionsMajor Enterprise Solutions

Company Applications Site

Ramco systems Ramco Marshal 46 Sites

QAD Inc MFG/ PRO 3250 sites

JD Edwards USA ONEWORLD 4300 sites

People Soft People soft 6 1300 sites

Mastek Ltd MAMIS 31 Sites


ERP Software market in ERP Software market in IndiaIndia

136.6

240

400

0

50

100

150

200

250

300

350

400

1997-98

1998-99

1999-2000

Rs in Crore


Who are using ERP !Who are using ERP !

BaaN Oracle SAP QAD Ramco

DiscreeteMfg

14 7 18 6 6

AutomotiveMfg

4 1 4 2 1

Process Mfg 2 1 4 2 4

Services 3 6 4 2


Cadbury Schweppes PlcCadbury Schweppes Plc Decided to implement ERP in 1994Decided to implement ERP in 1994

SAP R3 was Selected SAP R3 was Selected

Policy decision to re-engineer the Policy decision to re-engineer the process than to customise theprocess than to customise the

packagepackage

ERP EXPERIENCESERP EXPERIENCES


ERP Experiences ...ERP Experiences ...

By 1997 Cadbury India had By 1997 Cadbury India had different way of workingdifferent way of working

Head OfficeMumbai

26 Depots

6 Factories

Coco Sourcing point- Kerala


ERP ExperiencesERP Experiences

Calcutta

Picnic chocolateshortage

Head OfficeRequest

Depots

Telephone

FaxPicnic chocolate

Pre ERP Process at CadburysPre ERP Process at Cadburys


ERP ExperiencesERP Experiences

Post ERP Process at CadburyPost ERP Process at Cadbury

Calcutta

Picnic Chocolate Demand

ERP on-line, Calcutta

Nearest Depot

Request

Request

Picnic Chocolate


ERP ExperienceERP Experience

Tangible Benefit to CadburyTangible Benefit to Cadbury

The Turnover has doubled since The Turnover has doubled since ERP was implemented but ERP was implemented but manpower has not been addedmanpower has not been added


ERP ExperiencesERP Experiences Novartis India has Lowered its Novartis India has Lowered its

inventories by 30-35%inventories by 30-35% HLL - 240 locations , 120 depots ,40 HLL - 240 locations , 120 depots ,40

factories, and 13 branches are under factories, and 13 branches are under ERP and the ERP and the BenefitsBenefits realised : realised : -Depot Replenishment cycle of two -Depot Replenishment cycle of two weeks is cut by half a weekweeks is cut by half a week

-64 new products added last year-64 new products added last year


Who Wins ?Who Wins ?

Corporateand Customer

ERP Software Vendors

Implementation and consultancy service provider

Return on Investment 25-30 % / year

2500 crores by 2000 AD

400 croresby 2000 AD


Questions Normally askedQuestions Normally asked

What would be the implementation time ?

The size of oraganisation and the Preparation time

affect the implementation time.Typically it takes

18 months just to implement the software and

make the system live


Can one ERP package handle all the Functionality efficiently ? Each package is strong in one feature andsuited for certain business needsCan more than one ERP package used

together?


What is the cost involved ?

Can ERP system work with other systems.?

How to handle customised portions during upgradation?

Questions Normally askedQuestions Normally asked

introduction to erp

Education

tata consultancy services

business environmentsfebruary

business parametersresistance

erp projects

managethe business processes

legacy systemlacking

package features

acertain way of life