All entries for April 2011

Challenges of ERP implementation in manufacturing

ERP is integrated software application system used to control different aspects of enterprise management. The final aim of ERP is reducing cost and enhancing efficient. The early ERP is developed on the base of MRP, MRP II and CIM. Thus, the modern ERP software tools are powerful in the supply chain mangement and customer management.  

It cannot conceal the great advantages of ERP application in manufacturing industry. However, manufacturing is totally different from service and merchandising business. There are several challenges stopped the expanding of ERP software during manufactors.

1. Bottleneck of software tools

The information system in manufacturing is based on the CAD technology. With several years development, manufacturers already have CAD, CAM, PDM, PLM, Virtual factory and so on. However, it is difficult to integrate these technologies within ERP system. 

For example, there is a need of a process to deal with the order change. Because manufacturing is based on the customer requirements and the customers would change their mind during the production. Thus, the modification process is one of the most important workflow in manufacturing arena. But there is not a good ERP software can handle the order change in different departments quickly and perfectly. 

Another example is CAD drawing and BOM. We can build and link the CAD drawing and BOM in CAD system now. But the bill of materials used in ERP is different. And there is no tool can change the information of CAD drawing into the BOM used in ERP software automatically. Even a manufacturer implemented the ERP system, they need lots of people and time to do the work between the different systems. 

2. Industry complex

Compared with service and merchandising business, manufacturing has more complicated workflow. For example, the material purchase planning is quite different with that in merchandising business. In a merchandising company, a purchaser can easily get the information of purchase quanlity and time from the suppliers and customers. However, the purchase planning in manufacturing needs to consider the production schedule and factory capacity which have relationship with many other departments. The information collection and analysis would be a challenge work for ERP implementation team.

3. Repetitive investment

Most of modern manufactors already have more than one information systmes, not only CAD/CAM, but also OA, HR, CRM system. But these systems are rather separated. They cannot share or exchange information with each other automatically. So they need update regularly by operators. If there is something change in one link of the business, it would take a long time to make the change reach every department of the enterprise. For the head of the enterprise, implementation a new ERP integrated system means giving up the previous information systems and waste a lot money. However, there is not a formal solution for manufacturers to created a integrated platform with existing information systems.

4. Background of staff

Manufaturing is a very old industry and has developed for centuries. ERP is a mixture of industury and computer science and only has developed decades. There are lots of new concept and technologies in ERP which are different from traditional manufacturing. So it takes long time and a great sums of money to let the staff of manufacturing understand the new concept and apply the new systems.  

Basically, ERP system is a kind of software. So the most of the system developers and consultants have the background of computer science or IT. It is a hard work to make these IT workers to understand the processes and requirements during the production without engineering background knowledge. In the implementation, there always be a lot of time wasted on the communication between the two backgrounds. Thus, there is a need of someone have both knowledge of engineering and experience of the information systems. 

5. High cost

No matter the ERP system or other information systems have a rather high price. It would take a lot of money to implement, operate and maintain the systems, especially in manufacturing industry. For SMEs, they cannot offer these expenses. So they need a simple and cheaper solution for their business which would not be so powerful but fix their current problems and keep the potential of development in the future. 

All in all, it is a greater challenge to implement ERP system in manufacturing than in other business. 

: 27 Apr 2011 11:43 |  Tags: Challenge Erp Manufacturing |  Comments (3) |  Close comments |  Report a problem

ERP Simulation Game

Writing about web page http://www.youtube.com/watch?v=aAdmO7tGWTc

when I was doing my first degree, I have the opportunity to get involved in the competition of ERP simulation. there's no much difference between the simulation we have experienced in WMG course except it's based on software. everyone has been assigned a job role as part of the team, motivatively, each of us was entitled as one department manager which including financial,purchasing,storage,CRM,manufacturing and marketing, which covered all the major taches of the operation of a company. In one decade time, every company has to optimize the allocation of  resources and strain company strategies by forcasting the market trend and the movement of competitors.Its not quite a win-win game but a win-or-die combat. as an interactive,experienced and artificial tutoring system,is featured comprehensive,practicable,simulating and interesting. From this game, ive realized the importance of the information flow and taking a broader view in terms of the integeration of the whole company.

• Gain These Benefits from SAP ERP Simulation by Baton Simulations:

• Significantly increased user acceptance and adoption of SAP.
• Improved understanding of the integrated nature of SAP and the power of collaboration.
• Increased knowledge of basic navigation and operation of SAP.
• Enhanced business acumen and sharper decision making skills.

you can download it from here http://www.filestube.com/s/sap+simulator

if you cant find enough team members you can role play it all by yourself.it gonna be fun and also let you learn better as a whole of SAP.

hope you enjoy the game and wish all good with your PMA

: 24 Apr 2011 13:52 |  Tags: Erp Sandtable |  Comments (0) |  Close comments |  Report a problem

Critical Success Factors to make your ERP Project Successful

Eric Kimberling (2006) mentioned some of the critical success factors to make an ERP project successful. The basis on which Eric presented success factors was that many of the companies filed lawsuits against ERP software vendors because of their failed implementation. He also said that many companies assume success or failure is the fault of the software you purchase, but in reality, 95% of a project's success or failure is in the hands of the company implementing the software, not the software vendor. Following are the critical success factors that Eric mentioned:

1. Focus on business processes and requirements first. Too often, companies get tied up in the technical capabilities or platforms that particular software supports. None of this really matters. What really matters is how you want your business operations to run and what your key business requirements are. Once you have this defined, you can engage in a more effective ERP software selection process.

2. Focus on achieving a healthy ERP ROI (Return on Investment).This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to maximize the business benefits of ERP.

3. Strong project management and resource commitment. At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project.

4. Commitment from company executives. Any project without support from it's top-management will fail. Support from a CIO or IT Director is fine, but it's not enough. Briefing should be given to CEO regarding the project so that problems and issues should not arise in the future.

5. Take time to plan up front. An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

6. Ensure adequate training and change management. ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

7. Make sure you understand why you're implementing ERP. This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on which route to take, which may or may not involve ERP.

By ensuring you have these 7 critical success factors in place; your organization will be much more likely to maximize the business benefits of ERP.

: 16 Apr 2011 00:04 |  Comments (0) |  Close comments |  Report a problem

Are cloud–based ERP systems the future for SMEs?

The first ERP systems were highly expensive and often demanded major business process changes or costly customizations. Although this characteristic of ERPs was acceptable for large enterprises it was inappropriate for SMEs (Johansson and Bjørn-Andersen 2007).

SMEs are generally limited in financial resources and also in IT skills making them highly dependable on the characteristics of their owner/manager (Levy 2009). Due to their small number of employees they often end up with non-structured organizations, were one employee can fit many hats (Deep et al. 2008). Thus cost was not the only reason why ERP systems were not adopted by SMEs, other major reasons were the required organizational changes and the ease/speed of implementation (Johansson and Sudzina 2009).

Following the change from mainframe systems to client-server ERPs, some think that we are now entering a 3^rd generation of ERPs based on cloud computing, in particular SaaS (Software-as-a-Service) (Johansson and Bjørn-Andersen 2007; Hofmann 2008). After the Y2K period the high-end market is saturating, and major ERP vendors such as SAP and Oracle are now looking into the SME sector which make over 90% of all enterprises (Deep et al. 2008; Carvalho and Johansson 2010).

New ERP vendors are also providing ERP solutions based on cloud. An example is Manu Online who are providing a SaaS ERP solution for the manufacturing and material supply markets (Manu 2011). They say that “As a Saas (software as a service) package Manu Online immediately saves you money because we have removed the need to buy and maintain an expensive IT infrastructure”.

In fact SaaS has a very valid advantage over other technologies because it does not involve any upfront costs, which makes it highly attracting to SMEs. SaaS solutions normally offer a pay-as-you-go payment service; hence an SME would not require any expenditure in hardware (servers), licensing, or any other equipment except for a pay-per-use fee (Barot et al. 2010).

This might all sound very simple and an obvious solution for SMEs. However, as Buonanno et al. (2005) pointed out ERP implementation is not just about technical effort, the business aspect of the implementation is also highly critical. Therefore the question is how can SaaS ERPs fit the business requirements of an SME?

SaaS solutions generally offer a one-size-fits-all solution (Barot et al. 2010), which means that all of its clients will be using the same system with maybe a few configurable parameters. But SMEs are very different from each other, and often they want to take a competitive advantage by customizing their IT system (Taylor and Murphy 2004).

So, to conclude, in my opinion, yes SaaS can solve the technical problems by reducing up-front capital investments in IT, but how will they address the business aspects required for the successful implementation of an ERP system? How will they adapt to different SMEs needs? Will SaaS ERP vendors end up customizing their system for all their customers? If yes, what effect will this have on the performance of their system?

References

Barot, P. et al. (2010). The future of Cloud Computing: Opportunities for European Cloud Computing Beyond 2010 (Expert Group Report for European Commission). In Jeffery, K. and Neidecker-Lutz, B. (Eds). Retrieved March 25^th, 2011 from the European Commission CORDIS website: http://cordis.europa.eu/fp7/ict/ssai/docs/cloud-report-final.pdf

Buonanno, G., Faverio, P., Pigni, F., Ravarini, A., Sciuto, D., & Tagliavini, M. (2005). Factors affecting ERP system adoption: A comparative analysis between SMEs and large companies. Journal of Enterprise Information Management, 18 (4), 384 – 426.

Carvalho, R. & Johansson, B. (2010). Enterprise Resource Planning Systems for Small and Medium-sized Enterprises. Handbook of Research on Software Engineering and Productivity Technologies: Implications of Globalization. Retrieved March 22^nd, 2011 from the 3gerp website: http://3gerp.iwvi.uni-koblenz.de/docs/HSEDeCarvalho-Johansson.pdf

Deep, A., Guttridge, P., Dani, S. & Burns, N. (2008). Investigating factors affecting ERP selection in made-to-order SME sector. Journal of Manufacturing Technology Management, 19 (4), 430-446.

Johansson, B. & Bjørn-Andersen, N. (2007). Identifying Requirements for Future ERP system. Proceedings of the 30th Information Systems Research Seminar in Scandinavia - IRIS 30 (Ed.: Tiainen), 467-480. Retrieved March 22^nd, 2011 from the 3gerp website: http://3gerp.iwvi.uni-koblenz.de/docs/Identifying%20Requirements%20for%20Future%20ERPs_IRIS%202007%20paper.pdf

Johansson, B. & Sudzina, F. (2009). Choosing Open Source ERP Systems: What Reasons Are There For Doing So? IFIP Advances in Information and Communication Technology, 299 (2009), 143-155.

Hofmann, P. (2008). ERP is Dead, Long Live ERP. IEEE Internet Computing, 12 (4), 84-88.

Levy, M. (2009). An Exploration of the Role of Information Systems in Developing Strategic Growth in Small and Medium-sized Enterprises. Unpublished doctoral thesis, University of Warwick, Coventry.

Manu (2011). Online ERP for companies in material supply or manufacturing. Retrieved April 4^th, 2011: http://www.manuonline.com

Taylor, M. & Murphy, A. (2004). SMEs and e-business. Journal of Small Business and Enterprise Development, 11 (3), 280-289.

: 04 Apr 2011 18:13 |  Tags: Erp Saas Sme |  Comments (2) |  Close comments |  Report a problem