NMIMS

ENTERPRISE RESOURCE PLANNING

APPLICABLE FOR JUNE 2022 EXAMINATIONS

Case Study:
As an enormous international candy-maker, Nestle SA headquartered in Konicki
Switzerland, had harboured a goal of integrating ERP across all three of its operating
companies; Nestle SA, Nestle UK, and Nestle USA. The latter operation had been
working toward complete integration of a set of ERP solutions since in the late 90s, but
various requirements, organizational, and policy problems had plagued the complete
initiation. By the turn of the millennium, its management finally decided that a holistic
re-approach to its business requirements were in order. Consequently, this effort paid
dividends that allowed SAP to finally get the $200 million job done. Ultimately, positive
business impacts included the consolidation of an outdated accounting structure, better
and more efficient communications throughout its supply-chain, and a much more
confident workforce.

1. How to integrate the different business process across different sites in the ERP
solution; since it requires a lot of upfront effort - but it pays off in the long run - Justify
the same?

Answer:

Enterprise Resource Planning

Enterprise Resource Planning is integrated cross functional software that reengineers
manufacturing, distribution, finance, human resources and other basic business processes of a
company to improve its efficiency, agility and profitability. ERP is built with a vision to
providing businesses with an integrated information system. ERP software consists of
integrated modules that give a company a real-time cross functional view of its core-business
processes such as production, order processing and sales and its resources such as cash, raw
materials, production capacity and people.
I do agree with the given statement that ERP implementation requires lot of upfront effort -
but it pays off in the long run. ERP Integration is simply connecting and synchronizing your
ERP software with other business applications such as e-Commerce (front-end), CRM
(Customer Relationship Management), EDI (Electronic Data Interchange), marketing tools
such as analytics, and other databases and data points that your business operates with. In
short, connecting all the points a business leverages to input, manage, track and output data
that are meaningful and important.

Inter-relationship between various functions:

Here, the main ERP functions will be related to:

Sales and distribution: This module actively support sales and distribution activities with
outstanding functions for pricing, prompt order processing and on-time delivery, interactive
multilevel variant configuration and a direct interface to Profitability Analysis and Production

Inventory management: The ERP systems help in automating this task and thus, make the
inventory management more efficient and effective. Also, since the ERP system is integrated
with the materials management module. This module is integrated with other modules like
purchasing, sales, marketing, manufacturing, and production planning.

Accounting: This module facilitates provides integration of financial information that is vital
for any decision making. It provides ability to centrally track financial accounting data within
a framework of various organisations, multiple languages, and multiple currencies.

With the help of ERP, there will be integration between these functions and real time data
will also be provided which will be helpful in quick decision making. Orders are received by
phone or email which takes time to check so ERP system can record the orders automatically.
Apart from this, simple database management is used and even computerisation is not proper.

Benefits of ERP implementation:

Business Integration
The first and most important advantage lies in the promotion of integration. The reason why
ERP packages are considered to be integrated is the automatic data updating (automatic data
exchange among applications) that is possible among the related business components.

Flexibility
The second advantage of ERP packages is their flexibility. Different languages, currencies,
accounting standards, and so on can be covered in one system, and functions that
systematically manage multiple locations of a company can be packaged and implemented
automatically. To cope with company globalisation and system unification, this flexibility is
essential, and we can say that it has major advantages, not simply for development and
maintenance, but also in terms of management.

Better Analysis and Planning Capabilities

Yet another advantage is the boost to the planning functions. By enabling the comprehensive
and unified management of related business, and its data, it becomes possible to fully utilise
many types of decision support systems and simulation functions.

Use of Latest Technology

The fourth advantage is the utilisation of the latest developments in IT. The ERP vendors
were very quick to realise that, in order to grow, and to sustain that growth, they had to
embrace the latest developments in the field of IT. Therefore, they quickly adapted their
systems to take advantage of the latest technologies like open systems, client/server
technology, Internet/Intranet, Computer-Aided Acquisition and Logistics Support
(CALS),electronic-commerce, and so on. It is this quick adaptation to the latest changes in IT
that makes the flexible adaptation to changes in future business environments possible. This
flexibility makes the incorporation of the latest technology possible during system
customisation, maintenance, and expansion phases.

Challenges in implementing ERP package:

Implementing an ERP system is not an easy task to achieve, in fact it takes lots of planning,
consulting and in most cases 3 months to 1 year +. ERP systems are extraordinarily wide in
scope and for many large organizations can be extremely complex. Implementing an ERP
system will ultimately require significant changes on staff and work practices. While it may
seem reasonable for an in-house IT staff to head the project, it is widely advised that ERP
implementation consultants be used, due to the fact that consultants are usually more cost
effective and are specifically trained in implementing these types of systems.

To work successfully, the ERP solutions need to address a lot of factors. There should be
good people who know the business. The vendor should be good, and his package should be
one of the best suited for the, company’s needs. The ERP consultants should be good. The
system developers should plan well and execute perfectly the implementation. The end-user
training should be done so that the user must be aware of the system, and the effect of their
efforts on the overall success of the program. In case of any of the abovementioned factors
are not addressed properly by the company’s top management, the possibility of system
failure is evident during the implementation process of the ERP system.

A change in the job descriptions and functions of many employees is imminent when ERP
system is introduced in a company. Employees who were earlier doing the work of recording
information are transformed into decision-makers. Many employees find this transformation
difficult to accept. If the employees are not given proper training, well in advance, then the
systems fail. Another factor is the fear of unemployment. When procedures become
automated, the people who were doing those jobs become redundant. So it is quite natural to
have resistance from the employees. But the same employees can be trained in the new
system, and can work in more challenging and stimulating environments. For this also, the
employees have to be told, in advance, as to what would be the result, and should be given
ample time and training to make the transformation. Without support from the employees,
even the best system is liable to fail. So; it is very important that the management should take
the necessary steps, well in advance, to ease the fears of, and provide necessary training to
their employees.

2. Identify the players & their various functions and discuss that how ERP solution can
integrating SCM, CRM, and ERP help improve business operations.

Answer:

Enterprise Resource Planning:

Implementing an ERP system will ultimately require significant changes on staff and work
practices. While it may seem reasonable for an in-house IT staff to head the project, it is
widely advised that ERP implementation consultants be used, due to the fact that consultants
are usually more cost effective and are specifically trained in implementing these types of
systems.

Players and their functions

ERP vendors: Vendors are the people who invest huge amounts of time and effort in
research and development of the ERP package. They come up with innovations that make the
packages more efficient and flexible to implement and use. The ERP vendors spent billions
of rupees in research to come up with new ideas that make the packages more efficient and
flexible.

Tasks
 To agree on the various terms and conditions of ERP software which are related to
price, time, quality, performance etc.
 To provide the best ERP software to the organization with after sales support
 To help the management in installation process and provide training to the end users.

ERP consultants: Many of the big consulting firms invest a great deal of money in
developing a range of consulting services and assign many of their professionals to become
specialists in the various aspects of ERP packages and their implementation. These firm
develop an in-depth understanding of each product's strengths and weaknesses, work by the
side of the ERP vendors to confirm that the vendor’s package actually works, learn the tricks
and techniques of the trade, find out the pitfalls and mistakes that should be avoided and thus
create a pool of experts who could handle the ERP implementation without failure.

Tasks
 To maintain documents used during the ERP implementation project.
 To examine the existing marketing conditions and business processes of the
organization.
 To perform time study and gap analysis during the implementation process.
End users: ERP end-users are the people who will be using the ERP system once it is
implemented. Most of the functions that the end users used to perform are being automated
by the ERP system. ERP system brings drastic transformation in the actual work process
which leads to change in old job descriptions.

Tasks
 To work on the project after training is provided.
 To streamline all the activities of the organization.
 To integrate and manage all the data of the organization.

Inter-relationship between various functions

Here, the main ERP functions will be related to:
Sales and distribution: This module actively support sales and distribution activities with
outstanding functions for pricing, prompt order processing and on-time delivery, interactive
multilevel variant configuration and a direct interface to Profitability Analysis and Production

Inventory management: The ERP systems help in automating this task and thus, make the
inventory management more efficient and effective. Also, since the ERP system is integrated
with the materials management module. This module is integrated with other modules like
purchasing, sales, marketing, manufacturing, and production planning.

Manufacturing and production planning: It simplifies and speeds up the process of

information exchange within the different functional units of an organisation. It minimises
the production cycle time and assures quality.

Yes, all of these functions are inter-related in a firm because order fulfilment process will
include several steps which will be related to above mentioned functions only. Order
fulfilment includes various activities such as receiving inventory, Inventory storage, order
processing, picking, packing etc. All these functions will be performed by sales department,
manufacturing department and stock managing department. To fulfil the orders effectively, it
is really important that all these functions work together and coordinate with each other.
Role of ERP solution in CRM and SCM function:

E-CRM
E-CRM is the process of increasing sales to the existing customer and promoting continuous
relationships through the use of technologies such as e-mail, chat rooms and social media
marketing’s-CRM helps organisations in understanding customers’ needs and their buying
behaviour to leverage better and improved products or services. ECRM is also referred to as
web-enabled or web-based CRM. Electronic and interactive media such as the Internet and e-
mail play a significant role in ECRM by enabling effective and personalised information
exchange between organisations and customers. Whether it’s sales, support, marketing, or
just general customer data, your enterprise will have all the aggregate information it needs to
make more qualified decisions on how to maintain and improve your business relationship
with customers. Leveraging an integration platform with a prebuilt ERP system and CRM
system connectors helps manage various processes because they automate the workflows for
you and enhance productivity.

E-SCM:

Technological advancements have elevated the need for effective management of supply
chains. Businesses constantly experience the need for a fast, flexible and continuous supply
chain model to stay ahead of the competition. Therefore, traditional business paradigms are
rapidly being replaced by new business processes based on latest technologies-SCM
increases the effectiveness of logistics, production, distribution and other supply chain
activities through the use of the Internet. Web interface combined with SCM or E-SCM uses
e-business concepts and Web technology to achieve the objectives of SCM. E-SCM
integrates the various steps in the business cycle of organisations, from product design to
procurement of raw materials, shipping, distribution and warehousing of the final product to
delivering it to the customer.

The feature-rich working environment of ERP combined with the more streamlined and
efficient workflow of an effective SCM can provide a range of important advantages,
including:
 Improved efficiency across multiple departments and organizations working within
the supply chain
  Improved customer service for increased customer retention and greater chance of
repeat business opportunities
 Automation of workflow for reduced overhead and operational costs
 IT issues and problems that are less likely to create bottlenecks to impede efficiency

3. Case Study:
As a major energy utility San Francisco’s Pacific Gas and Electric should have know
better. Its Oracle ERP implementation had gone well, and there had been no problems
of note; until it came time to test the system. Apparently, a manager had chosen a live
information database to use during pre-launch testing, although no one thought that the
regime would uncover any sensitive company information. Unfortunately, this was
untrue, and consequently created a host of costly recovery programs, in addition to
losing public confidence in the company’s brand.

a. Explain the major issues to implement the different types of information system to
manage the database.
b. Brief your staff on exactly what they should do and not do. Don't get non-specialist
staff to carry out non-specialist roles. How to launch the well-planned ERP system for
this case scenario.

Answer:
A)
An information system is a set of interrelated components that collects, stores, analyses and
disseminates information for effective business decision making. For example, an
organisation wishes to increase its profits by boosting its sales. In such a case, an information
system can help the organisation in making effective sales-related decisions by providing
information on current market trends, needs and preferences of customers, availability of
substitutes, etc.

Types of information systems

 Transaction Processing System
 Management Information System
  Decision Support System
 Executive Information System

Issues to implement the different types of information system:

Find the right system: Before implementing any type of information system, it is not easy to
find right system for the organization and how it can help in the various operations. Ask
providers to respond on how they can meet your needs. It’s important that they have
experience within your industry, and that you can be as honest as possible about any future
changes in direction that might alter your requirements.

Resistance to change: There are implementation challenges of this type during the
introduction of any new system. Facing these issues head-on and dealing with them before
they manifest is always the best option. Those who hold influence within the current
infrastructure may fear losing their power, and long-serving staff may worry that they have
trouble adapting to a new system. If change is not communicated effectively in an
organisation, or previous implementations have failed, there will be a general distrust of
anything new.

Commitment from managers: Top-level support for your ERP project is required, but don’t
forget about junior and middle managers. In larger organisations where staff don’t have
regular access to senior figures, their immediate line manager and colleagues are often
instrumental in forming their opinions on whether something is or isn’t a good thing. If
managers at all levels are enthused about your plans, it will help in convincing others to
follow.

System training: Ensure that your project management team builds in time for training in
groups before the launch date. Allowing staff members to ask questions during and making it
interactive, can help create reassurance that every member of staff, regardless of seniority, are
going on the same journey.

Keeping Up with Change: If one thing is for certain in information technology, it’s that
nothing will remain the same for long. From one year to the next, innovations mean that
software needs to be upgraded and even replaced. In order to remain competitive, businesses
have to keep up with this, investing in software that will give them an edge. As businesses
respond to those changes, though, they face a challenge in getting employees on board with
adjusting what they do. At one time this was simply training employees to go from old paper-
based processes to using computers in the first place. Today, managers have to onboard new
systems while ensuring they provide employees what they need to be productive.

B)

According to Nah and Lau, ERP is a packaged business software system that enables a
company to manage the efficient and effective use of resources (materials, human resources,
finance, etc.) by providing a total, integrated solution for the organization’s information-
processing needs.

According to American Production and Inventory Control Society, ERP system is a method
for the effective planning and controlling of all the resources needed to take, make, ship and
account for customer orders in a manufacturing, distribution or service company.

Many organisations face issues, such as lack of real-time data, poor coordination among
different departments and increased cost. To manage these issues, organisations implement
ERP systems that help in streamlining business processes, reducing costs, maintaining a
smooth flow of information, etc. An ERP system provides integrated information to various
departments of an organisation.

Do’s and Don’ts during ERP implementation:

Do’s
Support and involvement of top management: Implementation of ERP solution in an
organization is big task so it needs the complete support from top management. It is not
sufficient to just monitor the implementation process but it also demands involvement of
senior officials from the management.
Providing necessary resources: ERP implementation requires lot of resources which should
be provided as and when required. It will help to implement the ERP solution easily and
effectively.

Selection of ideal ERP and consultant: It is also very important to select the correct ERP
solution which really can help and streamline the business operations. While choosing ERP
consultants, they should be evaluated on various parameters and accordingly, the best
consultant should be finalized.

ERP managers: There should be skilled, experienced and knowledgeable ERP manager who
has expertise in IT and other functional areas.

Don’ts
Unrealistic expectations: ERP provides certain benefits to the organization but it is not
correct to keep unrealistic expectations from the solution. Initial period may be tough but
staff should be patient enough and it will start providing the expected benefits.

Resistance to change: Employees are not very comfortable when they experience any major
change takes place at the organization so this should not be the case with ERP solution. If
there is resistant to change, organization would not be able to adopt good business practices.

No training: ERP solution normally used by all the employees working in various
departments but before using it effectively, employees should be trained to use it properly.

Going live too early: It is not recommended to go live with ERP solution until employees are
quite comfortable in using the same. Before going live, all the issues and needs should be
understood and go for testing and firms should go live with ERP solution.

In a well-planned ERP implementation, abovementioned Do’s and Don’ts should be taken

care of.