ENTERPRISE RESOURCE PLANNING (ERP)

Submitted By: Submitted To: Chitra dadlani Neha Sharma

Ms.

Apex Institute of management & Science, Jaipur

ACKNOWLEGEMENT The beatitude, bliss and euphoria that accompany successful completion of any task would not be complete without the expression of appreciation of simple virtues to the people who made it possible. So, with reverence, veneration honor I acknowledge all those whose guidance and encouragement has made successful in winding up this. I take this opportunity to thank Ms. Neha Sharma for her support and encouragement which helped me in the completion of this report. I extend my gratitude and thankfulness to apex institute of management & science. Last but not the least Im also grateful to my parents for providing me the continuous support to motivate me to successfully complete my report.

Date:

5.5.2008

Submitted By: Chitra Dadlani

Place: Jaipur

PREFACE

In this report, I have tried to highlight the Indian ERP packages, by inserting a section of Example of an Indian ERP packages that includes the integrated features of the ERP and explains the ERP III architecture in brief. Also two case studies have been inserted which demonstrate the successful implementation of the ERP packages in India. I fervently hope that this report on ERP will make the text more useful and reader friendly.

Chitra Dadlani

TABLE OF CONTENT S.N O

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. INTRODUCTION TO ERP DEFINITION AND FUNCTIONING OF ERP FEATURES OF ERP IMPLEMENTATION OF ERP STEPS IN IMPLEMENTION OF ERP ERP DEPLOYMENT- MAJOR ISSUE PRESENT SCENERIO ERP DOMAIN ADVANTAGES AND DISADVANTAGES WHY TO MODEL ENTERPRISE FUTURE GROWTH OF ERP NEED TO QUANTIFY ERP BENEFITS ERP COST BENEFIT ANALYSIS ERP EVALUATION- AN ALTERNATE APPROACH WHERE ERP COMES IN BUSINESS MODELING IN PRACTICE ROLE OF CONSULTANTS, VENDORS AND USERS EXAMPLE OF AN INDIAN ERP PACKAGE CASE STUDY CONCLUSION BIBLIOGRAPHY

CONTENT

PG.N O
5 6 7 9 10 11 11 13 15 17 18 19 20 22 24 25 26 27 29 34 35

INTRODUCTION

Companies all over the world use ERP to integrate their business processes and thereby reduce cost and improve productivity. Due to globalization, marketing and manufacturing needed to have close interaction/coordination including accounting and finance and these are to be integrated. Globalization also meant multiple handling of various functions like marketing, sales, finance and accounting, rules and regulations, multiple currencies, manufacturing etc. Therefore, there is a need to integrate manufacturing with all other functions of the firm. Traditionally, companies developed isolated computer applications to suit and satisfy each of their functional segments such as sales, purchase, production, finance, marketing, planning etc. Materials Requirement Planning (MRP-I) and Manufacturing Resource Planning (MRP-II) were developed basically to take care of requirements of manufacturing. But the information available on various functions was so disintegrated and scattered that it was almost impossible to consolidate the information. The need was to integrate all functions of an enterprise from the product development and design to marketing in a closed loop. As such, MRP-I and MRP-II will be a subset of the above objective. Such an enterprise wide system that would meet the information and decision needs of the enterprise as a whole, covering all the functions of management is the Enterprise Resource Planning (ERP) system. ERP allows various functional departments to share information and to communicate.To be successful in todays global competitive market, it is
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necessary for business enterprises to continuously strive for developing a high level of integration and coordination along the elements of supply chain and improve in the areas such as time to reach the market, customer satisfaction/communication, performance and monitoring. The ERP software meets these expectations and can handle all activities from customer enquiry to the realization of the revenue of the entire process in an interactive manner.

CONCEPTUAL FRAMEWORK Definition and Functioning of ERP:

ERP is a software package developed for optimum use of resources

of an enterprise in a planned manner. ERP has a central data base and a cross-enterprise interfacing facility shared by all functions of the organization. It should always offer a total solution and there should be seamless integration across all functions of an enterprise. ERP integrates entire organization and enable the enterprise to increase its productivity. ERP provides almost instantaneous access transactional information through out the organization.

Functioning of ERP:
Functioning of ERP can be best Suppose an order for a product/good is placed by a customer, then ERP -Checks for the stock -Reserves the quantity for dispatch -Opens the customer account to verify the credit -Processes the order, -If the credit limits exceeds, then it places hold on the order -All these functions are carried out instantaneously, as ERP integrates production logistics distribution, marketing, human resource development and finance etc.

Features of ERP:
The general ERP Model has a central data base shared by all functions of the enterprise. Some features of ERP are as follows:

1. Seamless Integration: ERP data base system provides total solution

and seamless integration across functions and across different divisions of the enterprise. This feature is useful to manage engineering change management. This includes electronics approval, routing change order process routing revision level control, and automatic generation of product structures. The crucial function of integrating new product in production or change in existing products fully into the enterprise system is possible through the feature of seamless integration of ERP.
2.

Supply chain management: The end to end supply chain

management is vital for an enterprise having multiple manufacturing divisions and distribution network. The intelligence resource planning of ERP system facilitates to optimize the overall flow of demand and supply data and to rebuild relationships between various activities to optimally identify the demand supply chain.

3.

Resource management:

The resources (man, machine and

materials) are to be effectively managed. ERP software package works out and provide the numerous functions related to management of human resources. These are employee data base, job descriptions, and evaluations, applicant tracking, performance review, training needs, career and succession planning creating alternate organization structure, etc. ERP also provides on line records of machines/equipments location and status, maintenance costs and operating costs to effectively manage the equipment/resources.

4.

Order management: This feature of ERP is used to handle the

incoming customer orders.

5.

Manufacturing/operations planning and implementation:

ERP provides this capability for the management by planning all manufacturing facilities.

6.

Logistic management: ERP software also has capability for

logistic management of inbound/outbound, internal nature, etc.

7.

Strategic business planning: ERP facilitates management for

strategic business planning useful in multi product and multi-division and multi location enterprise.

8.

Accommodating variety: ERP has a feature of multi-lingual and

multi-currency capabilities. Multimode manufacturing and multifacility provide the capability required to compete successfully globally.

9.

Integrating management information: ERP is capable and

used: As a flexible reporting tool to extract information as and when needed without depending on any one. As electronic data interchange (EDI). For imaging to provide the ability to display drawings/specifications, ability to store original quotations, customer orders, purchase orders, sale orders, etc. As data base creation for various activities.

IMPLEMENTATION OF ERP

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The way the ERP is implemented is very important to gain benefits. First, and foremost, the attitude of people has to change i.e. to change the way they do their job. People in general resist to any change. In fact, if peoples attitude is not changed, the ERP may be a hindrance to the smooth running of the operations. It should be realized, that the results from ERP are not instantaneous. The organization has to keep on improving its policies, procedures and systems, and ways of transacting business with ERP as an enabler. The emphasis is not to expect a revolution but a gradual transformation.

STEPS IN IMPLEMENTATION OF ERP

1. Identify need for having ERP system. 2. Within commitment management to implement ERP system.
3.

Awareness training to employees to change in their attitude as required by ERP philosophy and creates willingness in them to accept the new way of doing the job.

4. Create a nucleus of people who will work as a team to interact with ERP consultants. Clarify roles and jobs. 5. Document and evaluate old process and the new process planned. 6. Select the software and the vendor who would do the desired job. This would involve parameters like: Global and local presence of software and its vendor. Type of industry that the software attempts to target. Obsolescence of the software package.

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Price of package and cost of implementation. Ease of implementation (nature of package, its design, After sales support/service.

its modularity, and the people who install it). 7. Draw up a plan of implementation which may include: Team formation for implementation. Training of team personnel of the enterprise. .Schedule for the test run. Training of user.

ERP DEPLOYMENT: MAJOR ISSUES

The present process of implementation involves the vendor, a consultant and the firm itself. The consultants will help you to map the processes to the actual application. If the process does not exist in the system then the process is Re-engineered. The consultants claim to be having the knowledge of the best practices. Nevertheless, the success of a process cannot just be industry-specific but will depend on the kind of environment and culture that the company operates in. For a successful ERP implementation, it is important that the implementation should not be either vendor-driven or consultant-driven; there should be an in-house understanding of all the processes and issues. In addition, many firms believe that the investment is done to fix problems. There is a belief that IT can fix some of the issues, but one should understand that this is a strategic investment.

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PRESENT SCENERIO
The concept of ERP has been popular since the last decade; as a result, 70-80% of the large firms are already on the ERP system. Now, many of the multinational firms are restricting their business to partners who have the same ERP. For example, a firm in Small and Medium Enterprises (SMEs) sectors, with an annual turnover of Rs. 120 million and was

Planning to implement an ERP system, where they have to spend Rs.12.5 million, i.e. more than 10% of the turnover. The reason being one of the partners had the ERP package and was asking the other to implement the same.

Leading ERP software vendors:

1.

SAP: Sap is a German Company having a large share of ERP software. (SAP R/3)

2. BaaN: The Baan Company operates from the motherland as well as

from USA. (Baan IV) (Mento Park - California). 3. Some of the other companies in ERP software package are:
(i)

People soft Oracle ID Edwards Gartner

(ii) (iii) (iv)

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(v) (vi) (vii)

(viii)

Scala Ramco Marshal SSA (Systems Software Associates) QAD (MFG/PRO) etc.

THE ERP DOMAIN

Companies like, SAP AG, Baan, Qad, IFS, Ramco systems, to name a few of the leading vendors, leave no stone unturned to capture this holy grail.

SAP Introducing SAP

SAP was founded in 1972 and has grown to become the worlds fifth largest software company. SAP is both the name of the company and the computer system. The SAP system comprises a number of fully integrated modules, which cover every aspect of business management. The system has been developed to meet the increasing needs of commercial and other organizations that are striving for greater efficiency and effectiveness. They offer a unique system that supports nearly all areas of business. SAP provides the opportunity to replace large number of independent systems that have been developed and implemented in established organization with one single modular system. Each module performs a different function, but is designed to work with

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other modules. It is fully integrated, offering true compatibility across business functions. SAP is a German company but operates all over the world, with 28 subsidiaries and affiliates and six partner companies maintaining offices in 40 countries.

SAPS MARKET
SAP markets its products all over the world to almost every industry imaginable, as well as to government and educational institutions and hospitals. The following is a list of industries served by SAP: Raw materials, mining and agriculture Oil and gas Chemical Pharmaceuticals Building materials, clay and glass Building and heavy construction Primary metals, metal products, steel Industrial and commercial machinery Automotives industry Ship-building, aerospace, and train construction Transportation services and tourism Electronic/optic and communication equipment

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 Wood and paper Furniture Consumer packaged goods-foods Clothing and textiles Retail and wholesale trading Communication services and media Storage, distribution and shipping Utilities Financial services, banks and insurance Government, public administration, and services. Museums and associations Health care and hospitals Educational institutions and research Consulting and software Services.

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ADVANTAGES / DISADVANTAGES
ADVANTAGES OF ERP
ERP enables enterprises to look at it self inwards as well as outwards towards markets. The organization has better insight into its own policies, systems and procedures. The organization is also able to look at the inefficiencies, bottlenecks, and deficiency in communication across various functions. ERPs strength lies in its ability to provide information that it up-todate, instantaneous, and comprehensive to all segments. Some of the benefits of ERP system are as follows:
1. Availability of informations that are:

(i) (ii) (iii) (iv) across the world.

Up-to-date Uniform Comprehensive Integrated

2. ERP software emboids the best practices followed by corporations 3. Facilitates to take appropriate decisions with speed and accuracy. 4. Integration of workflow to enable to respond quickly and appropriately to market demand and situation and to attend customer.
5. Increase of inventory turnover

6. Reduction in Cycle time 7. Reduction of work in progress inventory 8. Reduction in lead time 9. On time delivery

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10.Enhanced customer satisfaction 11.Reduce quality cost 12.Improved resource utilization

13. Enterprise

forms a High performance starts moving on the path of

team structure
14. Enterprise

integrated system 15.Enterprise starts building new relationship with external organization and becomes an extended enterprise.

DISADVANTAGES OF ERP
1. Lack of integration with non-ERP systems 2. System inputs lack logic and are complex at times 3. After the project is over the vendor is no more associated with the project and there is very less or limited help available in case the client needs any. 4. The reporting systems are not adequate. It is very difficult to extract data from the sources and there is a requirement of additional tools in the form of business intelligence software.

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WHY TO MODEL THE ENTERPRISE

More agile enterprise Helps in eliminating redundant or non-value added activities.

More efficient system after being enabled by IT. 1. Information 2. Material 3. Money 4. Control 5. Intangibles, improvement such as customer satisfaction & quality

Stream lines 5 important flows in the enterprise.

Empowerment of employees to take action

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FUTURE GROWTH DRIVERS OF ERP

The future growth of ERP vendors will depend on the SMEs. In any country, SMEs are the largest contributors to the economy. This year, if we see in India, the SMEs have made a huge contribution to the IT industry. The Business Process Outsourcing (BPO) industry is a classic example of the success of SMEs. It is now that the bigger firms are thinking of moving into this industry since the capabilities of SMEs are limited. When we say capabilities, we mean capabilities in terms of financial resources, skilled labor with knowledge of processes. The vendors understand these and are trying to come out with new strategies such as the ownership of the system to be shared by a group, providing web-based applications, providing scalable models, etc. These will help to bring down the total cost of ownership. In addition, the implementation will take place in steps. So, it would mean deployment of resources in phases and this will give a chance to correct any problem detected during the initial stages.

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THE NEED TO QUANTIFY ERP BENEFITS

The cost of ERP is 3-7 times more than that of purchasing the software license, which is already very high. License cost of a SYSTEM ANALYSIS AND PROGRAMME DEVELOPMENT (SAP) R/3 is between $ 1-5 mn. The total cost required to implement ERP can be as high as $14.5 mn. Due to this, there is a lot of customer dissatisfaction. There is a need to clearly quantify and work out a ROI in the beginning of the installation itself. Many of the companies have reported dissatisfaction about the performance of ERP system after its implementation. To avoid this, it is necessary to identify and quantify the benefits of ERP implementation right in the beginning. This can be carried out by setting the required objectives and goals. It is equally essential to ask questions related to those objectives and goals.

TABLE: ERPs Goals and objectives Objective Improved customer satisfaction. Decrease inventory. Shorten order-to-delivery cycle time. Reduce material cost through improved. Vendor management.

Questions to be asked How, how much and when? How, how much and when? How, how much and when? How, how much and when? How, how much and when?

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ERP COST BENEFIT ANALYSIS

To Zero in on a particular strategy, it is very important to conduct preimplementation ROI analysis. Many people are of the view that ROI on ERP is very difficult to calculate. ROI calculation may not be science, but in the end, we need to know the benefits accrued that outweighs the cost involved. The benefits might be tangible and intangible. A rough estimation shows that the percentage of tangible and non-tangible benefits could be 50-50%. To measure the intangible part there are measures available, but there should not be speculative measures to measure the same. Companies that actually measures ROI report a significant performance improvement. Majority of the customers believe that ROI is difficult to measure. Now what is very hard to measure? The intangible part of returns and cost seems to be too hard to measure. On the investment side, the cost of the software, maintenance, up gradations, customization can be measure. The intangibles on the cost side could be the actual cost of the workforce that can be taken as weighted Cost of labour needed to install and customized the system. To make cost benefit analysis of an ERP system there is a need to study the areas. The following are the measure cost of ERP systems.

Implementation cost
This would include items such as software licenses and hard wares such as servers, network upgrades, support and maintenance contracts, training personnel, ongoing support and administration cost, customization and development cost.

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Personnel Cost The cost attached to personnel is almost as high as the license cost. There is a lot of internal human resource attached to ERP. As there is a shortage of trained labour for such specialized application, firm employees, who gain experience in such an implementation, are in great demand. Consequently, there is a increased chance of employee turnover. Considering the fact, the company has to assign employees to represent different functional group and, these are the people who understand the processes deeply. On the other hand, people handling some or the other functions are now dedicated completely for ERP implementation; it puts pressure on remaining employees also. The implementation team can be anywhere ranging from 50 to 150 people, depending on the size of the firm, no. of locations and the no. of functions. The other aspect is that a large amount of resources spent on employee training and this, in turn, may call for change management and business process reengineering (BPR). To avoid such costs, it is very important to have a clear understanding of the functionalities, a quick move to exploit the complete functionalities and to add as many users as possible. This will bring down per user cost and the benefits can be achieved fast. Costs, such as user training, change management, etc., can be measured by using surrogate measures. The other costs could be budget overruns, functionality shortcomings etc. Savings can be categorized under 4 different headings. They are IT staffing, Productivity, Operational efficiencies and Revenue Improvements. The overall benefit side includes operating efficiencies that help the company improve productivity, redeployment of manpower, better capital
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utilization, reduction in inventory levels, improved order to delivery cycle time, better control and increased certainty in decision making. Intangible benefits would mean greater reliability of the firm. Talk with different users and find out what amount of time is saved now, because not all time saved will be used productively. There will be a reduction in people required to monitor systems, operations related savings such as time saved on e-mails and phones, saving in travel costs for meetings.

ERP Evaluation An Alternate Approach

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ERP offers many opportunities for ROI calculation. The problem is that only a few companies actually do an ROI study for purchases, up gradation or customization. In addition, there is a limitation to the traditional tools being used for the ROI calculations. Therefore, there is a need to find out different tools and techniques. There were some methods that were proposed by different people. One of the methods that were proposed by different people. One of the methods being "Assessing the value provided by ERP applications through organizational activities" by Arik Ragowsky, Toni M "Somers and Denis A Adams through their paper in "Communication of the Association for information Systems". They selected companies that have all the five Porter's value chain elements. They have devised a research design where in they have asked for the impact of information systems such as inventory management, project management and customers orders budgeting on different aspects such as: Inventory holding cost Retention of customers Reduction in cost of after sales services The methodology used has been conducting personal interviews with senior manager of each organization. The study is more focused on the value provided in terms of subject perception and the benefits that the organization derived out of the use of specific individual IT applications to ERP. The longitudinal dimension is used to study the relative performance of firms before, during and after implementation to examine how the effects of
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ERP implementation appear over time. These studies will always indicate a positive outcome, but initial question s like how much, when, are not answered. If we are to conduct a pre-deployment ROI analysis (to be more realistic probability of achieving those returns and payback period can also be taken into account) to evaluate expected returns and costs then comparison studies will not suffice. A suitable strategy would be to pick up few companies from different industry verticals and conduct interviews with actual users across different functions. The drawback with the questioner method is that such studies will have very low feedback and a single form would be filled by one person, so it is very unlikely that he has in depth knowledge of the impact of ERP on all functions. We feel that the balance scorecard approach would be the best approach.

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WHERE ERP COMES IN

ERP is a result of modern organizations attitude towards how their information systems are to be configure to the new business focuses. Merely automating systems is no longer the cure. The major bottleneck is getting to build software and system solutions for emerging BPR needs is integration. Disparate elements of the organization have to be linked together so that whenever a change in an external pull takes place, the enterprise is able to adjust to it immediately and effectively. The trend today is that many organizations are changing from function oriented businesses to process driven entities. ERP systems enable this to happen. The areas of ERP deals with manufacturing as well as with finance. For an ERP solution, human resource is as relevant to the whole scheme of things as distribution. In fact, the various vendors who provide ERP solutions do so in a modular manner. ERP packages are mostly built on the Objective Oriented Programming (OOP) approach.

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BUSINESS MODELING IN PRACTICES

Most of the ERP packages available today facilitate flowcharting these processes using standards symbols. For example, SAP uses the Event Driven Process Chain (EPC) methodology. By connecting all the users, event, task/function, organization information, they can analyze even very complex business processes. In addition, these ERP packages also provide standard template for each of the processes, the idea being that the difference between the template and the actual process can be easily identified. The business model also plays a very important role in selecting an ERP package as it becomes possible to identify how the package actually fits the business model under consideration. At the time of actual implementation, a suitable data model and a MIS report substantiate the process model. By suitable analysis of the data model, process and MIS requirements, a standard data model is provided by the ERP package. It is thus, obvious that business modeling is the base for successful ERP package selection and implementation.

ROLE OF CONSULTANTS, VENDORS AND USERS

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Initially, organizations were skeptical about ERP since they felt that their businesses were unique and their cultures differ. As time passed and their business problems became more pressing, they started looking at ERP as the solution to their problem. In their urgency, they were expecting miracles. Unfortunately, this doesnt happen most of the time. Leads to poor participation and costly delays. It is important to understand that an ERP package cannot fit in completely with the existing business practices of an organization. In order to avoid setbacks in an ERP project, a consultant plays a useful role. The consultants by virtue of their industry, experience and package expertise should pitch in and set the expectation of the user at various levels keeping in mind the overall business objective of the client. They can do so by working closely with key users, understanding their needs, analyzing the business realities and designing solutions that meet the basic objective of the company. An ERP package is expected to improve the flow of information and formulize all the business processes and workflow that exist in an organization. Many users expect their workload to decrease after an ERP implementation, but this may not always happen. If one has to have more information in assistance, it entails more work from some users, but the benefit is that this information is properly stored, flow of information throughout the organization improves, the company starts performing better, and this in turn benefits the users who have collectively improved their way of working.

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EXAMPLE OF AN INDIAN ERP PACKAGE

During the 1990s, many Indian software companies developed ERP packages which were sold and implemented at hundreds of companies across India. Some of these packages have even been successfully implemented overseas. Sara ERP is one such package from Mumbai based Sara InfoTech. The company was established to create software products that would compete globally in terms of quality, functionality and cost. Today, this company has developed over a dozen packages, including flagship package Sara Intelligent Enterprise Management System (Sara IEMS). Sara IEMS is a comprehensive ERP III package, comprising ERP, CRM, SCM, Business intelligence and Interface with various equipment and instruments, all in one single application and one database. Sara IEMS modules can also be integrated with other Enterprise applications such as SAP, BAAN, J D Edwards, Siebel and PeopleSoft. Sara started developing its ERP package in 1995 and it was ready by 1999. Later it developed CRM, Business Intelligence, Interface with DCS, SCADA and other equipment, instruments, meters, etc. Sara has also enhanced its ERP package for certain verticals like hospitals, hotels, insurance, etc. to take into account their front-office functions. Sara ERP has `been successfully implemented in diverse companies in India, Thailand, Indonesia, Malaysia, and other countries.

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Based on the needs of the organization and understanding of the criteria that the customer will look at before buying ERP system. Here are some criteria based on which the company takes the decision regarding selection of ERP systems.

Criteria for ERP system Services 14% 14% 11% 18% Technical architecture 22% 21% Ability to execute Vision Cost Function

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CASE STUDY

MERCEDES-BENZ
Known worldwide for producing automobiles of the highest quality, Mercedes-Benz uses Baan software at its engine remanufacturing factory in Berlin. With more than 650 engine variation, the requirements for manufacturing applications software were quite complex. They primarily opted for Baans software as they realized that Baan fulfilled the specific customization as it provides flexible customization capabilities. Mercedes-Benz is one of the leading suppliers of automobiles in the world. The product range includes a large variety of vehicles from exclusive cars to universal commercial vehicles. Within Mercedes-Benz Inc., some production sites hold the position of suppliers in order to achieve an efficient division of labor. One of these sites is the engine factory in Berlin (2600 employees), which produces complete engines as well as engine parts. One department of this factory is in charge of the reconditioning of old engines (approx. 450 employees). Since the engine is not only the heart of the automobile but also a very cost intensive component, the reconditioning of usable parts is especially important from the ecological and economical points of view. The reconditioning in terms of dismantling, identification, chemistry and reconditioning of individual parts is quite similar to the operations in a
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workshop, but when it comes to the assembling of engines, it is more like small-lot production. In 1993, the engine parts reconditioning department of the production site in Berlin had to decide whether an individual or a standard software solution should be used to achieve more economical manufacture of rebuilt engines. Long machining time, low transparency of the manufacturing process, absence of uniform information about bills of materials and, to a large extent, manual calculation of requirement were the most significant weaknesses of the former manufacturing procedure. These weaknesses were identified through a profound analysis of the actual procedure. In the development of the target procedure, optimum PPS procedures were taken as the guideline. Workshops were organized with the PPS suppliers, during which the PPS system was chosen in accordance with the target business. Step by step, TRITON appeared to be the best suited PPS system. TRITON was chosen because it is very flexible and can, therefore, handle the multiple requirements of the manufacturing of rebuilt engines (variants and alternative parts issues).

The modified TRITON 2.2 on a HP 9000 system.

The operational system is installed on HP 9000/h50 with a 448 MB main memory and 2 X 9 GB mirrored disks. The standby system on a HP 9000/i50 with a 448 MB main memory is linked to the operational computer by a switchover concept and is used as a development computer. Sixty PCs, 36 terminals, 15 Alpha terminals and 15 laser printers are available for the users.

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After only six months of using TRITON, all item masters and the 6500 construction kits of 850 engine variants were registered. Then the routing were defined and drastically reduced (by 85%) due to the definition of parts families. In May 1994, required quantities started to be calculated by means of an extended MRP, and in Autumn 1994 the production order control started. Since January 1995, the system is in operation and completed by the addition of the inventory control and machine-aided disposition. The costing control is to be added in the future. It was observed that after only a few weeks of operation, the former standard situation of incorrectly issued parts became less tense. The milestone reports have led to transparency of the manufacturing process, which again facilitates early recognition of problematic parts and an early adoption of accelerating measures. The transfer from a pure manual disposition to a machine-controlled disposition was the most difficult task. The extended MRP calculates the required quantities on its won by using the complex structures of the bills of materials with their multiple possibilities of alternative parts. The required quantities are then used by the planners tests of these customized functions were more complex than anticipated. During operation there were some problems resulting from the always new constellations in the complex algorithms, but in the meantime, they gained control of most of the problems. Management and IT people at Benz were convinced that choosing TRITON standard software plus adaptations was the right decision. The costs involved in individual programming would have been much higher and they would have integrated some of the old concepts into the software which they have now avoided by means of very good organization. All in all, it can be stated that as a result of using TRITON and the simplified and made more
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secure and transparent. The employees now have a better view of the whole process chain and the targeted rationalization goal was surpassed. Management and IT people at Benz were convinced that choosing TRITON standard software plus adaptations was the right decision. The costs involved in individual programming would have been much higher which they have integrated some of the old concepts into the software in all, it can be stated that as a result of using TRITON and the accompanying organizational procedures, their business operations were simplified and made more secure and transparent. The employees now have a better view of the whole process chain and the targeted rationalization goal was surpassed.

ESSAR STEEL
With an investment of Rs. 20crore, CIO claims payback will be within one year. In what is probably one of the largest ERP projects in India, Essar Steel is spending a whopping Rs. 20crore on its SAP R/3 implementation and other IT and consultancy requirement. To produce high quality steel with the best ingredients, the company felt the need for an integrated and live information system. Consequently, this project was envisaged and driven by the top management. Essar has signed up with SAP for a 1000-user license to begin with, and this number is expected to go up to 2000 to 2500 users within a few years. These users would be spread over twenty sites. Already there are 600 users working on SAP at Essar Steel. With this upcoming SAP implementation, the modules that will be automated at Essar Steel will be
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finance, asset management, product planning, plant maintenance, sales and distribution, quality management control and commitment accounting. The company also has an in-house developed integrated marketing and product system (IMPS) which handles order entry production planning, quality, dispatches and invoicing. Since this (IMPS) is custom built, it has been integrated into SAP. Earlier, Essar Steel had also implemented a payroll/administration and management system (PAMS), which too will tie in with this SAP implementation. Essar Steel also has other custom built solutions for specific areas. All of these will be dovetailed into the SAP implementation. In fact, even after the full implementation of these three applications only 80 per cent of the companys business requirements would have been met. Why then did Essar decide to go in for an ERP solution at all? Essar for IT services was huge. Specifically, with SAP, they would save on implementation time and would be deploying proven software which fortune 500 companies use. The benefit arising from the SAP implementation is expected to be tremendous and Essar expects that by the end of 1998, the companys Return-On-Investment (ROI) would be 100 per cent. Already, at Essar Steel, the lead time for delivery and procurement of materials and products has been shortened which will, in turn, reduce the inventory carrying cost. The other benefits that Essar Steel envisages are transparency and accuracy of data, which will be near 100 per cent. Also, the company can close its books within seven days of the given period closing date and the cost reduction will result in improved bottom lines, and optimization of plant operations in terms of manpower and finance.

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CONCLUSION
The ERP is not a total solution to operational and strategic concerns. It is meant for optimal utilization of organizational resources from man to machine, finance and materials. It is not the ultimate solution to all the problems. It is meant to accurately track the processes for disciplined usage of the resources. It cannot be a solution to the customer services problems, quality problems. For such issues, ERP provides a base for implementation of specific solutions such as supply chain management, product life cycle management and customer relationship management. That is why it is very important for SMEs to understand the role of ERP, because that will them the power to take decisions on ERP, either single vendor or best of the breed kind of applications and to what extent. The reasons for implementation for ERP, is that a firm would like to consider the four perspectives: Financial Perspective. Customer Perspective. Internal Perspective. Innovation ad learning Perspective. This can be translated to ERP effectiveness parameters that can be measured through KPI's.

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BIBLIOGRAPHY

Production and Operation Management, Khandelwal, Gupta, Jain, Ajmera Book Co. Jaipur, First Edition: Jan07 Part 2, Chapter 13. E-Business, The icfai University Press Dec 2007. Pg. 37-44. Enterprise Resource Planning Concepts and Practice, Vinod Kumar Garg, N.K. Venkitakrishnan, Prentice Hall of India Pvt. Ltd. New Delhi, Second Edition: Jan03.

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