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erp ERP PERSPECTIVES Presented By NIRMALA APSINGIKAR I.T. AREA ASCI GMP FOR PGCIL 18/Aug/2001.

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Presentation on theme: "erp ERP PERSPECTIVES Presented By NIRMALA APSINGIKAR I.T. AREA ASCI GMP FOR PGCIL 18/Aug/2001."— Presentation transcript:

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2 erp ERP PERSPECTIVES Presented By NIRMALA APSINGIKAR I.T. AREA ASCI GMP FOR PGCIL 18/Aug/2001

3 erp ENTERPRISE-WIDE RESOURCE PLANNING - AGENDA zTHE CASE FOR ERP : yBUSINESS CASE yTHE I.T. ANGLE zERP DEFINITIONS, EVOLUTION zERP COMPONENTS zINVESTING IN ERP zIMPLEMENTATION ISSUES

4 erp The Business Case for ERP -POWER SECTOR THE BUSINESS ENVIRONMENT yDemand-Supply Gap growing yUnbundling of SEBs; Corporatization yPrivatization yIncreasing Competition (IPPs) yCERC & SERCs; Tariff Reform yChanging Customer Expectations zTHE CHALLENGE : TO ACHIEVE AND MAINTAIN SUSTAINABLE BUSINESS ADVANTAGE

5 erp SUSTAINABLE COMPETITIVE ADVANTAGE zAgility (Quick Response) zContinuous Innovation zFocus On Efficiencies

6 erp Power Generation Business - Major Operational Concerns yCost Effectiveness yProject Management ySupply-Chain Performance yReceivables Management yAssets /Plant Maintenance yEnvironmental Compliance ySafety yQuality

7 erp SUSTAINABLE COMPETITIVE ADVANTAGE CORPORATE INITIATIVES zOptimizing, improving, and Automating Business Processes yProject Management yContracts; yProcurement / Materials Management ySpares Inventory Optimization yReceivables Management zBPR / Process Thinking /cross- functionality zLeveraging Information Technology

8 erp SOLD-TO SHIP-TO INVOIC-TO PAY-BY CUSTOMER PAY-TO INVOIC-FROM BUY-FROM SHIP-FROM SUPPLIER INTERNAL BUSINESS-PARTNER Business Partners - multiple roles

9 erp COMPLEX ORGANIZATION STRUCTURES z Enterprise has evolved as a networked structure, z consisting of many small/ medium- sized organisations, z having their own specializations z, Working in tandem z To create value for their customers

10 erp RESPONSES TO BUSINESS PULL: MAJOR IMPLICATIONS zNEED TO MANAGE HIGHER ORGANIZATIONAL COMPLEXITY zCHANGE IN STRUCTURES, ROLES, PROCESSES zMANAGING INTERDEPENDENCE zNeed for information infrastructure to support changing business requirements

11 mispersp TRENDS IN I.S. APPLICATIONS OPTIMIZING AND AUTOMATING BUSINESS PROCESSES  On-line Transaction Processing (OLTP)  Integration Of Information Across Functions  Automation Of Work Flows;/ Groupware  Inter-organisational Systems  Electronic Data Interchange (EDI)/ E-commerce ERP / SUPPLYCHAIN/E-BUSINESS

12 erp ENTERPRISE-WIDE APPLICATIONS ENTERPRISE RESOURCE PLANNING : ENABLING THE AGILE ORGANIZATION

13 erp ERP DEFINITION(S) APICS z AN ACCOUNTING ORIENTED INFORMATION SYSTEM z FOR IDENTIFYING AND PLANNING THE ENTERPRISE-WIDE RESOURCES z NEEDED TO TAKE MAKE,SHIP & ACCOUNT FOR CUSTOMER ORDERS ERP DIFFERS FROM MRP -II SYSTEM IN TECHNICAL REQUIREMENTS LIKE, GUI, RDBMS,4 GL, CLIENT/SERVER ARCHITECHTURE, OPEN-SYSTEM PORTABILITY.

14 erp ERP DEFINITION(S) GARTNER GRP. zERP IS AN INTEGRATED APPLICATION SOFTWARE SUITE zTHAT BALANCES MANUFACTURING, DISTRIBUTION AND FINANCIAL BUSINESS FUNCTIONS. z WHEN FULLY IMPLEMENTED, ERP CAN ENABLE ENTERPRISES z TO OPTIMISE THEIR BUSINESS PROCESSES AND ALLOW S FOR NECESSARY MANAGEMENT ERP IS THE TECHNICAL EVOLUTION OF MRP-II THROUGH THE INTRODUCTION OF RDBMS, CASE, GUI, 4GL DEVELOPMENT TOOLS, AND C/S ARCHITECTURE.

15 erp ERP DEFINITION(S)….2000 zERP is a structured approach to optimizing a company’s internal value chain. zThe software, if fully installed across the enterprise connects the various parts through logical transmission and sharing of common data zIn an ERP implementation data and processes are organized, codified, and standardized contd. z

16 erp ERP DEFINITION(S)….2000 z When data becomes available at one point in the business, it generates and processes related data in other areas zTransaction data are converted into useful information and analyses

17 erp Enterprise planning : core process : Where does it fit? Demand Plan Inventory Plan (safety stock) Planned Orders Enterprise planning engine Item master planResource master plan demand forecast inventory information Distribution Orders Purchase OrdersProduction Orders

18 erp ERP Integrated Enterprise The 1990’s Enterprise MFG Finance Distribution PurchasingSales Projects

19 ERP SOFTWARE zBASED ON AN ENTERPRISE BUSINESS MODEL zAPPLICATION SOFTWARE MODULES FOR FUNCTIONS SUCH AS :.MANUFACTURING.TRANSPORTATION, SALES AND DISTRIBUTION.MAINTENANCE MANAGEMENT.FINANCE.HUMAN RESOURCES.PROJECT MANAGEMENT

20 ERP SOFTWARE zINTEGRATION AMONG FUNCTIONAL MODULES zWORKFLOW ENABLED zINTERNET/EDI, INTRANET ENABLED zCUSTOMIZABLE THROUGH IMPLEMENTATION TOOLS (SOFTWARE) zPRESENT SOLUTIONS INTEGRATE SUPPLYCHAIN MANAGEMENT AND CUSTOMER RELATIONSHIP MANAGEMENT

21 erp ERP MODULES zFINANCIAL zAccounts Receivable and Payable zGeneral Ledger zAsset Accounting zFinancial Consolidation zCash Management and Forecasting zBudgeting zProduct Cost Accounting zProfitability Analysis zActivity Based Costing zEIS

22 erp ERP MODULES LOGISTICS / OPERATIONS zEnterprise Planning : (Demand forecast to Prodn. Planning) zBill of Materials; Routing Management zMPS, MRP, CRP zPurchasing zShop Floor Control zQuality Management zWarehousing zTransportation zPlant Maintenance zField Service

23 erp ERP MODULES zSALES AND MARKETING zOrder Management zPricing zSales Planning zSales Management zCustomer Relationship Management zHUMAN RESOURCES zHuman Resources : Time Accounting zPayroll zPersonnel Management

24 erp Monitoring Monitoring Requirements Invoicing Invoicing Budget Budget Progress Progress Definition Definition Planning Planning Master Data Master Data Central Invoicing Finance Order Management Warehousing Manufacturing Configurator Service Project Solution

25 erp Project Management Solution Project Setup Project Execution Project Close Out Project Control Project Monitoring Project Administration Project Invoicing Business Control Diagram

26 erp Project Modules zProject Definition zProject Budget zProject Planning zProject Requirements zHours Accounting zProject Progress zProject Monitoring zProject Invoicing zMaster Data Management

27 erp Project Definition zProject Data : zProject-Specific Resources zProject-Specific Cost Breakdown Structures zCopying project data from Templates/ existing project

28 erp Project Requirements Planning zManages the generation of: yMaterial (Purchased, manufactured; or from inventory) yEquipment ySubcontracting zGenerates planned orders for Project Supply Chain (Warehouses, Suppliers, Production sites) zConfirmation->Release->transfer zDirect Delivery of Matl. To site, or to a Project Warehouse

29 erp PRP Confirm & Transfer to Warehousing Confirm & Transfer to Purchasing Project Budget & Control Data Warehouse Orders Purchase Orders Manual Orders Project Requirements Planning

30 erp Project Progress zInformation on actual execution zMilestone Completion; zManufacturing operations progress zActual Material Costs and Commitments updated thro’ integration with Order Management and Warehousing modules zActual labour hours and costs are updated through integration with Hours Accounting Module zProject Revenues posted

31 erp Project Monitoring Performance Measurement zScheduled Work = BCWS zPerformed = BCWP zActuals = ACWP zBAC = Budget at Completion zEAC = Estimate at Completion zVariances: ySchedule variances yCost variances

32 erp Project Invoicing zUpon selection of invoicing method, the invoicing amounts are calculated and generated through integration with Central Invoicing module (Multi-currency is supported) zInvoicing methods supported include: yFixed Price (Installments on basis of progress/milestones/predefined schedule yCost-plus (Reimbursement, etc) zAccounting support for Customer advance payments, retention transactions

33 ENTERPRISE RESOURCE PLANNING (ERP)  Deployment of IT mechanisms for the best use of Enterprise-wide resources and implementation of best business practices:  Evolved as a natural sequel to MRP (I & II)  Current solutions largely available to mfg. organisations  Manufacturing central to the solutions, HOWEVER,  solutions are being extended to cover services such as retailing, trading, healthcare, etc

34 mispersp SUPPORTING STREAMLINED BUSINESS PROCESSES THROUGH :  Upto-the minute information for improved operating decisions and services  Intuitive, iterative use of information by executives  Improved collaboration & coordination  Improved internal administration  Direct links to client/partners TRENDS IN I.S. APPLICATIONS Expected Benefits

35 erp ENTERPRISE SYSTEMS WHY ARE THEY IMPORTANT? zProvide Process and Information Integration zSupport Industry “Best Practice” (Enable Business Process Re- Engineering/Improvement) zGlobalization : Support MNC Reporting; Control Requirements zFoundation for e-Business (e-Commerce, SCM,CRM) zEnable Managing Business Change Consistently

36 erp THE CASE FOR ERP PRODUCTS: THE I.S /I.T ANGLE

37 erp THE CASE FOR ERP PRODUCTS: THE I.T. ANGLE zRapid advances in I.T. (Computing : Hardware, software; and Connectivity) zChallenges in absorbing and effectively exploiting new information technologies zI.T. is not the Core Competence zNeed for specialist companies who can assimilate new technologies and deploy them in products.

38 erp MAKING THE CASE FOR ENTERPRISE SYSTEMS - COMPAQ COMPUTERS zSupport the move to a Lean Production Strategy zMove from “Make to Stock” to “Build to Order” zNeeded to tie together processes for Ordering, configuration, Manufacturing, inventory, and distribution zPost-ERP, can order materials from Suppliers on a daily basis; zCan plan Production on basis of week’s sales

39 erp MAKING THE CASE FOR ENTERPRISE SYSTEMS - COMPAQ COMPUTERS…2 Initiatives Beyond ES zOutsourcing of Production zResellers to customize the product to customer Specs zExchanging data with Suppliers and Customers in Real time (using ERP with Internet) zDeveloped their own applications for production forecasting and order scheduling

40 erp MAKING THE CASE FOR ENTERPRISE SYSTEMS - Reebok Managing global integration zgrowth through acquisitions. zAcquired several disparate systems along with acquired companies. zOwn in-house systems were too inflexible zOutsourcing of Production zIndustry best practices in manufacturing and distribution zConsortium with VF and SAP to develop industry vertical solution for Apparel footwear industry zProduct creation processes not in ES.

41 erp PUTTING THE PIECES TOGETHER ENTERPRISE SYSTEMS WTH BOLT-ONs VF Corporation zWas a member of the SAP Consortium to develop the Industry solution for the Apparel Industry zSAP R/3 Backbone zProduct Development Processes supported by another S/w package WebPDM zWarehouse Control and Manufacturing control : Custom applications developed in-house zCapacity and Raw matls plg. Using i2’s Rhythm package zForecasting using Logility s/w zMicromarketing using other 3 rd party products such as JDA software, Marketmax, etc. zAll these were hooked on to SAP R/3 using Application Program Interfaces (APIs)

42 erp MAKING THE CASE FOR ENTERPRISE SYSTEMS - Others Intel : zES was a way to standardize and integrate by getting rid of most legacy applications zDid not include manufacturing systems in the ES application. Microsoft zBetter Financial and Procurement Systems worldwide zBetter management Control and reporting

43 erp Dovetailing ERP with Integrated Resource Management Systems in the Mining value chain Prodn. Mgt. Eqpt. Fleet Mgt. Matl. Movement Mgt. Reconcil. Bus. Intelligence Mine Plg. & Budgeting Mine Design Milling Beneficiation Accounts Payable Budget Accounts Receivable Mtce. Mgt. General Ledger Human Resource Supply Chain Mgt. Geology Resource Modelling Planning OPNSOPNS Process Control ERP Product Shipping Sales Environment Mgt.

44 mispersp  Load Profiling and forecasting  Power System Planning  Generation Planning; Load Despatch  Plant Optimization  Pollution Control; Environment Mgt.  Engineering Data / Workflow Management Specialized Applications for the Power Generation/Wholesale supply Industry

45 erp UTILITIES Typical ERP SOLUTION MODULES zEnterprise Management zCustomer Relationship Management zGeneration zTransmission & Distribution zInstallation Services zEnergy Service zEnergy Trading

46 erp UTILITIES Typical ERP SOLUTION MODULES zEnterprise Management zStrategic Planning Support zBusiness Intelligence and Data Warehousing zManagerial Accounting zFinancial Accounting zRegulatory Reporting

47 erp UTILITIES Typical ERP SOLUTION MODULES zGeneration zSupport for various generation facilities zEngineering and Construction zMRO Procurement zPlant Maintenance zWork Management Systems zSafety Protocols : Work Clearance Management

48 erp UTILITIES Typical ERP SOLUTION MODULES zTransmission & Distribution zEngineering and Construction zOperations Management zMaintenance & Work Management zOutage Management Systems zSafety Protocols : Work Clearance Management

49 erp UTILITIES Typical ERP SOLUTION MODULES zTransmission & Distribution zDistribution Management Systems zAutomated Meter Reading zField Crew Management zSpatial Information System Planning

50 erp UTILITIES Typical ERP SOLUTION MODULES: - Extend to Trading Systems Trading Systems zInternet-Based Trading Systems zSettlement Systems Customer Relationship Management zCall Centres zCustomer Information Systems zBilling

51 mispersp  Mincom Ellipse  SAP R/3 Utilities solution  Ramco Marshal Integrated Solutions for the Utilities Industry

52 erp ERP SOFTWARE ADVANTAGES OF IMPLEMENTATION OPPORTUNITY TO DESIGN AN AGILE, EFFICIENT ORGANIZATION.ENABLES BUSINESS RE- ENGINEERING:.MAKES INTEGRATED INFORMATION RAPIDLY AVAILABLE FOR DECISIONS:.ALLOWS EASY RECONFIGURING TO ADAPT TO CHANGES IN BUSINESS REQUIREMENTS

53 erp ERP SOFTWARE ADVANTAGES OF IMPLEMENTATION zMAKES INTEGRATED INFORMATION RAPIDLY AVAILABLE FOR DECISIONS : NINTEGRATED SOFTWARE MODULES NSINGLE POINT DATA ENTRY NCUSTOMISED REPORTING NMIS SUPPORT THRU CONTROLLING/ BUDGETING MODULES NDECISION SUPPORT THRU BUILT-IN ALGORITHMS AND DATA WAREHOUSING CAPABILITY

54 erp ERP sources of benefits zBUSINESS PARAMETERS: yINVENTORY LEVELS AND TURNOVERS yDEBTOR DAYS yCUSTOMER SERVICE OR RESPONSE LEVELS yRESOURCE USAGE yFINANCIAL RISK AND EXPOSURE zSYSTEM PARAMETERS: yIMPROVED SECURITY; RESPONSE; CAPACITY, ETC

55 erp INVESTING IN ERP QUANTIFYING BENEFITS zReduction in material costs through improved vendor management zReduction in working capital requirements zIncreased capacity utilization due to improved materials planning zIncreased capacity utilization from improved production planning zReduced downtime from improved maintenance

56 erp LIMITATIONS OF ERP zSTRATEGIC THINKING zENVIRONMENT SCANNING zINNOVATION zPRODUCT DESIGN

57 erp ERP : TRENDS zDATA WAREHOUSING SOLUTIONS zSUPPLY CHAIN SOLUTIONS : INTEGRATION; E-BUSINESS zINTEGRATION WITH CRM zINDUSTRY-SPECIFIC SOLUTIONS zPLUG-AND-PLAY ERP

58 erp Implementing ERP

59 erp INVESTING IN ERP PRODUCT EVALUATION zPRODUCT ASPECTS yFunctionality yTechnical Architecture yCost Of Ownership zIMPLEMENTATION ASPECTS yService And Support yAbility To Execute (Vendor, Implementor, In- house Team) yProcess Changes Required yChange Management Effort Required zVENDOR yVendor’s Technology Vision yVendor’s Longevity

60 erp INVESTING IN ERP TECHNICAL ARCHITECTURE zNETWORK AND HARDWARE PLATFORM zRDBMS zAVAILABILITY OF DATA AND PROCESS MODELS zUSER FRIENDLY INTERFACE zSTABILITY OF PRODUCT

61 erp APPROACH TO ORGANIZATION TRANSFORMATION zIDENTIFY CORE/SUPPORT PROCESSES zARTICULATE CUSTOMER-DRIVEN OBJECTIVES FOR THE IDENTIFIED PROCESSES zMAP AND MEASURE EXISTING PROCESSES zBENCHMARK FOR PROVEN AND INNOVATIVE ALTERNATIVES zREDESIGN PROCESSES WITH THE FEATURES OF A CHOSEN ERP PACKAGE zIMPLEMENT ERP

62 erp ERP IMPLEMENTATION STRATEGY zIMPLEMENTATION PLAN FOR ERP zBPR->ERP Selection->Implementation, or : zBPM->ERP->BPR zChoice of Pilot projects/Rollouts : y1 Business Unit, 1 pilot site: all modules->all sites in BU yParallelly in All Business Units, 1 pilot site in each; all modules->rollout to all sites zChoice of Pilot sites depends on : yComprehensiveness of coverage; yRelease of resources; assured focus; visible benefits

63 erp IMPLEMENTATION zCONSULTANTS’ METHODOLOGIES zTYPICALLY: zSTEERING COMMITTEE zPROJECT TEAM zCORE USER GROUPS zFUNCTIONAL GROUPS

64 erp Project Team Project Manager (DRL / SISL) Steering Committee Project Sponsor and Management Committee DRL Functional Team DRL IT Team SISL Tech. Team SISLConsultants Expert Optional Teams DRL / SISL SISLManagement Business Process Approval Committee Project Organization

65 erp IMPLEMENTATION SUCCESS FACTORS zUNDERSTANDING OF INDUSTRY zBUSINESS RE-ENGINEERING zERP PRODUCT KNOWLEDGE zERP PACKAGE IMPLEMENTATION EXPERIENCE zPROJECT MANAGEMENT EXPERTISE zTOP MANAGEMENT COMMITMENT zEMPOWERMENT OF CORE TEAM zUSER OWNERSHIP OF INSTALLED SYSTEMS AND SKILLS TRANSFER zEFFECTIVE CHANGE MANAGEMENT

66 erp IMPLEMENTATION Resistance to Change zFear of Changed Business Roles zDilution of Authority / Power zRecorded Accountability, Transparency zDiscipline, Standardization z

67 erp IMPLEMENTATION CHANGE MANAGEMENT zComprehensive Change management, addressing : yOrganization change yIndividual yTechnology assimilation zEffective communication within and outside project team zIdentifying the Appropriate roles ; Set up appropriate forums

68 erp IMPLEMENTATION SUCCESS FACTORS zCEO CHAIRS Steering Committee zOther Top Managers actively participate in deciding and managing change process z Workshops to create appreciation of : yNew IT-enabled Work Culture yProcess Working, Teamwork, Cooperation, etc yHealthy Debate on Business Process Change Before Implementation yTraining on the package / Software

69 erp IMPLEMENTATION Change management :Key components zLeadership zOwnership zEnablement zNavigation

70 erp Enablement focuses on factors that make change possible. z Policies and procedures zTraining of people z Rewards/recognition for adapting to and adopting change z Clear definition of revised roles in the changed environment zTime and resource investment in infrastructure required to operate in the changed environment

71 erp Co-ordinated change plan Successful Change Management Visible changes in ways of working Top-down commitment & direction Bottom-up involvement & buy-in Enablement Leadership Navigation Ownership Successful Management of Change Needs Four Forces to Drive the Change

72 erp IMPLEMENTATION SUCCESS FACTORS zERP Needs to be positioned properly in the total IS/IT Strategy zBolt-ons are a fact of Life zBenefits remain on paper unless benefits management is addressed

73 erp IMPLEMENTATION SUCCESS FACTORS zModifying the core ERP Code is Risky zCleaning-up and streamlining data is a pre-requisite zCommitment from Top to Bottom zChange Management is the Key zReward systems need to encourage use of ERP-generated data


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