ONE should understand that the sales forecast is not exact but should be as accurate as one could reasonably expect for the business he/she is in and that, through measurement and correction of errors, the sales forecast accuracy is improving on a product by product basis.
It is mainly the job of planning, purchasing and production departments to be able to meet the sales forecast given this expected level of accuracy. However, it is not necessary to have an accurate forecast to plan and control your business; you do need everyone to work to an agreed forecast that is updated regularly with any significant changes.
Forecast accuracy also will depend on the historical business background you are in. If you are in a mature and stable business you should expect a reasonably accurate forecast. If the business is new and growing, the forecast will be less accurate. In either case the way to determine what your forecast accuracy should be is to start with the accuracy you have achieved in the past. This is the minimum starting point for forecast accuracy. If you do not have a formal forecasting process at the moment, you should start now.
Forecast accuracy should be measured in units of production not value unless there is no sensible unit of production (a company selling a service for instance). An important reason to measure forecast accuracy is to be better able to plan the future supply chain and value adds in factors such as selling price and even exchange rates into the forecast accuracy which do not affect the supply chain. Average selling price and exchange rate should be forecast as a separate exercise for financial planning.
Once you are measuring sales forecast accuracy, the next stage is to improve it. This is achieved by investigating any forecast errors outside the historical accuracy of the forecast.
Finally, the sales plan should be the date and quantity of shipments you expect your customer may require. If your customer requests products in line with the plan, but you are unable to ship that product, it is still a hit as far as plan accuracy is concerned. On the other hand, if your customer requests shipments on a different date from the plan it is a miss even if you could have shipped it according to the forecast plan.
The project management team is responsible for conducting the scheduled work, administering the project, communicating with the in-house team and the consultants.
The team members should monitor the implementation team’s progress, assess the amount and quality of the contribution of the team members – both in-house and consultants – and resolve the issues that exist. Since the project management team has the project manager, the consultant team’s head, the vendor team’s head and the work team leaders, most problems could be resolved at this level. If any problems cannot be resolved at this level, then the project manager will escalate it to the executive committee for resolution.
The project management team should also ensure that the company personnel and the consultants are working together as a team and that there is full co-operation between the two groups. They are also responsible for ensuring that the consultants are transferring their knowledge to the in-house team and all the documentation is done properly. The project management team should make sure that even after the external consultants and vendor representatives leave the system will run smoothly.
Lot tracking system records information regarding a batch of product. Lot tracking allows to track several units of a stock item using the same lot or batch number. User can determine what can be purchased or sold by Lot status. Expiry dates and user defined statuses allow you to further control the stock item. You cannot sell stock items that have reached or passed their expiry date. You can track items by lot number and serial number – Lot tracked items are where the tracking (Lot) number refers to a specified quantity of the items, serial numbers are applied to individual items.
Lot Control and serialization options are defined at the system level and when one of these options is activated individual items are defined to be controlled by either lot number or serial number or by item number (not lot or serial tracked) on the part master file. When a part is defined as being tracked by lot number or serial number, that tracking is enforced throughout all material transactions for that item and upward through its parent items.
For purchased items lot or serial numbers are required for the full quantity of receipt, and are entered as part of the receiving transaction. For receipts with many serial number tracked items, ranges of numbers may be entered. A running total of items accounted for with lot or serial number assignments are displayed, thereby ensuring that the entire received quantity is properly identified prior to completion of the transaction.
Furthermore, the system checks current inventory to ensure that duplicate numbers are not assigned. On subsequent inventory transactions, lot and serial traceability is enforced upward through the item’s bill of material structure. The lot or serial number and quantity are required on all material issues.
ERP reports – Operational reports from the ERP system show recent events, but they do not satisfy managers’ requirements for planned versus actual monitoring, forecasting and exception analysis. Without business intelligence, managers must compile these reports manually from standard reports.
By allowing flexible reporting and analysis, a business intelligence system can unlock the value of the data in ERP reports. The information in the ERP daily orders report, for example, can provide information that will help in better decision-making and can be of use to the decision-makers in more than one department.
For example,
1. Which product shipments are not in schedule?
2. What products are selling best? Which are the ones that are not moving?
3. Which customers are most profitable?
4. Which customers are placing repeat orders?
5. Which customers have made purchases to get the maximum discount?
6. Did any customers purchase a product that requires another product?
Business intelligence system provide On-line analytical processing (OLAP) and Data mining tools that managers can use from the desktops to answer the types of questions above and to discover significant trends and patterns.
For example, analysts can drill-down to obtain progressively more detailed information about retain sales, change metrics, view graphs and charts, re-use reports, create ‘what if’ analysis and generate best-case and worst-case scenarios. Valuable in its own right, ERP information becomes even more valuable when it is combined with information from other sources.
Financial module impacts all others modules.
It also provides the basic pulse of an organization.
Other modules cannot be implemented without the financial module in place.
Successful implementations of financials show up immediately reinforcing the faith of an organization in ERP.
All these factors explain the fact that financial modules are taken up first.
Normally in all organizations, managers have to utilize large part of their time and energy in dealing with crises. This is due to someone from the staff is not having done his job in the manner it was expected to be done.
There may be many cases such as tax payment to the government is not done with accuracy, a shipment to a customer not being made on time, bills not collected, production department not meeting the deadlines etc. We are not saying that these works will be carried by an ERP system once it is implemented. As always, people have to do all of the above, but the advantage of an ERP system is that it will enable them to do all this, in a timely, planned and process driven manner.
An efficient ERP system frees up various levels of management form a very large number of operational problems. The managers will get enough time to look at what is going on, without the information seeking becoming an end in itself.
Also when the CEO of a company wants to know the top strategic objectives for the next year from the Function Head, he can actually get down to defining what those objectives are, and how they will be measured. Again, the defining of the objectives cannot be done by the ERP system, but will help in measuring the parameters associated with the strategic objectives.
The ERP system needs regular maintenance in order to function properly. The ERP plan needs revision and updating as per the changing situations in the organization. We have already seen that the ERP system should be reviewed regularly.
The review comments and suggestions should be incorporated into the system. Also the ERP system needs fine-turning as the employees become familiar with it. Once the ERP system has reached a stable state necessary action should be taken to improve the performance.
The ERP tools that are implemented are another area that needs maintenance. The project manager should be in regular contact with the vendors to see whether any upgrades or updates are available. All patches and upgrades should be installed to ensure that the tools are working at their maximum efficiency.
Employees should be given refresher courses on the new functionality that gets added with each new upgrade. The training documentation should also be updated so that it is in sync with the procedures and processes.
Just like implementation costs, implementation time frames vary widely based upon size and sophistication of the organization. The most important element in how long it takes to implement an ERP system is the level of commitment on the part of the senior management of the organization which purchased the ERP system.
While there are number of reasons why ERP implementations take substantially longer than originally anticipated (‘scope creep’, data conversion issues, etc.), the single largest issue in implementation is the staff of the implementing organization spending the necessary time to actually make the implementation happen.
This is difficult because in most mid-sized companies, implementation activities are typically performed by people currently working for the organization that purchased the ERP software (as opposed to larger organizations which typically use external sources to augment their staff during an implementation).
In most of these mid-sized companies, these individuals are already working a solid week without the added requirements placed on their time by an ERP implementation. An ERP software vendor should, based upon experience, be able to tell you how much time your organization will need to spend during the implementation process and how long the entire process should take.
An Enterprise Resource Planning (ERP) implementation project is complex in nature, involves a lot of people, require the coordinated effort of a number of groups. It also needs substantial investment and has a long completion period. To successfully implement an ERP system is a very difficult task and requires huge efforts from all the stakeholders.
ERP systems have fundamentally changed the work of IT organizations. The sheer size and complexity of ERP implementation makes managing these projects difficult. There are really two basic sides to ERP management, people and technology. An ERP packages touches the entire organization and can affect nearly every employee. In some cases, an ERP project manager may not be able to know who will be affected, which can lead to some nasty surprises. One mismanaged ERP implementation can lead to huge loss of time and money.
The project manager must cope with many tasks. Whether you are implementing one module or multiple modules, you must ensure consistently and full integration across the various sub-projects, which is an enormous effort even for an experienced system architect.
The process of ERP implementation is referred as “ERP Implementation Life Cycle”.
The following are the steps involved in completing the lifecycle.
