Lead Time and Inventory Management
Lead time is the time that elapses between the placing of an order (either a purchase order or a production order issued to the shop or the factory floor) and actually receiving the goods ordered.
If a supplier (an external firm or an internal department or plant) cannot supply the required goods on demand, then the client firm must keep an inventory of the needed goods. The longer the lead time, the larger the quantity of goods the firm must carry in inventory.
A just-in-time (JIT) manufacturing firm, such as some automobile manufacturing firms, can maintain extremely low levels of inventory. Some of these companies take delivery of some goods as many as 18 times per day. However, steel mills may have a lead time of up to three months. That means that a firm that uses steel produced at the mill must place orders at least three months in advance of their need. In order to keep their operations running in the meantime an on-hand inventory of three months’ steel requirements would be necessary.
Impact of ERP – The implementation of ERP turns out to be a challenge for many enterprises, but their chances for success are greater if they get to implement it rightly. Nowadays, many ERP solution providers are reducing their prices and make the products more accessible to all industrial segments. They are also focusing on quick implementation procedures that in turn help these organizations save some money. High competition in this field also forces the ERP providers to show results in a short time of period.
Earlier, organizations were looking at ERP as a back-office application. Today many organizations are initiating new projects to use ERP in their sales activities, customer service and commercial planning. Majority of these organizations have found ERP system an ideal application to e-business functions, while others are taking several actions in order to use software that can facilitate client-vendor relationships.
Users in these organizations started realizing that it was a good decision to implement ERP technology. They also feel that it is really important to understand that the system as a basic software. This system also can be customized to accommodate additional modules and other functions as per the organization’s needs.
One important area that could demand for additional functions is commercial analysis. You should use applications that allow you to measure benefits directly. These kind of applications need a well designed backbone ERP to make them work, and in this way it is certain there are a number of reasons to install an ERP system.
ERP II is a solution that includes the traditional materials planning, distribution, and order-entry functionality strengthened by capabilities like customer relationship management (CRM), human resources management (HRM).
Such a ERP system can quickly, accurately and consistently operate an entire organization. It delivers information in an instant to the people who need it. It manages the access to that information by establishing security roles and ratings that define which employees can use certain pieces of information. It also addresses the issue of multiple office locations by making the solution web-based, so employees can access the system no matter where they may be.
Businesses are utilizing the Internet more and more. It is no longer just a tool for e-mail, research and single transaction commerce. It is quickly becoming a tool for globalizing a business – a tool that allows an organization to tie together its employees, its suppliers and its customers. It enables the free flow of information and the next generation of solution will be built upon it.
Eresource ERP, India’s leading web-based ERP solution is integrated with all these latest modules and therefore can be termed as extended ERP or ERP II.
Business Process Reengineering (BPR) is the fundamental rethinking and radical redesign of business processes of an organization to achieve dramatic improvement in critical contemporary measures of performance such as cost, quality, service and speed. In simple terms, the process of examining current processes and redesigning those processes to increase the efficiency and effectiveness of an organization is called BPR.
More precisely, BPR means the rapid and radical redesign of strategic, value-added business processes and system, policies and organizational structure that support them to optimize workflow and productivity in an organization.
BPR concurrently pursued breakthrough improvements in quality, speed, service and cost by leveraging the potential of information technology while addressing the issues of organizational strategies and vision for change. Breakthrough improvement means quantum gains of 5 to 10 times compared to incremental improvements of 20-30 per cent. These improvements are generally characterized in terms of improvement of product and service quality at low cost and less time lag between product designs to marketing.
Data Mining – Powerful systems for collecting data and managing it in large databases are already in place in most large and medium-scale companies. However, the bottleneck of turning this data into your success is the difficulty of extracting knowledge about the system that you study from the collected data.
Below are all the questions that can probably be answered if information hidden among megabytes of data in your database can be found explicitly and utilized.
Modeling the investigated system and discovering relations that connect variables in a database are the subjects of data mining.
Modern data mining system self learn from the previous history of the investigated system, formulating and testing hypotheses about the rules, which this system obeys. When concise and valuable knowledge about the system of interest had been discovered, it can and should be incorporated into some decision support system, which helps the manager to make wise and informed business decisions.
If you ask the question what is cloud computing means, there are chances that you may get different descriptions from each answers. Cloud computing in simple terms means you will be able to work on a computer without having to install or buy a software which is has been developed for your requirement.
In a wider description, cloud computing is a movement that has been occurring in the technology applications. In this case it is not necessary to buy servers or need not install the software in the PCs. Buying more user licenses This all will contribute to a lot of money saving for the companies in the long run.. With the cloud computing method smaller companies can now access technologies and computing power from the internet “clouds” that become a company’s server, software, and data center, that can be readily accessed on demand.
Web-based eresource ERP system as a service is another description of cloud computing that is broadly used by companies today. eresource ERP system opening up technologies to the masses by smashing the costly constraints required by on-premise applications. With cloud computing method service provider who is the server and the data center making expanding and shrinking user demand incredibly fast, flexible and affordable.
As the benefits of cloud computing are becoming more clear even larger companies that are working on-premise solutions now looking into cloud computing for their ERP application requirements. This demand is putting some pressure on the large on-premise ERP vendors and web-based applications are gaining more and more popularity among the SMEs and large scale industries alike.
Bolt-on is an artificially intelligent, comprehensive execution system providing very specific functionality or technology to complement ERP systems. Bolt-ons employ client-specific business rules to meet unique needs. There are many useful applications of this type. The usual means of connection to other organizations with ERP systems is through software components.
Most software has historically been delivered as inflexible code focusing on its originally intended application. A much easier approach is the idea of components where separate, encapsulated software code is written that is easier to manage, upgrade and connect to host systems. Open systems can easily accept modifications, additions or linkages to external software. Components make open systems possible.
Since the underlying philosophy in early ERP systems was internal integration, there was initially little apparent value in developing open systems. However, the ERP user market soon identified the benefits of best-of-breed selection of modules, sometimes across vendors. Vendors then realized the need to offer applications components. The focus shifted from internal design coherence to the ability to communicate with external software. Service-based architectures were created enabling business transactions and data transfer from outside the core applications.
Some examples where bolt-on software is used are product data management, product life cycle management, customer relations, e-procurement, order tracking, warehouse management, data mining systems, etc.
An ERP software can be termed as consumer software and this enterprise application software is typically not bought and sold instead it is licensed for use. It may be licensed to be used by a company, on a particular computer or by other criteria such as number of users. Buying it once doesn’t mean you can duplicate it and share it with all your friends, or even sometimes use it on all your own computers. For enterprise application software how you pay for that license and the term of the license can vary.
Today, a software license can be perpetual. This means you pay for it once and can use the enterprise application forever. Even in this case more often a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product.
A maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in your maintenance fee and others may still need to be purchased. Maintenance is typically priced as a percentage of the software license.
But perpetual licenses are not the only type offered. Instead your license might be for a specific period of time. This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue use of the software.
Also Read – ERP for Steel Industry
The best practice in ERP can be defined as the utilization of fundamental set-ups to the maximum possible to produce the desired performance in terms of ‘customer focus, zero waste of all the resources and value creation’. Tangibly, it leads to increase in quality and service, and reduction of cost and response time.
ERP enjoys having a strong skeleton based on these best practices. All the workflows in ERP are so thoughtfully maintained that it ensures that the user automatically follows the best practice. It won’t allow the user to bypass or modify the predetermined course of action that may create ‘non-value added activity’.
Pre-requisites of ERP
Let us understand and describe the essential cultural elements based on best practices to make ERP a great success.
1) Highly customer focused environment.
2) Hierarchy and boundary less structure with empowered employees.
3) Well desired process based activities.
4) Responsible and accountable process ownerships.
The absence of any one of the above will lead to ERP malfunction. Hence to make the successful implementation, ERP must be properly interpreted in the following ways.
>> ERP is more a business strategy than IT strategy. The concept of ERP is more suitable for the lean manufacture than mass manufacture. In fact, in assemble to order scenario, ERP brings excellent business results, whereas in make to order scenario, it goes beyond business results and improves employee morale and motivation.
>> The culture of make to stock is not at all suitable to ERP, and hence forceful implementation of ERP will make ERP degenerate into more of a transactional system than a planning system, there by losing its core inherent capability.
>> The typical qualities of ERP users include team spirit, analytical mindset, and readiness to be a change agent, willingness to accept process accountability, viewing IT as a tool for scientific experimentations and improve information level.
>> The chief issue of ERP is not the process or the technology but the people. Hence, the Human Resource Head should be the main project leader for the ERP exercise.
