ABSTRACT

Manufacturing processes work out of required materials for the manufacturing processes with
unwanted materials not finding a place. This type of ERP will advocates smooth flow of
information between all stages of the production cycle. It also ensures less probability of errors
in subsequent stages of production and reduction in lead time. Every manufacturing process aims
to produce A quantity of product within a given time. A FMCG company can easily achieve this
by shortening the production cycle time with the help of appropriate ERP software. Automation
is an inherent feature of almost all the process based manufacturing ERP. Integrating all
manufacturing processes ensure that the chances of errors due to human intervention are
minimized.
Enterprise resource planning (ERP) is an enterprise-wide information system designed to
coordinate all the resources, information, and activities needed to complete business processes
such as order fulfillment or billing. ERP system supports most of the business system that
maintains in a single database the data needed for a variety of business functions such as
Manufacturing, Supply Chain Management, Financials, Projects, Human Resources and
Customer Relationship Management. An ERP system is based on a common database and a
modular software design. The common database can allow every department of a business to
store and retrieve information in real-time. The information should be reliable, accessible, and
easily shared. The modular software design should mean a business can select the modules they
need, mix and match modules from different vendors, and add new modules of their own to
improve business performance.
Ideally, the data for the various business functions are integrated. In practice the ERP system
may comprise a set of discrete applications, each maintaining a discrete data store within one
physical database.

TABLE OF CONTENTS
Topic

Page No.

1. Abstract

2. Acknowledgment

3. Introduction

4. Theoretical Review/Perspective

5. Review and Research

20

6. New Developments in the Research Area

37

7. Topics for further research

38

8. Recommendations

39

9. Conclusion

41

10. Bibliography

44

INTRODUCTION TO THE TOPIC

ERP requirements planning; later manufacturing resource planning) and CIM (Computer
Integrated Manufacturing). It was introduced by research and analysis firm Gartner in 1990. ERP
systems now attempt to cover all basic functions of an enterprise, regardless of the organization's
business or charter. Non-manufacturing businesses, non-profit organizations and governments
now all use ERP systems.
To be considered an ERP system, a software package must provide the function of at least two
systems. For example, a software package that provides both payroll and accounting functions
could technically be considered an ERP software package
Examples of modules in an ERP which formerly would have been stand-alone applications
include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM),
Human Resources, Warehouse Management and Decision Support System.
BEFORE
Prior to the concept of ERP systems, it was not unusual for each department within an
organization to have its own customized computer system. For example, the human resources
(HR) department, the payroll department, and the financial department might all have their own
computer systems.
Typical difficulties involved integration of data from potentially different computer
manufacturers and systems. For example, the HR computer system (often called HRMS or
HRIS) would typically manage employee information while the payroll department would
typically calculate and store paycheck information for each employee, and the financial
department would typically store financial transactions for the organization. Each system would
have to integrate using a predefined set of common data which would be transferred between
each computer system. Any deviation from the data format or the integration schedule often
resulted in problems.

AFTER
ERP software, among other things, combined the data of formerly separate applications. This
simplified keeping data in synchronization across the enterprise, it simplified the computer
infrastructure within a large organization, and it standardized and reduced the number of
software specialties required within larger organizations

THEORETICAL REVIEW/PERSPECTIVE
3

Best practices are incorporated into most ERP vendor's software packages. When implementing
an ERP system, organizations can choose between customizing the software or modifying their
business processes to the "best practice" function delivered in the "out-of-the-box" version of the
software.
Prior to ERP, software was developed to fit the processes of an individual business. Due to the
complexities of most ERP systems and the negative consequences of a failed ERP
implementation, most vendors have included "Best Practices" into their software. These "Best
Practices" are what the Vendor deems as the most efficient way carry out a particular business
process in an Integrated Enterprise-Wide system. A study conducted by Lugwigshafen University
of Applied Science surveyed 192 companies and concluded that companies which implemented
industry best practices decreased mission-critical project tasks such as configuration,
documentation, testing and training. In addition,the use of best practices reduced over risk by
71% when compared to other software implementations.
The use of best practices can make complying with requirements such as IFRS, Sarbanes-Oxley
or Basel II easier. They can also help where the process is a commodity such as electronic funds
transfer. This is because the procedure of capturing and reporting legislative or commodity
content can be readily codified within the ERP software, and then replicated with confidence
across multiple businesses who have the same business requirement
IMPLEMENTATION
Because of their wide scope of application within a business, ERP software systems are typically
complex and usually impose significant changes on staff work practices.[citation needed]
Implementing ERP software is typically not an "in-house" skill, so even smaller projects are
more cost effective if specialist ERP implementation consultants are employed.[citation needed]
The length of time to implement an ERP system depends on the size of the business, the scope of
the change and willingness of the customer to take ownership for the project.[citation needed] A
small project (e.g., a Jindal Stainless of less than 100 staff) may be planned and delivered within
3-9 months; however, a large, multi-site or multi-country implementation may take years.
[citation needed]
To implement ERP systems, companies often seek the help of an ERP vendor or of third-party
consulting companies. These firms typically provide three areas of professional services:
consulting, customization and support. The client organisation may also employ independent
program management, business analysis, change management and UAT specialists to ensure their
business requirements remain a priority during implementation.
Data migration is one of the most important activities in determining the success of an ERP
implementation. Since many decisions must be made before migration, a significant amount of
planning must occur. Unfortunately, data migration is the last activity before the production
phase of an ERP implementation, and therefore receives minimal attention due to time
constraints. The following are steps of a data migration strategy that can help with the success of
an ERP implementation:
Identifying the data to be migrated
4

Determining the timing of data migration

Generating the data templates
Freezing the tools for data migration
Deciding on migration related setups
Deciding on data archiving

PROCESS PREPARATION
ERP vendors have designed their systems around standard business processes, based upon best
business practices. Different vendor(s) have different types of processes but they are all of a
standard, modular nature. Firms that want to implement ERP systems are consequently forced to
adapt their organizations to standardized processes as opposed to adapting the ERP package to
the existing processes. Neglecting to map current business processes prior to starting ERP
implementation is a main reason for failure of ERP projects. It is therefore crucial that
organizations perform a thorough business process analysis before selecting an ERP vendor and
setting off on the implementation track. This analysis should map out all present operational
processes, enabling selection of an ERP vendor whose standard modules are most closely aligned
with the established organization. Redesign can then be implemented to achieve further process
congruence. Research indicates that the risk of business process mismatch is decreased by:
Liking each current organizational process to the organization's strategy; analyzing the
effectiveness of each process in light of its current related business capability; understanding the
automated solutions currently implemented.
ERP implementation is considerably more difficult (and politically charged) in organisations
structured into nearly independent business units, each responsible for their own profit and loss,
because they will each have different processes, business rules, data semantics, authorization
hierarchies and decision centers. Solutions include requirements coordination negotiated by local
change management professionals or, if this is not possible, federated implementation using
loosely integrated instances (e.g. linked via Master Data Management) specifically configured
and/or customized to meet local needs.
A disadvantage usually attributed to ERP is that business process redesign to fit the standardized
ERP modules can lead to a loss of competitive advantage. While documented cases exist where
this has indeed materialized, other cases show that following thorough process preparation ERP
systems can actually increase sustainable competitive advantage

CONFIGURATION
Configuring an ERP system is largely a matter of balancing the way you want the system to work
with the way the system lets you work. Begin by deciding which modules to install, then adjust
the system using configuration tables to achieve the best possible fit in working with your Jindal
Stainless s processes.
5

Modules Most systems are modular simply for the flexibility of implementing some functions
but not others. Some common modules, such as finance and accounting are adopted by nearly all
companies implementing enterprise systems; others however such as human resource
management are not needed by some companies and therefore not adopted. A service Jindal
Stainless for example will not likely need a module for manufacturing. Other times companies
will not adopt a module because they already have their own proprietary system they believe to
be superior. Generally speaking the greater number of modules selected, the greater the
integration benefits, but also the increase in costs, risks and changes involved.
Configuration Tables A configuration table enables a Jindal Stainless to tailor a particular
aspect of the system to the way it chooses to do business. For example, an organization can select
the type of inventory accounting FIFO or LIFO it will employ or whether it wants to
recognize revenue by geographical unit, product line, or distribution channel.
So what happens when the options the system allows just arent good enough? At this point a
Jindal Stainless has two choices, both of which are not ideal. It can re-write some of the
enterprise systems code, or it can continue to use an existing system and build interfaces
between it and the new enterprise system. Both options will add time and cost to the
implementation process. Additionally they can dilute the systems integration benefits. The more
customized the system becomes the less possible seamless communication becomes between
suppliers and customers.
CONSULTING SERVICES
Many organizations did not have sufficient internal skills to implement an ERP project. This
resulted in many organizations offering consulting services for ERP implementation. Typically, a
consulting team was responsible for the entire ERP implementation including planning, training,
testing, implementation, and delivery of any customized modules. Examples of customization
includes additional product training; creation of process triggers and workflow; specialist advice
to improve how the ERP is used in the business; system optimization; and assistance writing
reports, complex data extracts or implementing Business Intelligence.
For most mid-sized companies, the cost of the implementation will range from around the list
price of the ERP user licenses to up to twice this amount (depending on the level of
customization required). Large companies, and especially those with multiple sites or countries,
will often spend considerably more on the implementation than the cost of the user licenses -three to five times more is not uncommon for a multi-site implementation
CUSTOMIZATION SERVICES
Customization Services involves any modifications or extensions that change how the out-of-thebox ERP system works.
Customizing an ERP package can be very expensive and complicated. Some ERP packages are
not designed to support customization, so most businesses implement the best practices
embedded in the acquired ERP system. Some ERP packages have very generic features, such that
6

customization occurs in most implementations. It is also often possible to extend the standard
ERP package by purchasing third party software to provide additional functionality.
Customization work is usually undertaken as bespoke software development on a time and
materials basis.
Customization can be further classified into: Core system customization or custom extensions in
custom libraries
Core system customization is where customers change the software vendors proprietary code.
This means that the software will no longer be supported by the vendor for the particular
function that was customized as the code would be modified to the customers need. The
customers IT department will then normally support the code in-house or subcontract a
consulting organization to do so.
Custom extensions are where a customer build bolt-on custom applications that run parallel to
the standard system i.e. custom extended applications. Modules that are extended but core code
not changed remain supported but the extensions will have to be supported by the customers IT
department or subcontracted consulting organization
MAINTENANCE AND SUPPORT SERVICES
Maintenance and Support Services involves monitoring and managing an Operational ERP
system. This function is often provided in-house using members of the IT department, but may
also be provided by specialist external consulting and services companies
DISADVANTAGES
Problems with ERP systems are mainly due to inadequate investment in ongoing training for
involved personnel, including those implementing and testing changes, as well as a lack of
corporate policy protecting the integrity of the data in the ERP systems and how it is used.
DISADVANTAGES
Customization of the ERP software is limited.
Re-engineering of business processes to fit the "industry standard" prescribed by the ERP
system may lead to a loss of competitive advantage.
ERP systems can be very expensive leading to a new category of "ERP light" solutions
ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and
business process of some companiesthis is cited as one of the main causes of their
failure.
Many of the integrated links need high accuracy in other applications to work effectively.
A Jindal Stainless can achieve minimum standards, then over time "dirty data" will
reduce the reliability of some applications.
Once a system is established, switching costs are very high for any one of the partners
(reducing flexibility and strategic control at the corporate level).
The blurring of Jindal Stainless boundaries can cause problems in accountability, lines of
responsibility, and employee morale.
7

 Resistance in sharing sensitive internal information between departments can reduce the
effectiveness of the software.
Some large organizations may have multiple departments with separate, independent
resources, missions, chains-of-command, etc, and consolidation into a single enterprise
may yield limited benefits.
The system may be too complex measured against the actual needs of the customer.
Distinct but similar products are combined into aggregate product families that
can be planned together so as to reduce planning complexity. Similarly production resources,
such as distinct machines or labor pools, are aggregated into an aggregate machine or labor
resource. Care is required when specifying these aggregates to assure that the resulting aggregate
plan can be reasonably disaggregated into feasible production schedules.
Finally for complex products, one must decide the level and extent of the product
structure to include in the planning process. For instance, in some contexts it is sufficient to just
plan the production of end items; the production plan for components and subassemblies is
subservient to the master production schedule for end items. In other contexts, planning just the
end items is sub-optimal, as there are critical resource constraints applicable to multiple levels of
the product structure. In this instance, a multistage planning model allows for the simultaneous
planning of end items and components or subassemblies. Of course, this produces a much larger
model.

The PPS divides on into the production planning, which preplans the procedures central until
short term, and which production control, which releases and steers the orders on the basis this
planning. Both ranges interlink, and are in particular in small to medium sized enterprises usually
also summarized in an area of responsibility.
Parts of the PPS are production program planning, stock management, Termin-und capacity
planning (time economy), the order release and the order monitoring.
Usually the processes of the PPS are supported by PPS systems. First beginnings of integrated
systems were developed at the beginning of the 70's among other things by IBM with COPICS.

Traditional PPS systems are based on a gradual planning concept. The tasks of production
planning and - control are divided into sub-problems, which are solved one behind the other.
However often are the transitions between the individual points flowing.
The massive spreading of technically complex products and constant of the product life cycles
lead for some years to a constantly rising disposal need, these leads rising relevance of
disassembly planning and - control (DPS). The DPS is conceived in as far as possible similar to
the PPS.
Production planning can be divided after good mountain into three subranges:
Production program planning
Materials requirements planning
Production process planning
Production program planning

In production program planning (also primary requirements planning) kind, quantity and
manufacturing dates of the finished products (primary requirements) are specified. Definition
which products in which quantities in a certain long-range planning period to be produced are.
Quantity planning
On the basis of primary requirements (output) in materials requirements planning it is
determined how many quantity units at intermediate products and raw materials are needed for
the covering of primary requirements. For this the product components in parts lists or schedules
must admit to be. Parts of the secondary (and Tertiary period need) can be present already in the
camp. Existing materials do not have to be manufactured or procured either. Tertiary period need
is not contained in the parts list, since it concerns auxiliary and fuels. (e.g. oils, cooling
lubricants for the machine, fats, cloth etc.) the Tertiary period need is needed in production. The
arrangement takes place consumption controlled (stochastically)
Production process planning
This covers those

Lot size planning

Run and capacity time limitation
Sequence planning and fine time limitation
Lot size planning
Lot size planning determines (i.d.R.) with consideration of developing production,
storekeeping, preparation and cleaning costs, how many orders of a product can be
combined into a lot, so that the sum of the cost factors mentioned above achieves a
minimum size.

Date and capacity planning

As soon as admits the quantities which can be produced are, with the scheduling one begins. By
means of the run time limitation earliest and latest dates for the execution of individual work
procedures are planned. Subsequently, the question must be clarified whether the necessary
9

capacities for the production program are present. This is roughly planned in the capacity time
limitation. With capacity bottlenecks individual work procedures must be shifted into other
periods. As soon as this happened, roughly scheduled orders can be passed on to the production
control.
Sequence planning and fine time limitation
During the detailed planning one specifies, which machines are assigned to certain orders. Short
term tasks of the production control are to be seen particularly in connection with short term
changes in the order or capacity reality:
unplanned loss of a machine or a plant and/or a coworker
unexpected customer orders with high priority.
Since the connections are multidimensional, the tasks of the production control are
accomplished increased with appropriate software systems. These do not only permit to
implement the tasks and boundary conditions mentioned efficiently and comfortably it
make possible besides a high flexibility of the planner and a high transparency over
current Belegungs-und date condition in production.
While some systems methods of the Research use operations for the optimization of the results,
practice-oriented systems are characterised by heuristic functions with consideration of jobreferred priority rules, which correspond to the understanding and the opinion of the production
planner to a large extent.
The result are organisation of working of machines plans and operational fund allocations of
devices, tools, NCs-Programm and allocations of coworkers.
Production control
Production control is arranging, supervising and protection of the execution of the approved
orders. For the range of the manufacturing (and assembly) one speaks also of progressing. After
by fine time limitation the organisation of working of machines was specified, the orders are
arranged by making available work vouchers for the enterprise. The monitoring takes place via
suitable time near acknowledging systems. The protection is the correcting intervention in the
case of deviations, like quantity, dates and quality.
Order release
The roughly scheduled orders which are received from production planning are fine-scheduled
here. Some concepts to the order release are Kanban or the load-oriented order release (BOA
principle)
Order monitoring
A condition of a monitoring of the feedbacks over the current conditions of production are short,
a factory data capture. The feedbacks are made either by means of direct inputs at workstations
or by factory data capture systems (BDE systems). These acknowledging data are not only for
the progressing of importance, but also for gross wages, the inventory updating, running along
calculation and recalculation, quality control and the maintenance for maintenance planning.

10

More and more supply chains emerge that include a return flow of materials. Many original
equipment manufacturers are nowadays engaged in the remanufacturing business. In many
process industries, production defectives and by-products are reworked. These closed-loop
supply chains deserve special attention. Production planning and control in such hybrid systems
is a real challenge, especially due to increased uncertainties. Even companies that are engaged in
remanufacturing operations only, face more complicated planning situations than traditional
manufacturing companies. We point out the main complicating characteristics in closed-loop
systems with both remanufacturing and rework, and indicated the need for new or
modified/extended production planning and control approaches. An overview of the existing
scientific contributions is given. It appears that we only stand at the beginning of this line of
research, and that many more contributions are needed and expected in the future.
roduction Planning and Control (PPC) is a process that comprises the performance of some
critical; functions on either side, viz., planning as well as control.
Production planning: Production planning may be defined as the technique of foreseeing every
step in a long series of separate operations, each step to be taken at the right time and in the right
place and each operation to be performed in maximum efficiency. It helps entrepreneur to work
out the quantity of material manpower, machine and money requires for producing
predetermined level of output in given period of time.
Routing: Under this, the operations, their path and sequence are established. To perform these
operations the proper class of machines and personnel required are also worked out. The main
aim of routing is to determine the best and cheapest sequence of operations and to ensure that
this sequence is strictly followed. In small enterprises, this job is usually done by entrepreneur
himself in a rather adhoc manner. Routing procedure involves following different activities.
(1) An analysis of the article to determine what to make and what to buy.
(2) To determine the quality and type of material
(3) Determining the Productionoperations and their sequence.
(4) A determination of lot sizes
(5) Determination of scrap factors
(6) An analysis of cost of the article
(7) Organization of production control forms.
Production planning problems containing special characteristics from process industries are
addressed in this book. The main subject is the development of mathematical programming
models that allow to model production plans which are not disrupted by discretization of time.
However, discrete time models are used as a basis and are subsequently enhanced to include
aspects of time continuity. Their integration is achieved by different building blocks which may
be combined freely according to the specific planning situation at hand. The primary area of
application of these We study the optimal flow control for a manufacturing system subject to
random failures and repairs. In most previous work, it has been proved that, for constant demand
rates and exponential failure and repair times distributions of machines, the hedging point policy
is optimal. The aim of this study is to extend the hedging point policy to non-exponential failure
and repair times distributions and random demand rates models. The performance measure is the
cost related to the inventory and back order penalties. We find that the structure of the hedging
point policy can be parametrized by a single factor representing the critical stock level or
11

threshold. With the corresponding hedging point policy, simulation experiments are used to
construct input-output data from which an estimation of the incurred cost function is obtained
through a regression analysis. The best parameter value of the related hedging point policy is
derived from a minimum search of the obtained cost function. The extended hedging point policy
is validated and shown to be quite effective. We find that the hedging point policy is also
applicable to a wide variety of complex problems (i.e. non-exponential failure and repair times
distributions and random demand rates), where analytical solutions may not be easily obtained.
the following we describe the relation of inventory management to the different planning steps
which constitute a capacity-oriented system for production planning.
Production planning is strongly related to the layout type of a considered production system. An
empirical analysis of production systems to be found in industrial practice reveals many
differences which have a significant impact on the type of planning models that may be
applicable in a certain planning environment. There are numerous different layout types, e.g.
fixed position layout, process layout (job shop production), product layout (flow lines), just-intime production systems, and cellular layout, among others. In each type of production system
specific planning problems emerge for which the literature provides an appropriate modeling and
solution approach.
For the solution of the production planning problems, the operations management literature
provides a wide variety of planning approaches which are in part implemented in so-called
Advanced Planning Software systems (APS). It is a common property of most of these
approaches, such as aggregate production planning, master planning as well as lotsizing, that
planning is based on forecasts of future demands which are treated as deterministic data in the
planning process. That means, not only the external demand quantities but also the flow times
(including waiting times caused by bottlenecks or machine breakdowns) as well as the scrap
rates which in some industries are significant, are treated as deterministic factors.
However, since in reality random influences take effect, planning concepts are required which
are able to take the unavoidable uncertainty on all levels of planning and control of the valueadding processes into account. From a theoretical point of view, this would mean to extend, say,
a mixed-integer multi-level capacitated dynamic lotsizing model by including random variables
in the model formulation. Unfortunately, such an approach is not very promising as for many
production planning models not even the deterministic version of the problem can be solved
satisfactorily.
Therefore, there are no concepts available that could be generally applied in practical planning
environments, linking the above-mentioned deterministic and capacitated planning approaches to
approaches that allow for the protection against stochastic influences. In contrast, depending on
which characteristic dominates a given planning situation, basically two groups of planning
approaches are discussed in the literature:
1. Deterministic approaches to production planning and scheduling which (sometimes) take the
limited availability of resources into account. Uncertainty is often considered prior to
optimization through the adjustment of the data (for instance, by using safety stock or safety
time). The resulting production plans that are based on forecasts comply with the push principle.
12

An example is the aggregate production planning based on deterministic linear programming

models.
2. Stochastic approaches to inventory management which emphasize the uncertainty inherent in
the planning problem and which neglect the capacity of the resources almost completely. Thus,
there is no precise production schedule defined, but production rather reacts on the realization of
the random variables, e.g. the demand quantity observed in a period. Many of these approaches
follow the pull principle where activities are triggered by the arrival of a demand at the most
downstream node of the supply network. An example is the $(s,q)$ inventory policy.
The low-cost story is becoming less applicable in Indian manufacturing because of rising wages
and firming interest rates. As for geographic expansion, most manufacturing companies do not
necessarily have the managerial capability to run profi t centers in other parts of the world. Also,
few Indian companies are cash-rich. Most would therefore end up acquiring very small
companies that might not add value. Mergers and acquisitions, again, are often difficult to
accomplish for Indian manufacturing companies.
That leaves innovation, which has not yet been fully exploited. An ongoing Deloitte benchmark
study of more than 35 Indian manufacturing companies against 140 multinational companies that
have manufacturing operations in India has shed light on what Indian manufacturing companies
are doing right and what they need to change.
Companies across the spectrum agree that innovation is probably the manufacturing industrys
most underexploited strategy. If the Indian manufacturing industry is to remain competitive over
the next 15 years, it will need to focus on its innovation capabilities. The opportunity for
dramatic improvement and transformation of business models in Indian manufacturing is
significant. With average annual growth rates of nearly 20 percent among the companies
benchmarked based in India, companies are presented with an unprecedented chance for reinventing themselves. Growing at that rate, just five or ten years down the road, the vast majority
of investments in the business will be new investments.
As opposed to the multinational companies that have stopped depending on the well-being of the
economy or just the market in which they operate, Indian companies seem to consider those two
as the main drivers for business in the foreseeable future. Indeed, Indian companies lag behind
their global competitors in research and development. This is, however, something that will start
to change in the coming months and years as these companies look to launch products and
services on a continual basis. The challenge is doing it right.
Indian Manufacturing and Global Competitiveness will achieve through The best-performing
companies in the global benchmark research, called complexity masters, are far better at
synchronizing innovation across the enterprise. They invest in better processes and technologies
for optimizing the entire life cycle of products and services. The result is far better performance
with profit levels up to 73 percent higher than the competition. Many domestic Indian
manufacturers as well as multinationals operating in India have a hard time keeping up and
building the capabilities needed to succeed.
In Indian manufacturing, the most worrying evidence is that of the lack of visibility into strategic
information. In fact, and somewhat alarmingly, the more strategic the information, the less the
visibility! This makes it difficult to take the right decisions in strategy, planning and execution.
The other major challenge is that of flexibility. Indian companies will face increased complexity
and constraints on flexibility as they continue their domestic and global expansion.

13

In fact, the average Indian Jindal Stainless is not lean at all. Even companies that operate with
just five or six customers have frozen timeframes for production of two weeks or more.
Were they to aim for less time, they believe they would lose money reconfiguring their
manufacturing schedules. They have difficulty connecting their sales forecast to material plans or
even their production plans.
Indian manufacturers lack the technology support for looking at the life cycle data of the
products. Without this data, innovating on the product portfolio is difficult, if not impossible.
Indian manufacturers are far behind multinationals in India when it comes to adopting leading
technologies despite the (perceived or real) low cost of technology in India compared to the
more developed countries. This low rate of technology adoption poses a real risk to Indian
manufacturers futures, limiting their participation in global value chains where these
technologies are required.
In the absence of lean processes or visibility, a lot of management time goes into day-to-day
issues and fire fighting with very little time left over for future planning and innovation. Despite
a lack luster record when it comes to R&D, Indian manufacturing has recorded high growth,
creating a unique opportunity for innovation. In fact, India is the top destination in the world for
R&D investment. The cost of innovation in India is typically one-third that in developed
markets; it is among the lowest globally. Manufacturers need to seize this opportunity to
innovate with respect to products, processes, technologies and business models. Reverse
currents: going overseas for growth Crompton Greaves is an excellent example of the new breed
of Indian companies that have cut their teeth competing with multinationals on the home turf
after the liberalization of the Indian economy. Success on the home front has prompted a foray
overseas.
The 68-year-old Jindal Stainless is the largest private electrical Jindal Stainless in India. It is
also the first Indian electrical multinational. The realization that it was a leader in all the fi elds
in which it had a presence in India prompted the Jindal Stainless to consider entering the world
market. India comprised only 2.5 percent of the world market. The search for a bigger slice of
the pie led Crompton Greaves to acquire Belgium-based Pauwels Transformers.
The decision to enter developed markets via an acquisition came about after the Jindal Stainless
determined that a recognizable brand was crucial. Product approvals, experience and image are
the main barriers for Indian companies entering developed markets. Customer relationships and
quick service are also essential for success in developed markets. Building such a brand from
scratch would take time and be very expensive, and serving developed markets from an Indian
base would prove costly. In addition, acquiring a Jindal Stainless in the developed market would
provide access to the latest technology.
With the current generation of ERP software there are fewer integration problems, so ERP
projects fail or drag on for other reasons. Most companies considering ERP today are looking at
migrating processes and data, from legacy systems to modern computer systems running an ERP
application. Fresh ERP implementations, or 'greenfield' implementations, are rare. And migration
brings along a whole set of problems, the primary one being people.
An ERP implementation impacts people, systems, and the organization as a whole. And barriers
are expected from these areas since work processes are expected to be altered when ERP is
introduced. Business processes, roles, and responsibilities would undergo change. And when this
happens, the organization will encounter a sticky issue called 'resistance to change.'

14

Since ERP introduces transparency in operations and brings about more discipline, people who
are empowered are bound to oppose it. People who are very used to a particular system or a
certain set of processes, won't accept an alternative like ERP so easily and won't adapt to the new
system.
Prashant Karkhanis, Global Head-Business Consulting at Mahindra Consulting
Besides employees, people from the extended enterprise will also protest. Vendors for instance
may not take to the idea of updating data in the ERP system through a Web interface. Change is
welcome if it reduces workloads or gets the job done faster. But ERP does not offer exactly that.
ERP consultants say the resistance to change can be minimized through initiatives like change
management, periodic training, 'hand-holding,' organization preparedness, and of course,
management support.
Change management
Change management is about handling the issues arising due to differences in legacy processes/
systems and the new ERP system. Business processes may have to be re-engineered for ERP,
something that's bound to draw disapproval, especially from function heads.
User organizations and consultants think of ways to motivate employees and get them to accept
the new system. Rewarding employees with cash incentives is one such approach. Another
approach is to involve all users, right from the beginning, or even before the project begins. This
helps get the 'buy-in' for ERP.
Mahindra Consulting, organizes workshops for users at various levels (end-users, operational
managers, executives), within the organization. This helps to involve them in the processes of
business process design, systems configuration, and testing.
"Such involvement helps us get their buy-in for the changes in the business processes, system,
and roles & responsibilities," said Prashant Karkhanis, Global Head-Business Consulting at
Mahindra Consulting.
Nalakumar R.S., Corporate Champion, IT & E-business, Emerson Network Power (India) said,
"You have to ensure that there is a business buy-in for any process changes that you are bringing
in. The business benefits must be realized at the user level. This must be done before you roll out
ERP or before implementing a new change."
Satish Gaonkar, Head-Consulting Services Practices, Blue Star Infotech feels the HR department
can play an important role in handling change among employees. But HR must be involved at
the beginning of implementation.

15

REVIEW AND RESEARCH

Given the current competitive business landscape and stringent time and cost constraints, it is
imperative for organisations to streamline enterprise-wide processes, divest procedural
maneuvers and delays, ensure smooth transactions and operate on real-time information.
Enterprises need to be integrated and the various functions, in unison, to attain optimum
efficiencies, glitch-proof operations and gain and leverage operational and competitive
advantage.
However,
this
is
easier
said
than
done.
Conventional silos -mode of functioning and geographic and functional boundaries inhibit such
enterprise-wide integration. Technological advancements in the field of ERPs aim at providing
the
same,
changing
the
very
face
of
your
business.
ERPs provide greater agility to business, ensuring optimum resource-use and huge costs and time
savings. Meeting current business requirements and being prepared to face future demands are
by-products
of
an
ERP
implementation.
Implementation of an ERP is 3 faceted - cost, time and technology decision that is taken once but
brings with it huge business benefits. Also, it is vital for organisations to understand that there is
more to ERP than just simply software as it entails fundamental re-alignment of people,
processes and data and simply re-designs and re-organises the way business is done. A successful
implementation calls for the right mix of people, processes, technology and infrastructure.
Organisations face numerous hurdles while striving to get an ERP implemented at their end. The
first and most crucial of these barriers is to identify the apt ERP system suiting your organisation,
the cost and time considerations and subsequently the implementation, support, maintenance,
upgrades
and
training
of
the
system.
In spite of these issues, organisations must not get overwhelmed with the complexity of the
system or the risk and organisational change that trail. Like any other purchase, its about taking
a well-informed and realistic decision which the business needs of today have made essential and
unavoidable.
Practice Composition
For years now, CMC's ERP practice has bred best-in-class enterprise applications and technology
and enabled organisations to implement, optimise and garner maximum value from their
technological investments. CMC leverages its highly skilled resource-power and deep domain
knowledge to bring forth extensive skills in business consulting, ERP evaluation, selection,
implementation, post-implementation support, maintenance, upgrades, change management and
related data management services.

16

CMC has vast experience and deep expertise in leading ERP applications including SAP, Oracle,
IFS, Baan (SSA LN), Microsoft Business Solutions and RSMART (CMC developed ERP
offering). CMCs experience in ERP Application spans across a wide range of industry sectors
from Real Estate, Utilities, Electronics, Consumer Goods and Discreet Manufacturing, to Public
Administration.

Services Offered Over several business-years and assignments, CMC ERP Practice has acquired
technical and operational excellence and extensive industry expertise to provide actionable
insights and solutions that address your business objectives, minimising the TCO and
maximizing
the
ROI.
The services that CMC offers in the ERP space are Pre-Implementation, Implementation and
Post-Implementation services.

17

Enterprise resource planning: a software system that coordinates every important aspect of an
organization's production into one seamless process so that maximum efficiency can be achieved
ERP Implementation Life Cycle
The process of ERP implementation is referred as d as "ERP Implementation Life Cycle". The
following are the steps involved in completing the lifecycle
Shortlist on the basis of observation
Selecting an ERP package for the company can nevertheless be compared with the process of
"Selecting the right Person for the Right Job". This exercise will involve choosing few
applications suitable for the company from the whole many.
Assessing the chosen packages
A team of Experts with specialized knowledge in their respective field will be asked to make the
study on the basis of various parameters. Each expert will not only test and certify if the package
is apt for the range of application in their field but also confirm the level of coordination that the
software will help to achieve in working with other departments. In simple terms they will verify
if the synergy of the various departments due to the advent of ERP will lead to an increased
output. A choice is to be made from ERP implementation models.
Preparing for the venture
This stage is aimed at defining the implementation of ERP in all measures. It will lay down the
stipulations and criterias to be met. A team of officers will take care of this, who will report to the
person of the highest hierarchy in the organization.
18

Gap Analysis
This stage helps the company to identify the gaps that has to be bridged, so that the companys
practice becomes akin to ERP environment. This has been reported as an expensive procedure
but it is inevitable. The conglomerate will decide to restructure the business or make any other
alterations as suggested by GAP analysis inorder to make ERP user friendly. Click here for a
detailed study on GAP analysis. A choice is to be made from ERP implementation models.
Business process reengineering
Changes in employee rolls, business process and technical details find place in this phase of
restructuring most popularly refered as business process engineering. For more details on BPR
click here.
Designing the System
This step requires lot of meticulous planning and deliberate action. This step helps to decide and
conclude the areas where restructing have to be carried on. A choice is to be made from ERP
implementation models.
In-house Guidance
This is regarded as a very important step in ERP implementation. The employees in the company
are trained to face crisis and make minor corrections as well because the company can neither be
at liberty nor afford the bounty to avail the services of an ERP vendor at all times.
Checking
This stage observes and tests the authenticity of the use. The system is subjected to the wildest
tests possible so that it ensures proper usage and justifies the costs incurred. This is seen as a test
for ERP implementation.
The real test
At this stage the replacement takes place viz the new mechanism of operation and administration
takes over the older one.
Preparing the employees to use ERP
The employees in the organization will be taught to make use of the system in the day to day and
regular basis so as to make sure that it becomes a part of the system in the organization.
Post Implementation
The process of implementation will find meaning only when there is regular follow up and
proper instruction flow thereafter and through the lifetime of ERP. This will include all efforts

19

and steps taken to update and attain better benefits once the system is implemented. Hence an
organization has to perform ERP implementation safely and correctly.
What are the steps to be taken to account the performance ERP software programs in your
organization?
Enterprise Resource planning ERP definition is not a technical aspect. Enterprise resource
planning is a huge investment on the part of company. Therefore it is necessary to ensure the
accountability of the ERP vendor.
An understanding of ERP and language is must to follow ERP best practices. The ERP vendor
cannot be blamed if the company does not follow the procedures correctly. On the contrary when
his services are not up to the industry standards he has to be held responsible. But how to
compute the services is another big question
Some of the steps that can be taken to compute are as underneath:
Preparations
The company should have a scale for evaluation right from the beginning stage. This will help
them to progress further in due course of time .This is the primary step in the process .It includes
everything is checking if the vendor has given the necessary supporting services to the company
in the process of implementation installation training and relevant areas. This is very important
because it forms the foundation for the ERP process in the company. One needs to be clear about
ERP best practices for this.
Evaluating the work
This step concentrates on the core function. The company must periodically make a note of the
work done. Any discrepancies will be brought to the vendor's notice immediately. The vendor
should extend his full fledged cooperation in making sure that the work gets done as promised.
Then
only
it
is
possible
to
scale
ERP
best
practices.
Incase there are some inherent errors or technical flaws in the company the ERP vendor can
advise or suggest the company on how things are to be done. This step by and large helps the
company to find out if the vendor stands up to the promise in terms of delivery. Understanding of
ERP and language is a must.
Calculating ROI
ROI helps to directly account the performance of ERP software programs. In simple terms ROI
calculates the returns from ERP software programs. When the returns are high or at least meets
the expected and industry standards the performance of ERP software can be rated as
"promising". The ROI on ERP will not be merely achieved by ERP implementation. The returns
will be achieved only if the procedures are followed properly. But if the software fails to deliver
the required results even after following the correct practices it shows lacuna on the part of ERP
software.
This
will
affect
the
rate
of
ROI
as
well.
20

Following contracts terms

The performance of ERP software can be gauged on the basis of its working in relation to the
terms of contract. ERP software that accords to contractual terms in relation to working
definitely indicates better performance than vice versa.
Compare ERP software on the 8 following criteria modules:
1. Finance
2. Human Resources
3. Manufacturing Management
4. Inventory Management
5. Purchasing Management
6. Quality Management
7. Sales Management
8. Technology
9.
Compare ERP on Financial Criteria
The finance section encompasses modules for bookkeeping and making sure the accounts are
paid or received on time.
How to compare ERP software on finance? Simple. Compare ERP software on the following
financial criteria:
1. General Ledger
2. Accounts Payable (A/P)
3. Accounts Receivable (A/R)
4. Fixed Assets
5. Cost Accounting
6. Cash Management
7. Budgeting
8. Financial Reporting
9. Project Accounting
Compare ERP on Human Resources Management (HRM)
The section dedicated to human resources management (HRM) encompasses all the
applications necessary for handling personnel-related tasks for corporate managers and
individual employees.
Modules will include personnel management, benefit management, payroll management,
employee self service, data warehousing, and health and safety.
How to compare ERP software on human resources management? Simple. Compare ERP
software on the following HRMS criteria:
1. Personnel Management
2. Benefits
3. Payroll
4. Employee Self-Service
5. Data Warehousing
6. Health and Safety
Compare ERP on Manufacturing Management (Discrete and Process)

21

Manufacturing management (for both discrete and process manufacturing) encompasses a

group of applications for planning production, taking orders, and delivering products to the
customer.
How to compare ERP software on manufacturing management? Simple. Compare ERP software
on the following manufacturing management criteria.
Because we want to compare ERP software systems on an apple-to-apple basis, we need to make
a difference between discrete manufacturing and process manufacturing.
Discrete ERP
1. Product Costing
2. Shop Floor Control
3. Production Planning
4. Field Service and Repairs
5. Project Management
6. Product Data Management (PDM)
7. Product/Item Configurator

Process ERP
1. Product Costing
2. Shop Floor Control
3. Production Planning
4. Formulas/Recipes
5. Process Model (Formulas + Routings)
6. Process Batch Control and Reporting
7. Conformance Reporting
8. Process Manufacturing Costing
9. Material Management

Compare ERP on Inventory Management

Inventory management (IM) encompasses a group of applications for maintaining records of
warehoused goods and processes movement of products to, through and from warehouses.
How to compare ERP software on inventory management? Simple. Compare ERP software on
the following inventory management criteria:
1. Inventory Management On-line Requirements
2. Processing Requirements
3. Data Requirements
4. Reporting and Interfacing Requirements (Inventory Management)
5. Locations and Lot Control
6. Forecasting
7. Reservations and Allocations
8. Inventory Adjustments
Compare ERP on Purchasing Management
Purchasing management encompasses a group of applications that controls purchasing of raw
materials needed to build products and that manages inventory stocks.
It also involves creating purchase orders/contracts, supplier tracking, goods receipt and payment,
and regulatory compliance analysis and reporting.
How to compare ERP software on purchasing management? Simple. Compare ERP software on
the following purchasing management criteria:
1. Vendor and Supplier Profile
2. Supplier Rating and Profile
3. Requisitions and Quotations
4. Purchase Orders
5. Prices and Discounts
6. Vendor Contracts and Agreements
7. Purchase Order Management
22

8. Procurement Reporting, On-line Reporting Capability

9. Repetitive Vendor Procurement
10. Procurement Receipts
11. Repetitive Vendor Procurement
12. Reporting
Compare ERP on Quality Management
Quality management encompasses applications for operational techniques and activities used to
fulfill requirements for quality control, inspection plan creation, and management, defective item
control and processing and inspection procedure collection planning.
How to compare ERP software on quality management? Simple. Compare ERP software on the
following quality management criteria:
1. Defective or excess material return processing must update on-hand
2. Customer return file: awaiting disposition
3. Damaged materialcorrective action and failure analysis available to vendor on-line
4. Inspection required indicator by supplier and by item
5. Pre-inspection receipts registered as "inventory on hold"
6. On-line inquiry of inspection and material review board (MRB) queue
7. Validation against automated inspection criteria
8. Inspection disposition with audit trail
9. Disposition delinquency report
10. Quantity rejected
11. Reject reason codes
Compare ERP on Sales Management
Sales management encompasses a group of applications that automates the data entry process of
customer orders and keeps track of the status of orders.
It involves order entry, order tracing and status reporting, pricing, invoicing, etc. It also provides
a basic functionality for lead tracking, customer information, quote processing, pricing &
rebates, etc.
How to compare ERP software on sales management? Simple. Compare ERP software on the
following sales management criteria:
1. On-line Sales Management Requirements
2. Reporting and Interfacing requirements
3. Available-to-Promise (ATP)
4. Pricing and Discounting
5. Customer Service and Returned Goods Handling
Customer Relationship Management (CRM) and E-commerce Requirements

23

NEW DEVELOPMENT UNDER THE TOPIC

The technology category defines the technical architecture of the ERP system, and the
technological environment in which the product can successfully run. Criteria include product
and application architecture, software usability and administration, platform and database
support, application standards support, communications and protocol support and integration
capabilities. Relative to the other evaluation criteria, best practice selections place a lower
relative importance, on the product technology category.
However, this apparently lower importance is deceptive, because the product technology
category usually houses the majority of the selecting organization's mandatory criteria, which
usually include server, client, protocol, and database support, application scalability and other
architectural capabilities. The definition of mandatory criteria within this set often allows the
client to quickly narrow the long list of potential vendors to a short list of applicable solutions
that pass muster relative to the most basic mandatory selection criteria.
During the process of ERP software selection, a great deal of attention is given to the functional
capabilities of the software being evaluated. While this aspect is obviously important, ignoring
the technical mechanisms by which the ERP software actually operates can be fatal to the ERP
software solution selection project.

24

RECOMMENDATIONS
Erg's scope gets wider as it is implemented in an organization. There is a call for including many
tasks under the purview. This dilutes the ERP Existing system after modifying it a couple of
times. Repeated change in configurations and systems will only add to the confusions. When the
functions are operated by a machine it becomes increasingly difficult to make the necessary
changes. These troubles arise when they are not foreseen and addressed in the implementation
stage. They have to be given a place in ERP implementation plan.
Organizational reaction to change
Changes do happen quickly and immediately in the organization after ERP is implemented. But
if there is no proper understanding of the process or mishandling of information, it will result in
questioning the ERP process. If updating is not done in the machine it will only affect the
business process and create unnecessary confusions. The changes don't happen all on a sudden in
an organization and expecting it immediately will only cause needless disappointments. In spite
of all this expecting every member in the organization to respond proactively will not happen. If
that happens the chances of ERP implementation success are great.
Inflating resources for ERP implementation
The implementation time and money always exceeds the promises and stipulated deadline and
amount. This makes companies to lose faith on ERP and ERP vendors. They think that ERP
vendors overplay on the costs and time required but it is not so. Infact they are aware of it in the
very beginning stage itself but have a different reason for concealing. They don't disclose it in the
beginning because it would look like exaggerating. Infact no one would like to lose a prospective
business and vendors are equally aware of the fact that "Truths are always bitter"! However
many people mistake this to be the cause for ERP implementation failure.
Organizations non adherence to the stated principles
Organizations largely experience a wide gap between practices and preaching .Infact this has a
negative effect on the entire business scenario itself. The voracity and impact of loss could be
greater and more devastating when this turns out to be true even in the case of ERP. Since ERP
successful functioning is purely based on following the laid down procedures the lag could throw
a serious challenge on ERP'S potential right from the stage of its implementation.
Problem of Transformation due to ERP
Employees find it hard to digest the transformations that place in an organization all on a sudden
due to ERP implementation. Infact employees exhibit positive signs as everything goes right in
the first place. But as one progresses he finds difficult to work as it gets more complex. The
initial interest and expectation turns into apprehensiveness in due course of time. There is
another category of people who did not encourage ERP right from the conceptualization stage.
Their state of mind during these circumstances deserves
no special mention.
The acronym "ERP"for enterprise resource planningwas defined in 1990 by Gartner, Inc.
(Stamford, CT). That was then. This is now. Gartner's Research Director in the Business Process
and Applications Group, Brian Zrimsek, sees three major changes affecting ERP now:
1. Process extensions. "Today, ERP is still for the enterprise, but the enterprise is changing. It's
becoming more virtual." Consider how the OEMs are outsourcing aspects of car design and the
rise in contract manufacturing. Both of these business processes span physical enterprise
25

boundaries. "ERP starts to struggle as you outsource more activities," says Zrimsek. The
build/made items in ERP become bought/purchased items. The visibility that comes from
routings, work-order statuses, and work-in-process data acquisition gets lost. Hence the drive for
collaborative information systems among outsource partners. But remember, points out Zrimsek,
"ERP wasn't built with the Internet in mind."
2. Verticalization of functionality. ERP was initially built for manufacturing and distribution.
Now, fully integrated, feature-rich, ERP systems have extensions for supply chain management
(SCM), customer relationship management (CRM), warehouse management, and several other
business processes. Zrimsek has seen ERP deployed in just about all industry sectors; food,
petrochemical, aerospace and defense, the armed services, and even the public sector.
Consequently, ERP vendors are deepening the functionality of their systems to meet the needs of
the target industries.
3. Architecture. Before client-server computing in the early 1990s, which was kind of the birth
of ERP, resource planning systems were very monolithic. ERP deployments were basically
mainframe deployments. Upgrading meant taking out the whole thing and putting in a new
system. Today, users are loathe to pay 20% to 60% of what they paid in system implementation
for upgrades/migrations. This is putting pressure on ERP vendors to provide software that is
open, component-oriented, and
migratable in piecesthereby
leaving existing, desired, ERP
components (as well as SCM,
CRM, etc.) in place and
functional.
Add that all together and you see
why Gartner is coining the term
"ERP II" to label the "next act in
the evolution of ERP, which
expands beyond enterprisecentric
optimization
and
erp's
Evolution
Into
ERP
II
transaction processing to a new
focus on improving enterprise
competitiveness." So, dismiss anything written that ERP is dead. "It's not accurate to say there's
nothing happening in ERP. There's lots happening. ERP is still growing and evolving," exclaims
James Shepherd, Senior Vice President at AMR Research (Boston, MA). ERP is still doing what
it's supposed to: provide a common database for an entire enterprise. "ERP is truly the enterprise
backbone. That can't go away," says David Schaap, Product Marketing Manager for BRAIN
North America, Inc. (Ann Arbor, MI). If anything, ERP is manufacturing's equivalent to
Microsoft's Office Suite: lots of core functionality and changes that are far more incremental than
they once were.
Automotive
ERP
"What's new in ERP is no different than what has always been new in the product category
currently known as ERP,' formerly MRP II' [manufacturing resource planning], formerly MRP'
[material requirements planning]: The difference has to do with what's being added to ERP," says
Shepherd. That is, the scope, features, and functions of ERP continue to expand. Some of these,
points out Shepherd, are invented by the ERP vendors; most are invented by small, niche
vendors, later co-opted by the ERP vendors. "That's progress as usual in ERP," Shepherd adds.
26

And yet, ERP still doesn't fit automakers very well mainly because they have evolved their own
way of doing business, which is sufficiently different than other industry sectors. However, ERP
does fit the operations of the suppliers. Nowadays, suppliers are implementing ERP packages
rather than writing their own systems or modifying "off-the-shelf" to some unrecognizable
system state, as they did in the past. One key reason is that because automotive is a key target
market for the ERP vendors; automotive-specific functionality is now the "price of admission."
For example, look at Release Management from Oracle Corp. (Redwood Shores, CA). This
module manages customer schedules, then reconciles demand with existing requirements. It
posts shipping and sequence schedules, and generates updates to sales orders and forecasts. The
module lets OEMs and suppliers automate the receipt and processing of inbound planning,
shipping, and production sequence schedules. As necessary, the module generates exceptions if
data is missing or invalid; valid schedules will continue to be processed. Once validated,
customer schedules are archived and accessed by schedule history, original schedule
date/quantity, associated sales order, and customer authorization information using the Release
Management Workbench.

CONCLUSION
Enterprise resource planning (ERP) is not a magic bullet. ERP systems have become more
affordable, effective and -- to a significant degree -- essential, but manufacturers need to pause
before joining the headlong rush toward implementation. Companies that do not ready
themselves before implementing ERP find it nearly impossible to fully utilize their new systems,
and risk upsetting their organizational culture with chaotic implementation phases. However,
manufacturers can prepare for ERP adoption with straightforward activities that do not require
outside consultation, require no investment other than time and can typically be achieved within
three months.These basic preparedness activities focus on best business practices and pave the
way for smooth transitions to ERP adoption. Because best business practices vary across
manufacturing microverticals, we will examine how best practices apply to subcontractors and
process manufacturers. Additionally, we will see how manufacturers, regardless of their
specialty, can prepare for ERP adoption by benchmarking the organization against peers and then
removing all non-value-adding activities from the supply chain.
To establish best business practices before adopting ERP, process manufacturers first need to
develop a comparison between their organizations and their peer group through benchmarking.
This inside-out comparison will clarify the performance of the manufacturer's competitors. Once
a manufacturer knows how many units per hour a competitor produces, and at what cost per unit
or throughput per unit, understanding which areas within the organization need improvement
becomes self-evident. The next step involves understanding what procedures and processes will
best improve performance.
For example, if you measure your organization against a peer group and realize that you need to
improve labor efficiency, the next step calls for an enterprise-wide assessment of assigned labor,
specific labor activities and duplication of business processes. This allows you to identify
unnecessary steps executed by labor, and in turn improve business processes by removing nonvalue-adding activities and retraining workers.
27

Or, if the benchmarking activity determines a disadvantageous yield compared to the peer group,
you examine where and why waste occurs. This helps develop an awareness of how each phase
of process manufacturing's continuous production cycles enhances -- or inhibits -- the overall
effectiveness of the organization. If you discover that competitors' machines run at greater
efficiency, plant maintenance requires a closer look. How is each machine's output measured?
Have preventative-maintenance and production schedules been adhered to? Have bearing and
electrical-motor performances been recorded? Process manufacturers do not need an ERP system
to clearly answer these questions. However, this sort of basic, but rigorous, self-assessment
establishes the procedures that pave the way for successful ERP implementations.
While process manufacturers examine how to strip away non-value-adding activities from their
continuous production cycles, subcontract manufacturers need to evaluate their core processes.
Because subcontractors pack out their partners' bulk production into smaller quantities, peergroup benchmarking most often focuses on efficiency. If the peer comparison shows the
subcontractor lagging behind industry standards on packing out a given chemical within a
specified time window, the sub-contractors needs to locate the deficient area. An examination of
equipment, training procedures, labeling, pallet preparation, storage and third-party drop
shipments will reveal the general problem. If mis-labeling proves to be the issue, what is the
cause? By drilling down on labeling, the subcontractor will eventually discover the root cause,
whether malfunctioning equipment or insufficient training.
Companies looking at ERP often assume that they will simultaneously implement enterprise
software; translate redefined business processes into an optimized system; prepare the necessary
data; and conduct flawless training, all while change management somehow takes care of itself.
And, of course, all of this will happen on budget. In these cases, the consultant comes in and has
to start at a whiteboard, because the organization has no point of reference for understanding
their own enterprise needs. Business design and blueprints require four months and configuring
that information into the system takes another six months. After training and testing, you're
looking at an implementation that will consume an inordinate amount of time and resources.

28