Presented To: Sir Imran Presented By: Iqra Arif Zaman Javed MBAP 12255 MBAP12250
Table of Contents
AKNOWLEDGEMENT: .................................................................................................................................... 5 INTRODUCTION (GOURMET BAKERS & CONFECTIONERS) ........................................................................... 6 OUR MISSION ................................................................................................................................................ 6 OUR VISION ................................................................................................................................................... 6 INDENTIFICATION OF NEED OF ERP .............................................................................................................. 7 MAJOR INTERNAL PROBLEMS ....................................................................................................................... 7 ROADMAP FOR ERP IMPLEMENTATION ....................................................................................................... 8 i. ii. iii. iv. v. Strategic Planning: ............................................................................................................................ 8 Project Team: ................................................................................................................................ 8 Examine Current Business flow:.................................................................................................... 8 Set Objectives: .............................................................................................................................. 9 Developing Project Plan: ............................................................................................................... 9 Procedure Review: ............................................................................................................................ 9 Review Software Capabilities: ....................................................................................................... 9 Identify Manual Steps: .................................................................................................................. 9 Developing Standard Operating Procedures: ............................................................................. 10 Data Collection & Clean-up: ............................................................................................................ 10 Convert Data: .............................................................................................................................. 10 Collect New Data:........................................................................................................................ 10 Review all data input: ................................................................................................................. 10 Data Clean Up: ............................................................................................................................ 10 Training & Testing: .......................................................................................................................... 10 Pre-test the Database: ................................................................................................................ 11 Verify Testing: ............................................................................................................................. 11 Train the Trainer: ........................................................................................................................ 11 Final Testing: ............................................................................................................................... 11 Go Live & Evaluation: ...................................................................................................................... 11
DISADVANTAGE OF ERP .............................................................................................................................. 13 ADVANTAGES OF ERP.................................................................................................................................. 13 RECOMMENDED ERP SYSTEM FOR GOURMET ........................................................................................... 14 TIME REQUIRED FOR DEPLOYMENT ........................................................................................................... 14 COST ESTIMATION ...................................................................................................................................... 14 SELECTION OF ERP VENDOR ....................................................................................................................... 15 REQUIRED ERP MODULES ........................................................................................................................... 15 OBJECTIVES OF IMPLEMENTATION OF ERP ................................................................................................ 15 BENEFIT/RESULTS OF IMPLEMENTATION ................................................................................................... 16 ASSUMED RESULTS OF SELECTED MODULES .............................................................................................. 17 Purchasing and incoming goods handling................................................................................... 17 Material management, recipes ................................................................................................... 17 Production planning including recipe details ............................................................................. 17 Sales including telephone sales .................................................................................................. 17 Order proposals/permanent orders ........................................................................................... 17 Inventory control, returned products. ........................................................................................ 18 Chain store management, snacks, management of bank holidays ............................................ 18 Finance and accounting, cost calculation/controlling, assets accounting .................................. 18 Information system, business warehouse .................................................................................. 18 Quality control, batches and best before dates ......................................................................... 18 Capacity planning and forecast ................................................................................................... 18
POST IMPLEMENTATION PHASE ................................................................................................................. 19 i. ii. iii. iv. v. Integrated system ........................................................................................................................... 19 Limitation in the work power ......................................................................................................... 19 Clear vision of employees ............................................................................................................... 19 Performance reports ....................................................................................................................... 19 Security system ............................................................................................................................... 19
AFTER IMPLEMENTING & TRAINING OF ERP .............................................................................................. 19 Post implementation issue ......................................................................................................................... 20 Skill ability Problem ..................................................................................................................... 20
New dimension ERP system ........................................................................................................ 20 Limited experience...................................................................................................................... 20 Poor response of employees ...................................................................................................... 20 Employee resistance ................................................................................................................... 21 Training and motivational problems ........................................................................................... 21 Time and Cost ............................................................................................................................. 21 Bar code ...................................................................................................................................... 21
CRITICAL ANALYSIS ...................................................................................................................................... 21 Problems Faced after implementing Software: .......................................................................... 21 Budget ......................................................................................................................................... 22 Minimum project Resources ....................................................................................................... 22 Time ............................................................................................................................................ 22
WHY ERP ..................................................................................................................................................... 22 COMPETITIVE ADVANTAGE......................................................................................................................... 23 CHALLENGES IN IMPLEMENTING ERP ......................................................................................................... 23 FUTURE PLANNING FOR FURTHER UPGRADING ......................................................................................... 23 BREAKDOWN OF ERP USERS ....................................................................................................................... 24 Key User: ..................................................................................................................................... 24 Power User:................................................................................................................................. 24 End User: ..................................................................................................................................... 24
CONCLUSION............................................................................................................................................... 24
AKNOWLEDGEMENT:
All praise to ALLAH, the most merciful, kind and beneficent and the source of all knowledge, wisdom within and beyond my comprehension. We take this opportunity to express my profound gratitude and deep regards to Sir Imran for his exemplary guidance, monitoring and constant encouragement throughout the course of Enterprise Resource Planning". Through his motivational behavior, we are able to complete this assignment work. The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which we are about to embark. We are obliged to staff members of SUPERIOR UNIVERSITY, for the valuable information provided by them. We are grateful for their cooperation during the period of my assignment. Lastly, we thank almighty, my parents, brother, sister and friends for their constant encouragement, manual support, strength, and help and for everything without which this assignment would not be possible.
OUR MISSION
Our mission is to provide quality products at lowest prices
OUR VISION
Leader of quality juice providers in the region by offering products enjoyed in every home. This will be achieved from the dedication of each employee in conjunction with supportive participation from management at all levels.
In order to remove those major and potential problems ERP SAP should be implemented in Gourmet Bakers & Confectioners. It will not only reduce the costs and lead time but it will also secure their data and recipes. Data regarding employees, supplier, wholesalers, outlets and retailers will be arranged and automated reporting tool of ERP SAP will help the employees to generate daily reports with just a single click.
There is only manual inventory management in Gourmet, whereas a system should be introduced in order to do technical inventory management. Forecasting is not proper or close to the demand in the market, an electronic system should be implemented.
Set Objectives: Objectives regarding implementing ERP SAP should be set so that they can be achieved when it is implemented. Objectives of implementing SAP in Gourmet are already discussed above. Developing Project Plan: There are set parameters for the project plan of implementing ERP SAP which are as follows: o Beta version should be tested by the IT Department of Gourmet o It is the responsibility of IT Department to give details, information and guidance to the other users of SAP in Gourmet. o Trainings will be given to the managers and HODs of the departments whose time tenure is 25 days by the RS AG (SAP partner) itself. o Beta version will be tested and implemented by the IT Department itself. o Trainings will be conducted in house so that the working hours and work environment would not be disturbed for the HODs and managers. o On 1st June, complete package of ERP SAP will be started to implement in Gourmet Bakers & Confectioners. ii. Procedure Review: In procedure review, we will take an over view of the implementation process, as we are first implementing the beta version therefore we will first check the procedures which are necessary to work in the ERP system conditions. Following steps should be notified carefully: Review Software Capabilities: First of all we will check that the beta version is understandable to the selected employees. If there are any discrepancies or confusions then trainings will be conducted by the IT Department in order to create a sense of understanding the software and its system. Identify Manual Steps: After that we will share those steps which should be converted into automated ERP system. Gourmet will first of all convert its purchasing process and delivery process of its manufactured items on ERP because it will help them to re-align their process in the production house as well as on their outlets. After that the accounts will be transferred as well because ERP Sap gives more security level than any other software, hence Gourmet will be encouraged to transfer its accounts and financial details on ERP SAP.
Developing Standard Operating Procedures: SOPs are important for every business type because they will help the organization to implement the system quickly and efficiently. Following are the SOPs for Gourmet: o If the price of raw materials increased globally, how we handle it? o Process for adding new product and items o Developing or changing new process in production as well as in services department o Changing working environment o Expanding plant size or production capacity iii. Data Collection & Clean-up: The next procedure for implementing ERP SAP in Gourmet is to collect the overall data from all departments of the organization in order to manage the ERP system. Following steps should be used: Convert Data: The HOD of IT Department will first check the data which can be converted easily into ERP system. He will made another team in IT department which will help him to check, analyze and convert the data because it is not possible to convert 100% data of the company because some of the data may be corrupted or out of reach. Collect New Data: Spreadsheets and Performas should be given to the HOD and manager of each department. They will collect the new data which is necessary for the implementation and ordered by the HOD of IT Department. Review all data input: When all the data is collected and converted then the data will be entered in the ERP system. After data entry, HOD of IT department should verify and check the data by himself in order to remove any discrepancies in the data entry and the system will work fluently. Data Clean Up: When data is reviewed in the ERP system then any data which is not necessary and not needed for the implementation of ERP SAP should be removed in order to create smooth flow of information and to reduce the difficulties and complexities. iv. Training & Testing: The next step for implementing ERP SAP is to train the employees according to the users which are assigned to the employees and test the software in the organization in order to check its credibility and working. Following steps should be considered:
Pre-test the Database: For pre-testing the ERP system database, we are using its beta version in order to understand the working environment of ERP SAP. Daily activities will be recorded and processed in the ERP Sap in order to check if there are any problems regarding the implementation of ERP SAP.
Verify Testing: In this procedure, we will verify that the actual working of ERP SAP system works accordingly and testify the SOPs which are created above. Train the Trainer: As the training process is very costly for every organization, therefore in Gourmet we will train the managers who will train their sub ordinates who will work as end users. Managers can take out time by giving their tasks to their assistants and take trainings which are arranged in house. This process will become less costly as compared to giving trainings to every staff member because the manager will give trainings to their sub ordinates at lower costs. Final Testing: When training sessions are over then a final testing will be arranged after the training to check whether the training sessions helped the employees in understanding the ERP system or not. v. Go Live & Evaluation: In the last before implementing the proper version of ERP SAP we will first develop a go live countdown checklist in which we will check the functions and other tasks which are necessary in order to implement the ERP system. The contents of checklist are: o o o o o o o Physical inventory process is complete. Beginning balance entry procedures are developed for all modules. Any transition issues are addressed. Documents & modifications are tested thoroughly. Executives and departments heads are fully trained. Vendor is available for go-live day. Users will have assistance during their first live transactions.
The next step is to evaluate at the end in order to check the working and benefits of the implementation of ERP SAP in Gourmet. This can be done by the post implementation feedback forms and by taking surveys on regular intervals.
ERP
ERP or Enterprise Resource Planning is IT software that integrates business activities across an enterprisefrom product planning, parts purchasing, inventory control, and product distribution, to order tracking. ERP may also include application modules for the finance, accounting and human resources aspects of a business. SAP and Oracle are the two ERP leading vendors. From a business perspective, ERP today has expanded from simply coordinating manufacturing processes to being the integrator of enterprise-wide backend processes. ERP has also evolved technologically from a monolithic legacy implementation into flexible, tiered, clientserver architecture. ERP system totally automates the organizations operations, business process, inventory handling, and product information and most important it integrates the department with each other so that they can easily share the information with each other. There are a number of advances in technology that has contributed to the growth of ERP. Enterprise Resource Planning is directly connected to Information Technology. The improvement of IT with the decreasing cost of computers has made it possible for small businesses and organizations to begin using ERP. When Enterprise Resource Planning was first introduced, it was designed to run on powerful mainframe systems. Most companies will use a variety of system platforms, and they may also be in need of third party platforms. The ideal ERP system must be capable of offering this. It is also important for
an ERP system to be comprehensive. It must be able to support a large number of different functions that are related to the company.
BENEFITS OF ERP
1. ERP can greatly improve the quality and efficiency of a business. By keeping a company's internal business process running smoothly, ERP can lead to better outputs that will benefit the company such as customer service, and manufacturing. 2. ERP provides support to upper level management to provide them with critical decision making information. This decision support will allow the upper level management to make managerial choices that will enhance the business down the road. 3. ERP also creates a more agile company that can better adapt to situations and changes. ERP makes the company more flexible and less rigidly structured in an effort to allow the different parts of an organization to become more cohesive, in turn, enhancing the business both internally and externally.
DISADVANTAGE OF ERP
1. Customization is problematic. 2. Reengineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities 3. ERP can cost more than less integrated and/or less comprehensive solutions. 4. High switching costs associated with ERP can increase the ERP vendor's negotiating power which can result in higher support, maintenance, and upgrade expenses. 5. Overcoming resistance to sharing sensitive information between departments can divert management attention. 6. Integration of truly independent businesses can create unnecessary dependencies. 7. Extensive training requirements take resources from daily operations. 8. Due to ERP's architecture (OLTP, On-Line Transaction Processing) ERP systems are not well suited for production planning and supply chain management (SCM) 9. The limitations of ERP have been recognized sparking new trends in ERP application development, the four significant developments being made in ERP are, creating a more flexible ERP, Web-Enable ERP, Inter enterprise ERP and e-Business Suites, each of which will potentially address the failings of the current ERP.
ADVANTAGES OF ERP
The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:
Sales forecasting, which allows inventory optimization Chronological history of every transaction through relevant data compilation in every area of operation. 3. Order tracking, from acceptance through fulfillment 4. Revenue tracking, from invoice through cash receipt 5. Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
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ERP systems centralize business data, bringing the following benefits: They eliminate the need to synchronize changes between multiple systems consolidation of finance, marketing and sales, human resource, and manufacturing applications 2. They bring legitimacy and transparency in each bit of statistical data. 3. They enable standard product naming/coding. 4. They provide a comprehensive enterprise view (no "islands of information"). They make realtime information available to management anywhere, any time to make proper decisions.
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They protect sensitive data by consolidating multiple security systems into a single structure.
COST ESTIMATION
The cost for implementing ERP SAP for bakeries and confectioners charged by RS AG group is 58,000 Euros approximately. It is also mentioned on their official website. In Gourmet they will also charge total amount of 58,000 which is equal to PKR 65,482,000. This amount can be paid in lump sum or in installments also.
Optional packages which are also required by Gourmet are: Quality control, batches and best before dates Capacity planning and forecast Distribution of surplus and under production
To automate or to advanced all the functions of the firm like e.g. building an information platform covering logistics and information flow Standardizing the management of orders, inventory and costs conducting real-time analysis of business and financial affairs Building a uniformed data resource for business data sharing. Inventory management Better accounts management and financial reporting Secure recipes and material required to make them Fast purchasing order and sales order system Better quality and quantity check Lead time of products delivery will be accurate and less Better handling of employees i.e. HRM functions will be operated properly and more accurately to motivate and train the employees to achieve goals and objectives.
BENEFIT/RESULTS OF IMPLEMENTATION
With the help of the implementation of ERP SAP software they have completed the integration with other relevant business groups of Gourmet. After implementation of SAP they improve the market competitiveness of EPG by building a set of supply processes. They have build the integrated data platform for all the departments using SAP they integrate data such as materials, customers, credits, suppliers, BOM. Build a business information platform covering logistics, cash flow and business flow based on order information and integrate it with all the departments. Routing, sales prices, purchase records and budget control in accordance with the requirements of MDM management and the features of software through data cleansing; provide a single data source for each system to ensure the uniqueness and accuracy of data coding. Gourmet will also come to know about the demand of raw materials which are required by their production house and also the lead time at which those materials are required. It will also help gourmet to create automated purchase order requisitions which will not only save their time but their costs as well and help to improve their processes also.
When ERP SAP will be implemented Gourmet will not only manage its sales but also it will help them to retain and attract more customers, whether it is already become a market giant but it will help them to capture more market share. ERP SAP will also help Gourmet to secure their secret data regarding employees, recipes and production houses. It will help them to manage their resources and allocate them properly.
Sales including telephone sales Sales module will direct Gourmet in utilizing their sales in a profitable manner. Their sales may also increase and this module will notify Gourmet about their credit and cash sales. Order proposals/permanent orders This module gives Gourmet a pet format through which they can handle their huge orders related catering, cakes, functions and parties. They can easily take decisions about the materials required for specified orders.
Inventory control, returned products. In inventory control module, Gourmet knows about those material or products which should be returned to the vendor because of their low quality or any other obligation. It also helps them to control their inventory level i.e. it indicates them that their inventory level is reached at low level or maximum level so that they can make appropriate decisions according to the situation. Chain store management, snacks, management of bank holidays This module works as MRP (Material Requirement Planning) software and it tells them how much material is required for which product. This module majorly focused on the supply chain management of Gourmet and it will also identify the bank holidays so that if they want to buy material then they should pay the amounts to their supplier before or after those dates. Finance and accounting, cost calculation/controlling, assets accounting This module allocates their finance and assets. Gourmet will then plan for purchasing new assets by utilizing this module. It will notify Gourmet that when will the depreciation of any asset reaches to its maximum limit and they have to purchase new asset or new part of that asset. Information system, business warehouse Information system module is the major module. After implementing this module, Gourmet can access to their information of any department with a single click because with the help of this module all departments will be integrated with each other. Optional packages which are also required by Gourmet are: Quality control, batches and best before dates Quality control module identifies the quality measures which should be fulfilled in order to keep their quality and quantity at best level. It will also notify the expiry dates according to the material used in the products. Capacity planning and forecast Gourmet will have more grips on forecasting after implementing capacity planning module. Gourmet will know about the optimum capacity which should be produced by them which will gives them benefit and more profit. Forecasting will help them to reach the demand level in the market. In the end, it is concluded that many functions will be accomplished with more accuracy and efficiency and the problems with each department will be eradicated after the implementation of ERP modules because they provide integrated platform for whole organization to work and stay connected with everyone like a home.
due high learning rate among employees. The structure of organization says that every time they update the system, the training is must for employees. To make their implementation and training sessions easier for the employees, Gourmet is implementing the beta version of SAP in which limited functions are available to use which will not only guide the employees but also helps them to understand the full version through its use.
Employee resistance There is always resistance when there is a change in the organization. On implementing ERP system employees resisted despite the fact they know the work or not. For experience employees it was worry that their traditional workiin.ng system would get disturbed and for the other employees they were worry about getting the training again. In Gourmet, employees who are not at managerial level they resist more because they have more physical work load. Therefore employees at the first stage resist coming and taking trainings. Employees who are working as managers, they also resists sometimes but they know the importance of ERP SAP therefore they are agreed to take the trainings. Training and motivational problems Training gets the main problem for the organization as they have to train and introduce the whole new system again. Motivation of employees get affected when the manager or CEO asks them to leave their work and go for the training sessions and after that employees have to work for more hours because they have to look after their own work load as well. ERP SAP implementation also helps them to motivate as well because the training of ERP SAP will add more power to its CV as well as to his experience and his salary will also be increased for that. For the training purposes, Gourmet is organizing in house training sessions i.e. trainers will come to the Gourmet factory and they will give training seminars and classes. Some of the trainings are conducted out house because it will motivate the employees and it will also become a recreational tour for them. Time and Cost For implementation of ERP the organizations required great deal of time and the ERP system is quite expensive. Therefore organizations have faced great deal of problems in implementation process. As in the case of BMW they tried three years in implementing SAP ERP but they failed to implement it. Therefore Gourmet should allocate appropriate time and cost in ERP SAP to get their departments aligned. In the beginning it will take cost as well as time but after that it will produce many profits which will cover up all the costs. Bar code Gourmet is facing great problem with their BAR CODE system the bar code is not matching with product placed in warehouse.
CRITICAL ANALYSIS
Problems Faced after implementing Software: ERP software takes years to implement in multinational companies and there is a huge risk that weather this ERP package works or not. At Gourmet Company they implemented the SAP ERP
package with maximum risk and they implement it phase wise. Every company faces different problems after implementing this software. First Gourmet is implementing a trial version of SAP ERP which shows them that how they have to handle the information and data regarding every department and do their departments show co-operation or not. From the 1st of June they will implement ERP SAP with full functionality. Budget Gourmet official tells us that they decided some budget for the implementation of the ERP system at Gourmet. When Gourmet starts to implement ERP by implementing the first phase they will get the exact figures about the implementation of ERP Sap by getting now that how much trained employees will work as Key users, Power users and end user. They will give proper trainings and their expected budget will be aligned towards actual budget. Right now gourmet is just trying the beta version in order to check its authenticity and reliability. Minimum project Resources In Pakistan everything is minimized just because of the minimum industry resources offered by the government to the industries. So Gourmet has minimum project resources. Time In Gourmet they have to face great deal of problem with employees that all the employees are worried about the time required in the implementation and this cause employee resistance and employee dissatisfaction.
WHY ERP
ERP systems are need for todays business world, without ERP it is very difficult to survive in this competitive world. ERP system help in achieving a number of important objective of the organization, including maiming information, minimizing response time to customers and suppliers, pushing decision making down to the lowest appropriate level, providing timely information to decision makers. Most importantly an ERP system integrates the information throughout the organization and throughout the various departments of it. From business point of view this means that ERP help the organization to reeducation the cost of inventory and improved operating performance. Our main objective to implement ERP was to make strong relationship between our suppliers and dealers because of the integrated system information flow become easy for all departments
most importantly for our dealers and for the production plant that to what many manufacture and in what quantity. Our Basic purpose of ERP implementation is to build strong relationship with supplier and dealers, most importantly improving relationships in supply chain management. It will enhance the contacts of Gourmet with their prestigious suppliers, retail shops and outlets as well.
COMPETITIVE ADVANTAGE
In Pakistan there were few organizations implementing ERP therefore our ERP implementation provides us a competitive advantage over those organizations. All the major industries such as oil and gas, chemicals, consumer products and computer industry is utilizing the benefits and advantages of ERP SAP to secure their organization and its data and to achieve its goals and objectives at a fast pace. In this competitive world every single organization in the developing and developed countries are struggling to get some sought of competitive advantage over there. ERP is not necessaries to get a competitive advantage over your competitor or in industry, but in future it would be even if ERP implementation may not provide a competitive advantage, companies which do not have ERP system may still find themselves at a competitive disadvantage, particularly in industries in which ERP implementation is widespread, companies using ERP will be able to take advantage of best practices in running their business to reduce time cycle and to make smooth flow of information throughout all departments.
Linking to chain store cashier system Business with trade chains, display handling and management Payroll accounting, personnel planning, staff time recording Maintenance Property management Integration into existing IT environment
CONCLUSION
In this report, we have surveyed Gourmet Bakers & Confectioners and we are going to implement ERP SAP system there. It is found that if we implement ERP SAP in Gourmet then their all outlets and production houses will be inter-connected with each other which save their telephonic cost and other costs as well. It will also reduce the delivery time of the products and it will help the supervisors and managers to generate reports quickly as there is automated reporting tool already configured in the ERP SAP software. It will also integrate the departments of Gourmet which will make the flow of information more fluent and better. For Gourmet, if they want to have a competitive edge on their competitors and to achieve new heights of success,
ERP SAP system will help them to achieve those heights of success and their goals as well because it will secure their data and also provide assistance in every department work.