Q. 1. Why are ERP System said to be flexible ? Explain with example.

Answer:-

We need to know that setting up an ERP system has many advantages both direct and indirect. The direct benefits include improved efficiency, information integration for better decision making, faster response time to customer queries, and so on. The indirect benefits comprises better corporate image, improved customer goodwill, customer satisfaction, and so on. The following are some of the direct benefits of an ERP system:

Business integration Flexibility Better analysis and planning capabilities Use of latest technology

Flexibility One of the advantages of ERP packages is their flexibility. Different languages, currencies, accounting standards, and so on can be covered in one system, and functions that systematically manage multiple locations of a company can be packaged and implemented automatically. To cope with company globalisation and system unification, this flexibility is essential, and we can say that it has major advantages, not simply for development and maintenance, but also in terms of management.

Q.2 Explain with an example the concept of supply chain management?

Answer:Supply Chain Management A supply chain can be defined as a network of facilities and distribution options that performs the function of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Both in service and manufacturing organisations supply chains system exist. However, the complexity of the chain may vary greatly from industry to industry and firm to firm. Traditionally, the departments like the marketing, distribution, planning, manufacturing, and purchasing of an organisation operated independently along the supply chain. This kind of traditional organisations each departments had their own objectives, which often conflict with other departments objectives. For example, Marketings objective of high customer service and maximum sales revenue conflicts with manufacturing and distribution goals. Many manufacturing operations are designed to maximise throughput and lower costs, but very little concern was given for the impact of this on inventory levels and distribution capabilities. With the very little information and based on the historical buying patterns purchasing contracts were often negotiated. This resulted in chaos and there was not a single, integrated plan for the organisation there were plans as many as services the company offered. This clearly demanded a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved. If the SCM has to be successful their must be a change from managing individual functions to integrating activities into key supply chain processes. For example, the purchasing department places orders as requirements become known. In case of marketing department, it has to respond to customer demand, communicate with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chains partners can only be fully leveraged through process integration. The integration process of Supply chain business process involves collaborative work between buyers and suppliers, joint product development, common systems, and shared information. But one has to understand that continues information flow is required to operate an integrated supply chain. Top management of many companies have reached the conclusion that optimising the product flows cannot be accomplished without implementing a process approach to the business. An organisations supply chain or logistics network is affected because of supply chain sustainability. This is a major business issue and is frequently quantified by comparison with SECH ratings like social, ethical, cultural and health records. Today consumers have become aware of the environmental impact of their purchases and companys SECH ratings. Along with this nongovernmental organisations ([NGO]s), are setting the agendas for focusing on transitions to organically-grown foods, anti-sweatshop labor codes, and locally-produced goods that will support independent and small business groups. Because supply chains frequently account for over 75% of a companys carbon footprint many organisations are exploring how they can reduce this and thus improve their SECH rating. Companies can improve their overall competencies with the help of supply chain specialisation, in the same way that outsourced manufacturing and distribution has done. It allows them to focus on

their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency. The leading reason why supply chain specialisation is gaining popularity is just because of the companys ability to quickly obtain and deploy this domain-specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house.

Q.3. Differentiate between Open Source and Commercial ERP. Briefly explain the key principles to a proper ERP system selection process.

Answer :-

ERP Selection Methods and Criteria ERP is a very expensive investment and has a long and complicated implementation process. As such, it is important to make a proper selection of the ERP. ERP selection process involves identifying criteria and their relative weights, and evaluating the alternatives. An ERP system is the information backbone of an organisation and extends to all areas of the business. Thus, long-term business strategy of the organisation forms the basis of the ERP selection criteria. As mentioned earlier, ERP systems are costly to implement. When choosing an ERP system, it is important to take time to select the right ERP system or set of modules for your business. In order to do this in an efficient manner, it is important to have a plan of action.

The selection of the appropriate solution is a problem because only a part of it can be handled by a definite or accepted procedure such as standard investment calculations. On the other hand, the decision maker needs to judge and evaluate all relevant business impact aspects. There is no agreed-upon and formal procedure for this important task[1]. The modules that an ERP offers are the most important selection reasons; and can vary according to the needs of the organisation. When you consider an ERP system, it is important to weigh all available options carefully. This is because of the time, money, and training that can be consumed in implementing such a system. There are three criteria that are generally used when evaluating an ERP solution: Financial Considerations : When an ERP solution is considered, it must make money to be acceptable. As such, there are several measurements that the finance department may make in order to determine whether or not an ERP solution is feasible. - Net Present Value (NPV) is generally the most accepted method of valuing an ERP. It takes into account the time value of money and cash flows generated. The cash flow and discount rate selection process is the most important part of an NPV calculation. Determining an average cost of capital for your firm and the predicted cash flows help you get an accurate result from the NPV calculation. - Budgetary constraint is the most used method when considering IT projects. The Internal Rate of Return (IRR) and payback period methods are also very popular for many firms dealing with IT implementations. Management Considerations : On the management side, there are more variables to consider than simply money. For example, managers may differentiate between implicit and explicit business needs, competitive pressures, legal needs, and environmental concerns. This can make the management side of valuation very difficult to quantify. Generally, companies take a few factors and try to create a scoring system that can be objectively applied across the options. Sometimes probability of achieving the intended benefits is included in this part of the calculations else it is included in the financial part of the process. However, the probability of achieving the benefits instead of simply succeeding in implementation takes on a different look. This sort of probability may be more directly tied with a softer science such as management. Development Considerations: Development is usually the least important decision factor in these processes. One of the most important factors is the probability that a project finishes on time. This simply does not happen very often, so it is important to determine what sort of adverse effects this could have on business operations.

ERP Software Selection Criteria When reviewing potential software suppliers, you tend to focus only on the potential products functionality and cost. Although these elements are important, this methodology neglects other areas of importance. A suppliers ability to deliver product services goes well beyond price and feature options. The key selection criteria include making few questions. Such questions help you simplify making an ERP software purchase decision. Some of the questions include: For Product Functionality Does this package meet the overall requirements listing?

 Is the menu structure easy to follow and understand? Are the help files easily assessable and easy for users to understand? Can you customise help to meet the needs of the organisation? Is the product too complex? Are there standard reports available, and are they useful? For Product Cost Are the license costs justified given the functionality offering? Is the required database affordable? Are annual maintenance charges reasonable and in line with the industry average? Are payments for annual maintenance charges in line with industry norms? What is the true implementation services-to-software ratio for implementations with comparably-sized companies? How quickly can payback be received? For Corporate Vision What major organisational changes has the supplier made in recent years? What major product changes have occurred in recent years? What major product changes does the company foresee or have planned in the coming years? What level of involvement does the executive staff have in the companys daily operations? Is the executive staff knowledgeable of industry trends and developing technology? For Service and Support Was the team comfortable with the sales process and representative? Were the teams questions answered in an open and honest forum? Can the supplier provide a complete turn-key solution? What type of training is available? What is the average technical support persons experience level and tenure with the company? How quickly are the non-critical software bugs fixed?

 Is 24/7 support available? Does the supplier offer business process re-engineering as part of the implementation process? Does the supplier have experience in similar industries? For Technology and System Architecture Is the technology robust enough to handle current and future transactions load? Is it scalable? Is the systems speed acceptable for daily usage? Is source code provided for customisations or modifications without hefty charges? Do customisations hamper upgrading to future software releases? Is the software Open Database Connectivity (ODBC) compliant? Does the software support eCommerce, Radio Frequency (RF) and bar coding, and Electronic Data Interchange (EDI) transactions? Does the software support multi-company, multi-division, and multi-currency environments? Are there any restrictions to this type of environment? For Supplier Longevity How many years has the company been actively engaged in this software industry? When was the products first release? What is the current release version being quoted? Has the company been consistently profitable? Has there been recent turnover in the management staff? Has the supplier increased or reduced overall headcount over the last year? Are customer references available? Can you visit a customer reference site prior to contract signing?
Q.4. What is ATO and how is it different from ETO? List the advantages of CAD/CAM.

Answer:Manufacturing Operations The manufacturing operations can be classified based on the amount of processing the product requires, after the company receives an order from customer. They are broadly classified as:

 Make-to-Order (MTO) and Make-to-Stock (MTS) Assemble-to-Order (ATO) Engineer-to-Order (ETO) Configure-to-Order (CTO) Assemble-to-Order (ATO) Assemble-to-Order (ATO) company is another variation of the manufacturing operations. The ATO company manufactures standardized, option modules according to the forecasts it has made and then assembles a specific combination, or package of modules, after receiving the customers order. The classic example is the automobile manufacturer. After receiving orders from a host of dealers, the manufacturer specifies the exact production schedule for the automobiles. The schedule is based on the options order by the customers, like automatic transmission or manual transmission, air-conditioning, standard or digital control panel, leather, cloth or vinyl seating, and so on. Many components for assembling the automobiles would have be ordered or started into production before receiving the customers order based upon demand forecasts. Thus, the major processing that remains when the orders come in is assembly. This approach shortens the time between placement of the order and delivery of the product cycle time. Engineer-to-Order (ETO) Yet another variant in the manufacturing operations is the Engineer-to-Order (ETO) company. The ETO Company is the ultimate in product variety, product customisation and flexibility. In this mode of operation, as per customer order the company manufactures any thing, but at a higher price. The expensive clothing of the bold and beautiful is an example of this kind of production. Products are made for each customer and even the minute details, for example, the feel of the cloth and the texture, the colour of the threads, the size of the collar and so on will differ from one customer to another, depending upon the customers preferences. So the manufacturer cannot keep anything in inventory, he will have to order only once the customer has given his/her specifications. Obviously, the cost of production will be highest in this mode of production.

Computer Aid Design/Computer Aid Manufacturing The CAD/CAM systems assist engineers in designing, examining, and upgrading drawings required for manufacturing. Being a part of Product Data Management it enables high degree of precision in both during design phase and the actual manufacturing phase. It also enhances the capacity of the company by reducing the time consumed in converting the drawings into actual working models. Computer Aid Design/Computer Aid Manufacturing (CAD / CAM) are the other major focus area for the manufacturing sector. Traditionally, the automotive and aerospace industries are the largest consumers of CAD/CAM.

With the automotive sector in the depression, vendors were not able to meet their expectations from this industry. On the other hand, the farm auto sector did better in comparison. Mahindra & Mahindra (Tractor Division) has grown considerably in the last three years and their manufacturing capacity has doubled. This is accompanied with significant improvement in design capacity. Increasing design capacity is also a competitive edge for a company. For example, Tata Johnson Controls, which makes seating systems, started off by designing seats solely for Ford. With increased design capacity using advanced CAD/CAM, they went on to supply seating systems to many other auto majors. The major focus area in CAD/CAM is on design analysis, development, and manufacturing. Styling and ergonomics are the refinement areas to achieve design excellence. There were only marginal investments in modelling. There is also a trend developing for reverse engineering, especially in the engineering and appliances industry. Manufacturing, companies in the BPL Group have taken up reverse engineering. Product data management (PDM) is another leading edge of the CAD/CAM philosophy. TELCO and Mahindra Ford have integrated many of their suppliers. For the supplier, it means enhanced competence and improved competitiveness. Many of these suppliers, with their improved design capacity and integration with OEMs, have also started exporting. Brakes India is supplying brakes to many of the European auto manufacturers. Another reason, which forces a company to make design an imperative, is the improved alignment that many manufacturing organisations have acquired. This is because of business process reengineering. An important thing is the integration of tier 1 and tier 2 suppliers with OEMs, for standard product information. Many companies in heavy engineering sector have signed up multi year contracts with global majors like SDRC and PTC. BHEL has a CAD/CAM contract across all units with SDRC for a term of five-year. Similarly Lakshmi Machine, L&T and Siemens works are investing in CAD/CAM to beef up their research capability.

Q.5. How does the plant maintenance module help in achieving competitiveness? Write a note of Quality Management.
Answer:Plant Maintenance The achievement of outstanding performance demands delivery of quality products expeditiously and economically. Organisations simply cannot achieve excellence with unreliable equipment. The

approach towards maintenance management has changed as a result of quick response manufacturing. Just-in-Time (JIT) reduction of work in process inventory and the elimination of wasteful manufacturing practices. Before breakdown in machine and idle time for repair was once an accepted practice. Times have changed. Today, when there is a break down in a machine, it can shut down the production line and the customers entire plant. The Preventive Maintenance (PM) module provides an integrated solution for supporting the operational needs of an enterprisewide system. The Plant Maintenance module includes an entire family of product; covering all aspects of plant/equipment maintenance. It becomes vital to the achievement of process improvement. The major subsystems of a Plant Maintenance module are: Preventive Maintenance Control Equipment Tracking Component Tracking Plant Maintenance Calibration Tracking Plant Maintenance Warranty Claims Tracking Preventive Maintenance Control Preventive Maintenance Control (PMC) provides planning, scheduling, and control of facilities and equipment. Equipment lubrication, component replacement and safety inspection can be planned, scheduled, and monitored. Maintenance tasks can be tracked for each piece of equipment or machine, by two user-defined modes, as well as calendar day frequency. These modes include tracking by hours of operation, units of production produced, gallons of fuel consumed, or the number of days in operation since the last service interval. Preventive Maintenance Control enables organisations to lower repair costs by avoiding downtime, machine breakage, and process variability. Companies achieve higher machine utilisation and improved machine reliability and tolerance control, along with higher production yields. Equipment Tracking Equipments are an asset that needs to be protected and monitored. In many situations, costs of equipment maintenance constitute the single largest controllable expenditure of an organisation. All facets of plant location history and utilisation history are described and tracked. This history includes acquisition of disposition information and associations between different pieces of equipment to pinpoint operational dependencies. Running totals for operation units to date (miles, hours, days, units of production, and so on.) are also provided. Each piece of equipment is defined by, a serial number and model. User-defined data sheets are developed, which allow for the grouping of user data into formats that can be linked to equipment records. All of this information can be used to create equipment stipulation, which provide detailed information for technical specialists working in equipment operations, maintenance, and transportation control. Component Tracking Components are subsets of larger equipment and deserve the same amount of cost controlling scrutiny. Component Tracking helps equipment managers to; identify components with chronic repair problems. They can determine if either repair or replacement must be covered by warranty. Planning component replacements, rather than waiting for component failures to occur,

reduces unscheduled equipment downtime. Component tracking includes repair/exchange history and component service life. Plant Maintenance Calibration Tracking Plant Maintenance Calibration Tracking (PMCT) allows organisations to leverage their investment in the Plant Maintenance module by, providing for the tracking of equipment calibration in support of ISO 9000 requirements. Plant Maintenance Warranty Claims Tracking Plant Maintenance Warranty Claims Tracking (PMWCT) is an administrative system designed to, provide control of all items covered by manufacturer and vendor warranties. It helps plant management to recover all of the warranty; reimbursements to which they are entitled but have not been able to recover in the past. Features include the ability to establish the length and type of warranty. For example, elapsed day, months, operating units,, or mileage stipulation. A complete history review is performed for each item covered by the warranty and complete information regarding the warranty service provider is generated. Quality Management The ISO 9000 series of standards defines the elements of a quality management system and the functions of quality management. The functions in the Quality Management (QM) module support the essential elements of such a system. The other integrated modules in the QM system complement this functionality. The ISO standards require that QM systems must be an essential part in all processes within an organisation. According to the quality looping method, it is not only during the production or manufacturing (implementation phase) but also during production planning and product development (planning phase) quality control must be carried out. Quality must be monitored starting from procurement of materials to sale and distribution of the finished product, and it must be monitored in the entire usage phases of an organisation. In the areas of production, quality assurance is no longer viewed in terms of inspections that are the elimination of defects alone. Instead, the production process itself becomes the focus of attention.

Q.6. Explain the working of Warehouse Management and Purchase department with an example.
Answer:Warehouse Management This module provides real-time information about inventory levels across the enterprise and tools to manage the daily operational needs of warehouses. Coordination of an organisations

warehouse network is one of todays most important business needs and requires an understanding of the relationship between the different organisation units such as warehouses, production facilities, sales offices, and purchase offices. Various components of a good Warehouse Management application is designed to meet a wide range of warehousing needs, such as the mapping of internal goods flow within warehouses and the monitoring of warehouse inventory transactions. Components of a good Warehouse Management application include: Inventory Planning: This comprises of all planned inventory movements, which enable the accurate forecasting of trends and the consequent adjustment of reordering points, safety stock, lead-times for orders, and service levels. Inventory Handling: This allows monitoring of all warehouse order scenarios such as the receipt and issue and transfer of inventory. To ensure fast communication with suppliers and customer, advanced shipping notifications can be received or sent by means of EDI which enables shipments to be received and allocated ahead of time. Inventory Reporting: This function permits full visibility of inventory at single or multiple sites and provides a company with the tools to give customers accurate delivery dates. Inventory Analysis: This function enables the analysis of information that result from warehousing activities and the use of feedback in process optimisation. In addition, inventory analysis supports inventory forecasting and inventory valuation. Shipping & Transportation Shipping The shipping module supports the following functions: Monitoring dates of orders due for delivery Creating and processing deliveries Planning and monitoring work lists for shipping activities Monitoring material availability and processing outstanding orders Picking & Packing deliveries Supporting transportation planning Supporting foreign trade requirements Printing and sending shipping output Updating data related to goods Figure 7.3 shows shipping process. The Delivery note is the central shipping document. When is a delivery created (at the shipping point), shipping activities such as picking and delivery scheduling

are initiated and monitored, and the data generated during shipping processing is recorded. A delivery note can refer to a sales order or to a transportation order for stock transfer. Depending on the requirements, you can manually create deliveries and automatically using work lists. You can make agreements with your customers for complete or partial deliveries and for order combinations.

Figure 7.3: Shipping process Transportation Transportation is an essential element of the logistics chain. It effects both inward and outward movement of goods. Effective transportation planning is required to ensure that shipments are dispatched without delay and that they arrive on schedule. Costs of transportation play a considerable role in determining the price of a product. It is important that these transportation costs are kept to a minimum in order to keep the price of a product competitive. The aim of the transportation element is to provide basic functions for transportation such as transportation planning and processing, freight calculation, freight settlement, customer freight calculation, and customer freight invoicing as well as functions for service agent selection.