Effective implementation of Enterprise Systems

MADE BY:
Abhinav Srivastava Vinod Choudhary Jayaram S Meinu S Sinduja P

INTRODUCTION
The implementation issues of ES have been extensively studied but not the business impact of ES adoption. This case discusses about the impact of ES adoption in Indian firms.

ES in HLL (MNC)
HLL largest FMCG firm To keep the whole chain well oiled information must follow seamlessly. 1977- MFG/PRO package was implemented across 220 sites. Objective: To integrate manufacturing, financial & distribution to improve WC management, reduce channel inventory and to standardize business processes.

BEFORE OF ERP

IMPLEMENTATION AFTER IMPLEMENTATION OF ERP

Stock replenishment cycle 2weeks time

3.5days(substantial savings in inventory cost)

Levers planning cycle

Monthly or bi-monthly

Everyday (improved planning paid-off in stock reduction)

Response time

14days

2days

Inventory

47days

41days

Mahindra & Mahindra (Indian pvt)

Largest manufacturer of utility vehicles and tractors. It had several programs running organization wide like: KRA programs, JQI, KAISAN activities, quality circles, task force activities, SPC/SQC, ISO9000 pursuit at individual websites. Problems associated with these programs were being run in isolation and the advantages of synergy were gained nowhere.

 M&M decided to rebuild its processes under the dynamic leadership Anand Mahindra. The proposed redesign was in terms of Business Process Re-engineering(BPR) BPR exercise initiated at manufacturing locations in 1994. it involved factory redesign and supply chain modeling. Lucas engineering was hired to help in implementation of BPR. This program was named as TOP GEAR PROGRAM- aimed to boost productivity by 50% /year.

The entire process of change initiatives can be encapsulated in the following objects:1. Building product units instead of functional layout: - M&M decided to restructure its existing functional oriented management structure into process and team orientated strategic business units around products.

2. Adoption of cellular system at shop floor: -M&Ms functional system had each factory consisting of a number of specialized shops created a chaotic work flow. -PROBLEMS FACED: i) each component visited the same shop floor several times. II) travelled upto 1.5kms and frequently came to a dead halt -Solution: i) Adoption of cellular systems in which entries factory was broken into no. of cells. ii) Within a cell the parts follow continuously form one operation to another iii) The cells were laid out in U-shape to allow for easy switching between product lines.

 After effects: -Production times reduced upto 50% - Reduction in distance travelled by 75% - Reduction in changes of ownership by 80% - Non-valued added activities reduced by 64%

 Decentralization of decision making: age old hierarchical bureaucratic set up changed to customer centric decentralized decision making system. Objective: i)improving efficiency in business ii) improve in decision making iii) providing improved customer satisfaction

 Creation of sense of ownership among workers: -Employee and workers to be taken into confidence in the change program. -They need to be educated and provided sense of ownership in the change program.

 Benefits gained by ERP implementation -the manufacturing, logistics management, product data and financial processes of the company are now linked and it has access to the information it needs to keep the lead in the demanding market place. - the company has a long term delivery solution- the high performance and businesscritical system ensures information is readily and continuously available.

- it gives the company an edge in understanding the financial status at any given moment. - the new system helps to response to its customers much faster.

ES in BPCL (PSU)
BPCL implemented ERP enabled Enterprise Transformation project called ENTRANS in 2001 Project was an outcome of strategic restructuring program initiated in 1998 BPCL chose SAP R/3s

Business impact: Growth- 3.6% Market share- 20.66% to 21.43% PAT growth- 16.5% Sales volume- 5.26% Net profit- 17.34% EPS- Rs. 27.34 Procurement cycle time reduced over 20%

conclusion
With ES companies are often provided with new capabilities that can be challenging to quantify ES has a potential to benefit organizations in the following: 1) operational: -Relating to cost reduction, cycle time reduction, productivity improvement, qaulity improvement and customer service improvement.

- this kind of benefits happens due to cross-functional integration and automation of its business process 2) strategic: - concerning supporting business growth, supporting business alliance, building cost leadership, generating product differentiation and building external linkages. - the strategic benefits are derived out of restructuring and adoption of best practices from ES implementation.

3) Managerial decision making: - Relating to better resource management, improve decision making and planning and performance improvement. - Decision making improved due to seamless flow of information across business functions and subunits.

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