B. How Do Conventional Application Packages Differ From ERP Packages?

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MBAN-SEM-IV MI0029- SETI

11. A. What are the advantages of ERP?

Ans. Installing an ERP system has many advantages – both direct and indirect.
The direct advantages include improved efficiency, information integration for better
decision making, faster response time to customer queries, etc. The indirect benefits
include 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

b. How do conventional application packages differ from ERP packages?

Ans. The first answer to this question is that ERP packages cannot only handle
individual business functions such as accounts and inventory, but also the entire range of
business functions necessary for the company's operations. The second difference is that
ERP packages are targeted at everything from small businesses to the largest
organizations, and that they can be composed of a highly flexible decentralized database
and an information system cluster linked by a network. The third difference is global
adaptation, represented by ERP packages' multilingual and multi-currency capacity. In
the present day, when companies, irrespective of their size and market share, are
manufacturing and selling in various areas of the world, the globalisation of management
platforms is being hastened, along with the global adaptation of enterprise information
systems.

2. What are the limitations of ERP systems? What are the technologies used to overcome
these limitations. Explain each one of them in brief.

Ans. ERP systems have three significant limitations:


1. Managers cannot generate custom reports or queries without help from a programmer
and this inhibits them from obtaining information quickly, which is essential for
maintaining a competitive advantage.

2. ERP systems provide current status only, such as open orders. Managers often need to
look past the current status to find trends and patterns that aid better decision-making.

3. The data in the ERP application is not integrated with other enterprise or division
systems and does not include external intelligence. There are many technologies that help
to overcome these limitations. These technologies, when used in conjunction with the

ROLL-NO-510286414 CENTRE-01976
NAME:-AHUJA PRAKASH DHANRAJ
MBAN-SEM-IV MI0029- SETI

ERP package, help in overcoming the limitations of a standalone ERP system and thus,
help the employees to make better decisions. Some of these technologies are:
• Business Process Reengineering (BPR)
• Management Information System (MIS)
• Decision Support Systems (DSS)
• Executive Information Systems (EIS)
• Data Warehousing
• Data Mining
• On-line Analytical Processing (OLAP)
• Supply Chain Management

Business Process Reengineering (BPR)


BPR has been around for quite some time and a lot has been written about it in both, the
practitioner trade press and the academic research journals. However, the controversy
still remains about whether there is any accurate description of BPR, or BPR is just a fad
– an appealing label to tag on to whatever your company is doing, to suggest that your
latest and greatest work is 'in vogue.' But if reengineering is to continue in the long run,
then it must do more than advertise its considerable successes to date. It must become
more proactive and inclusive with regard to human, organizational and motivational
change issues.

Management Information Systems (MIS)


In the past, most payroll systems were data processing systems that did little more than
process time sheets, print payroll checks and keep totals of annual wages and deductions.
This was the case with most other departmental information systems. As managers began
to demand more and better information about the working of the organization, the data
processing systems evolved into management information systems. For example, a
human resource MIS system is capable of predicating the average number of worker sick
days, the amount that must be given as bonus, the overtime allowances, and so on. MIS is
a computer-based system that optimizes the collection, collation, transfer and
presentation of information throughout an organization, through an integrated structure of
databases and information flow. The major differences between a management
information system and a Data Processing system are:
• The integrated database of the MIS enables greater flexibility in meeting
the information needs of the management.
• The MIS integrates the information flow between functional areas (accounting,
marketing, manufacturing, etc.) Whereas data processing systems tend to support
a single functional area.

• MIS caters to the information needs of all levels of management whereas data
processing systems focus on departmental-level support.
• Management's information needs are supported on a more timely basis with the
MIS (with its on-line query capability) than with a data processing system.

ROLL-NO-510286414 CENTRE-01976
NAME:-AHUJA PRAKASH DHANRAJ
MBAN-SEM-IV MI0029- SETI

.
Decision Support System (DSS)
Managers spend a lot of time and effort in gathering and analyzing information before
making decisions. Decision support systems were created to assist managers in this task.
Decision support systems are interactive information systems', that rely on an integrated
set of user friendly software and hardware tools, to produce and present information
targeted to support management in the decision-making process. On many occasions,
decision-makers can rely on their experience to make quality decisions. However,
decision-makers, especially at the top management levels, are often confronted with
complex decisions. The analysis of such complex decisions which involve many factors
can be difficult for a human being. These types of decisions, and the need for complex
information
analysis required for such decision-making, led to the evolution of decision support
systems. A DSS can help close the information gap and allow managers to improve the
quality 6f their decisions. To do this, the DSS hardware and software employ the latest
technological innovations, planning and forecasting models, 4th generation languages
and even artificial intelligence. In many cases, DSS facilitates the decision-making
process, helping the decision makers to choose between alternatives. Some decision
support systems can automatically rank the alternatives, based on the criteria given by the
decision-maker. DSS also help in removing the monotony and tedium of gathering and
analyzing data.

Executive Information Systems (EIS)


The line dividing DSS and EIS is very thin. EIS can be considered as a better and
sophisticated DSS. Top-level executives and decision-makers face many problems and
pressures. They have to make the right decisions at the right time to take the company
forward. In today's competitive world, reaction times are shrinking and time to make
decisions is very less. EIS is a decision support system especially made for senior-level
executives. An EIS is concerned with how decisions affect an entire organization. An EIS
takes the following into consideration:
• The overall vision and mission of the company and the company goals
• Strategic planning and objectives
• Organizational structure
• Crisis management/Contingency planning
• Strategic control and monitoring of overall operations

Data Warehousing
If operational data is kept in the databases of the ERP system, it can create a lot of
problems. As time passes, the amount of data will increase and this will affect the
performance of the ERP system. So it is better to archive the operational data once its use
is over. When I say 'the use is over', it does not mean that the archived data is useless. On
the contrary, it is one of the most valuable resources of the organization. However once
the operational use of the data is over, it should be removed from the operational
databases. For example, once the financial year is over, the daily transactional data can be
archived.

ROLL-NO-510286414 CENTRE-01976
NAME:-AHUJA PRAKASH DHANRAJ
MBAN-SEM-IV MI0029- SETI

Data Mining
We are living in the information age. The importance of collecting data that reflects ones
business, or of activities that achieve competitive advantage, are widely recognized now.
Powerful systems for collecting data and managing it in large databases are available in
most organizations. However, the major bottleneck of converting this data into effective
information is the difficulty faced in extracting knowledge about the system from the
collected data. Modeling the investigated system discovering relations that connect
variables in a database are the subjects of data mining. Data mining is the process of
identifying valid, novel, potentially useful and ultimately comprehensible information
from databases that is used to make crucial business decisions. Modern data mining
systems self learn from the previous history of the investigated system, formulating and
testing hypotheses about the rules, which the system obeys. When concise and valuable
knowledge about the system of interest has been discovered, it can and should be
incorporated into some decision support system which helps the manager make wise and
informed business decisions. The main reason for needing automated computer systems
for intelligent data analysis is the enormous volume of existing and newly appearing data
that require processing. The amount of data accumulated each day by various businesses,
scientific and governmental organizations around the world is daunting. Research
organizations, academic institutions and commercial organizations create and store huge
amounts of data each day. It becomes impossible for human analysts to cope with such
overwhelming amounts of data.

On-Line Analytical Processing (OLAP)


According to Business Intelligence Ltd (http://www.OLAPReport.com), OLAP can be
defined in five words – Fast Analysis of Shared Multidimensional Information. FAST
means that the system is targeted to deliver most responses to users within about five
seconds, with the simplest analysis taking no more than one second and very few taking
more than 20 seconds. ANALYSIS means that the system can cope with any business
logic and statistical analysis that is relevant for the application and the user, and keep it
easy enough for the target user. SHARED means that the system implements all the
security requirements for confidentiality (possibly down to cell level) and, if multiple
write access is needed, concurrent update locking at an appropriate level.

Supply Chain Management


A supply chain is 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.
Supply chains exist in both service and manufacturing organizations, although the
complexity of the chain may vary greatly from industry to industry and firm to firm.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing
organizations along the supply chain operated independently. These organizations have
their own objectives which are often conflicting. Marketing's objective of high customer
service and maximum sales revenue.

ROLL-NO-510286414 CENTRE-01976
NAME:-AHUJA PRAKASH DHANRAJ
MBAN-SEM-IV MI0029- SETI

3. What are the benefits and pitfalls of JIT?

Ans. Benefits of JIT


JIT is continuously seeking to reduce inventory levels of work in process (WIP), raw-
materials and finished goods. Therefore, less space is required with lower inventories so
there is less chance of the product becoming damaged, spoiled or obsolete. Material
handling of lots can be automated, and operations can be placed closer together,
enhancing communication and teamwork. The following are some of the benefits of a
properly implemented JIT system:
• Increased flexibility: This can be done through small batch sizes, which achieves
faster throughput. Flexibility is a prerequisite, if small batch sizes are to be kept.
A flexible workforce means that the operators must be multi-skilled which is
done through training. The worker should also be free to move from low demand
to high demand areas.
• Parts reduction: JIT continuously seeks to reduce inventory levels of raw
materials, work in process and finished goods. Lower inventory means less space
and less chance of the product being obsolete, damaged or spoiled. Work in
process inventories are reduced as a firm implements the 'pull system'. Raw
material reduction is a key part of the IT system and requires a sound
relationship with the supplier. Inventories can be reduced if products are
produced, purchased, delivered in small lots. To avoid unnecessary production
delays, materials must arrive just before they are needed, they must be correct
material and must satisfy the quality specifications.
• Increased quality: When operating a JIT system, disruption has a minimum
impact, so quality problems need to be eliminated. Benchmark: Quality Function
Deployment, and service design can be used for device operations. Service
employees need to learn the value of providing defect free services.
• Simplicity of system: Product mix or volume changes as planned by Master
Production Schedule (MPS), can be accomplished by adjust the number of cards
in the system. Production orders are prioritised by the cards on a post. Production
orders for parts that are running low are moved in front of parts that have more
supply.

Potential Pitfalls of JIT


Many companies fail to understand what JIT is and what it can mean to the because they
fail to implement it properly. Most importantly, they need to aware of the tasks,
resources, time scale and costs. For this, the system need the full backing of the top
management. The JIT system will also fail if an adequate education programme is not
provided. If careful planning process and control improvements are not strictly followed,
they will result JIT not being realised. The planning stage will require dedication and t:
and may also require the assistance of an external consultant(s). All above must be
integrated with moves towards JIT purchasing, or again, JIT will not be achieved. The
JIT system should not be viewed as a one scheme but as an on going continuous process.

ROLL-NO-510286414 CENTRE-01976
NAME:-AHUJA PRAKASH DHANRAJ

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