Siddharth Sharma Roll no: 520928713

Master of Business Administration-MBA Semester IV

MI0029
Enterprise Resource Planning– 2 Credits
(Book ID: B0898)
Assignment Set- 1 (30 Marks)

Note: Each question carries 10 Marks. Answer all the questions

Q.1 Write a scenario to explain the failure of ERP implementation

Ans. Information Technology is revolutionizing the way in which we live and
work. It is changing all aspects of our life and lifestyle. The digital revolution
has given mankind the ability to treat information with mathematical
precision, to transmit it with very high accuracy and to manipulate it at will.
These capabilities are bringing into being, a whole world within and around
the physical world. The amount of calculation power that is available to man-
kind is increasing at an exponential rate. Computers and communications are
becoming integral parts of our lives.

To survive, thrive and beat the competition in today’s brutally competitive

world, one has to manage the future. Managing the future means managing
information. In order to manage information, in order to deliver high quality
information to the decision-makers at the right time, in order to automate
the process of data collection, collation and refinement, organizations have to
make Information Technology (IT) an ally, harness its full potential and use it
in the best possible way.

IT has many roles to play in any organization. All organizations have certain
objectives and goals to achieve. For any organization to succeed, all business
units or departments should work towards this common goal. But each
department or business function in the organization will have its own goals
and procedures. The departmental objectives can sometimes be conflicting.
For example, the finance department might want to cut down the advertising
budget, whereas the marketing department might want more money.
Similarly the production-planning department might want to reduce the
inventory level, but the production people might want to have more stocks.
The success of an organization rests in resolving the conflicts between the
various business functions and making them do what is good for the
organization as a whole. For this, information is critical. Everybody should
know what is happening in other parts of the organization. It is not enough
that each department manages its activities efficiently; it should also help
other departments manage their functions efficiently. For this to happen, the
organization should cease to function as islands of information, each working
in isolation. Each and every employee should know what his/her counterparts
are doing, how his/her actions and decisions will affect the other de-
partments. This kind of information sharing was difficult in the early days.
Now with the advancements in Information Technology this is possible.

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IT has a crucial role to play, both at the organizational level and at the
departmental level. At the organizational level, IT should assist in specifying
objectives and strategies of the organization. IT should also aid in developing
and supporting systems and procedures to achieve them. At the departmen-
tal level, IT must ensure a smooth flow of information across departments,
and should guide organizations to adopt the most viable business practices.
At this level, IT ensures seamless flow of information across the different
departments and develops and maintains an enterprise-wide database. This
database will eliminate the need of the isolated data islands that existed in
each department and make the organization’s data accessible across the
departmental boundaries. This enterprise-wide data sharing has many ben-
efits like automation of the procedures, availability of high quality
information for better decision making, faster response times, and so on.

Why do many ERP Implementations Fail?

ERP packages, if chosen correctly, implemented judiciously and used

efficiently, will raise the productivity and profits of companies dramatically.
But many a company fails in this because of a wrong product, incompetent
and haphazard implementation and inefficient or ineffective usage.

To work successfully, the ERP solutions need a lot of factors to click. There
should be good people who know the business. The vendor should be good
and his package should be the one best suited for the. company’s needs. The
ERP consultants should be good. The implementation should be planned well
and executed perfectly. The end-user training should be done so that the
people understand the system, and the effect of their efforts on the overall
success of the program.

The introduction of the ERP system will dramatically change the job
descriptions and functions of many employees. Employees who were earlier
doing the work of recording information will, overnight, be transformed into
decision-makers. For example, in the past an order entry clerk’s job was to
enter the orders that came to him. With the implementation of a good ERP
system, the order entry clerk becomes an action initiator. As soon as he
enters the order into the system, the information is passed on to the sales,
distribution and finance modules. The distribution module checks whether the
item is in stock and if available, the item is dispatched and the information is
sent to the finance module. If the items are not in stock, then the
manufacturing module is given the information, so that production can start.
The customer is informed about the status of his order. If the items are
shipped, the finance module prepares the invoice and sends it to the cus-
tomer. All these actions take place automatically as soon as the order entry
clerk enters the information regarding the order into the system. Thus the
order entry clerk is transformed from a data entry operator to a decision-
maker whose actions can trigger a chain of actions.

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Many employees find this transformation difficult to accept. If the employees

are not given proper training, well in advance, then the systems will fail.
Another factor is the fear of unemployment. When procedures become
automated, the people who were doing those jobs become redundant. So it is
quite natural to have resistance from the employees. But the same
employees can be trained in the new system and can work in more
challenging and stimulating environments. For this also, the employees have
to be told, in advance, as to what will happen and should be given ample
time and training to make the transformation. Without support from the
employees, even the best system will fail. So it is very important that the
management should take the necessary steps, well in advance, to alleviate
the fears of, and provide necessary training to their employees.

Q.2 a. What is the use of transparency and information access? [2

marks]
b. What are the limitations of ERP systems? How ERP packages help
in overcoming theses limitations
Ans. 2b.What are the ERP Packages used now

In regard to the application packages, many products have been developed

thus far and are selling well. So, how do conventional application packages
and ERP packages differ?

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 compa-
nies, irrespective of their size and market share, are manufacturing and
selling in various areas of the world, the globalisation of management plat-
forms is being hastened, along with the global adaptation of enterprise infor-
mation systems.

Q.3. What is the use of JIT approach to any organization.

Ans. All ERP packages contain many modules. The number and features of
the modules vary with the ERP package. In this chapter, we will see some of
the most common modules available in almost all packages.

· Finance,

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· Manufacturing and Production Planning,

· Sales and Distribution,

· Plant Maintenance,

· Quality Management,

· Materials Management, etc.

This is by no means a comprehensive list. Some packages will have the

subset of this and some will have more modules and/or features. For detailed
information, you will have to consult the product literature of the specific ERP
system.

Just-In-Time/Repetitive Manufacturing

The past decade has seen a surge of interest in the adaptation of Just-in-
Time (JIT) manufacturing techniques. While companies have embraced the
concepts of waste elimination, product factory layout, manufacturing cells
and Kanban signaling, many implementations have struggled due to lack of
software tools to effectively support the transition. Many systems not only
provide high volume repetitive manufacturing functionality, but also provide
for the transition to rate-based production by allowing the use of repetitive
scheduling, even for products that are not rate-based. This allows a
production facility to transition products from discrete manufacture into a
JIT/ Repetitive focus. For example, when the demand pattern for an item
begins to stabilise and show a repeatable/predictable pattern, then a
production schedule can be initiated even though the item may not be
designated as rate-based. Over time, as the item’s demand pattern grows,
the item can be switched to full rate-based production scheduling. This
transition capability enables production facilities to adopt process
reengineering, setup reduction programs, single minute exchange of die
(SMED) programs, employee empowerment work teams, etc. with the
confidence of knowing that the planning and control system will effectively
support their efforts. JIT/Repetitive includes strong analytic capabilities. A
production inquiry presents both current production status and past history.
The history provides current day, month to date, and year to date results, as
well as calculations of maximum and average production results per hour. A
purchase/production plan report shows current on-hand quantity and
scheduled receipts by planning period. A cumulative production report shows
production status information by item which includes quantity ordered,
received, remaining and due, as well as quantity allocated and year to date
receipts. A downtime analysis report highlights all causes of downtime by
reason code. A quality control/reject analysis report tracks all rejections by
reason code. A yield analysis by operation identifies where loss in
productivity is occurring. A cumulative purchasing report shows total
procurement needs by item, effectively displaying daily delivery performance

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and summed delivery results. An item allocation report provides details

regarding on-hand and allocation status for child items, including lot number
and lot tracing status for lot controlled items. A JIT work list compares the
production plan to the capacity plan for rate-based items. This tool quickly
identifies discrepancies based upon actual performance, so that production
rates and/or daily output goals can be adjusted proactively and monitored on
a timely basis. Reports covering employee efficiency and detailed cost by
item are also provided together with lot tracing status for lot controlled
items.