ERP Project Management

Lean Manufacturing Through Factory Floor Innovation

Taking the concepts of the Toyota System and enhancing them with todays information systems technology has been the key to allow some manufacturers to unlock the door that leads to a short-cut in process improvement projects. They are rethinking the good ideas of lean manufacturing and are using todays factory floor information tools to quickly and easily improve factory floor performance, customer responsiveness and their bottom line.

Process improvement through a leaner approach and finite scheduling for the factory floor can be demonstrated in a number of ways: Continue reading Lean Manufacturing Through Factory Floor Innovation

ERP Overview

This ERP Overview covers What is ERP, Brief history of ERP, Why is it necessary, Market Leaders and the future of ERP. What is ERP? Enterprise Resource Planning or ERP is an industry term for integrated, multi-module application software packages that are designed to serve and support multiple business functions. An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organizations own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendors proprietary tools as well as proprietary or standard programming languages.

Brief History of ERP The focus of manufacturing systems in the 1960s was on Inventory control. Most of the software packages then (usually customized) were designed to handle inventory based on traditional inventory concepts. In the 1970s the focus shifted to MRP (Material Requirement Planning) systems that translated the Master Schedule built for the end items into time-phased net requirements for the sub-assemblies, components and raw materials planning and procurement.

In the 1980s the concept of MRP-II (Manufacturing Resources Planning) evolved which was an extension of MRP to shop floor and Distribution management activities. In the early 1990s, MRP-II was further extended to cover areas like Engineering, Finance, Human Resources, Projects Management etc i.e. the complete gamut of activities within any business enterprise. Hence, the term ERP (Enterprise Resource Planning) was coined.

Why is it Necessary? By becoming the integrated information solution across the entire organization, ERP systems allow companies to better understand their business. With ERP software, companies can standardize business processes and more easily enact best practices. By creating more efficient processes, companies can concentrate their efforts on serving their customers and maximizing profit.

Market Leaders The top five ERP vendors, SAP, Oracle Corporation, Peoplesoft, Inc. (now Oracle Corp.), JD Edwards & Company, and Baan International, account for 64 percent of total ERP market revenue. These vendors continue to play a major role in shaping the landscape of new target markets, with expanded product functionality, and higher penetration rates. SAP dominates the $6.7 billion ERP applications market in Europe with 39% market share. Oracle and PeopleSoft come second and third respectively, followed by SAGE Group and Microsoft Business Solutions.

The Future of ERP Industry analysts expect that every major manufacturing company will buy the software, which ranges in cost — with maintenance and training — from hundreds of thousands of dollars for a small company to millions for a large company. AMR Research of Boston says consolidation among the major players will continue and intensify. ERP vendors are expected to put more effort into e-commerce, CRM and SCM initiatives, with leaders redirecting between 50% and 75% of their R&D budget to these projects.

According to Gartner research group, the rapid evolution of ERP has already lead to a new corporate must-have, ERP II, which is supposed to help businesses gain more competitive edge in the future. The major difference is that ERP II involves collaborative commerce, which enables business partners from multiple companies to exchange information posted on eCommerce exchanges.

In the next tutorial we will talk about popular ERP Products and the Modules and Application related to them.

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Causes of ERP Failures

by Bruce Zhang

ERP is the acronym of Enterprise Resource Planning. Multi-module ERP software integrates business activities across various functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking. ERP has transformed the way multi-billion dollar corporations conduct their businesses. Successful implementation of ERP systems could save tens of millions of dollars and increase employee satisfactions, customer satisfactions and sustain competitive advantages in every-changing marketplace. Corporate executives are often perplexed by the stories that how reputable corporations (Hershey Foods) have failed miserably and lost ten of millions of dollars in their ERP endures.

The failures of ERP projects are preventable if we can identify the common causes of the failures regardless the companies and industries that implement them.

: Image by Behrooz Nobakht via Flickr

An ERP system is the combination of ERP software, the business processes that the ERP transforms, the users of the ERP system, and the computer systems that run the ERP applications. The failures of a ERP project is often the result of the failures in one or more of those four components. The failures in computer systems (hardware and operating systems) are much easier to identify and to fix, so we’ll examine the failures in software implementation, business process and user acceptance.

ERP Failures -Software Implementation

Module-based ERP software is the core of ERP systems. Most ERP projects involve significant amount of customizations. Packaged ERP software modules have built-in functionality that work in a standard and simplified enterprise environment. However, every organization is unique in data requirements and business processes. It is the customizations that transform packaged ERP software into ERP software that meets organizations’ individual business processes and operations. Long and expensive customization efforts often result the pass of release deadline and budget overrun. Customizations may make the software more fragile and harder to maintain when it finally goes to production. Major changes may be required in the later stage of the implementation as a result of incomplete requirements and power struggles within organizations

The integration of ERP systems (http://www.sysoptima.com/erp/erp_integration.php) with the IT infrastructures also challenges ERP project teams. The use of appropriate implementation methodologies can often make or break a ERP project. (http://www.sysoptima.com/erp/implementation_methodologies.php)

ERP Failures – Failure of Accommodating Evolution of Business Processes

According to Anthony, R. A, business processes fall into three levels – strategic planning, management control and operational control. Organizations continuously realign their business processes of all levels in response to the ever-changing market environment. Many ERP systems aren’t flexible enough to accommodate evolution of business processes. Many ERP system need a major overhaul in every a couple of years.

ERP Failures – Failure of User Acceptance

The users of ERP systems are employees of the organizations at all levels. ERP projects usually modify the company’s business processes which create extra workload for employees who use them initially. They may not think that the workflow embedded in the software are better than the ones they currently use. Ongoing end-user involvement and training may ease the difficult in organization’s adaptation of new systems and new business processes.

Bruce Zhang has over 10 years experiences in developing and implementing ecommerce and ebusiness systems in various industries. He operates a website www.sysoptima.com that automatically aggregates the news and new articles in e-business (ERP, CRM, Supply Chain Management and Knowledge Management) from over 50 sources daily (www.sysoptima.com/newsbot/) to help corporate executives, professionals and consultants to keep up with the latest development in enterprise software market. The website offers a knowledge base for understanding business software from a systems perspective.

Another Related ERP Failures post

Causes of ERP Failures

CRM to the Rescue: CRM End All Be All?

by Jeffrey Hahn

I love a challenge. And that is what I got when I was asked to lead a project to put together a CRM. How do you put together a CRM? Given my educational background is in Philosophy, I started thinking, “what is CRM?”, “What is the essence of CRM?”, and “What provoked the need for someone to create CRM?” After going back and reading about CRM, the many failures and few successes, I found whole experience enlightening. One might gather from reading up on CRM that there might be semantics issue, but I believe it goes deeper. Is CRM a business process? Is it a software application? Or is it a goal that you hope to achieve? In each of these three questions would unfold another layer of questioning in order for you (your company) to define what you/they mean by Customer Relationship Management. If it is a goal, how do you know when you have achieved CRM? If it is a business process how to you know you are following CRM? These are questions that a company must address before assembling a team to create a “CRM”. Read the entire post at: CRM to the Rescue: CRM End All Be All?

What makes a successful ERP implementation?

ERP implementations are the most difficult thing you will probably have to do. They are painful and they usually tear a team apart (and then bring them back together) before going live. Some say that a major ERP implementation will go live under its third project manager! While this is extreme, it can be seen in large corporate environments. Add to the fact that ERP is not really one system; there are document management systems, bar code systems, report writers, warehouse management and other sorts of bolt-on’s. The greatest challenge is Continue reading What makes a successful ERP implementation?