Implementation of an Integral ERP System - Essay Example

Implementation of an Integral ERP System 1.0Executive Summary: In this competitive era, ERP systems have become an integral part of any organization, whether it is manufacturing sector, banking sector, insurance sector or medical fields. ERP systems are not only essential in today’s fast track environments, but have become necessity. These ERP systems have to perform multidisciplinary tasks and for a supply chain management system, these must be performed at the real-time basis. For a supply chain management, the jobs these systems has to perform are enormous, tracking the product information, inventory control, design production, optimizing cost , supply management , billing and tracking customers for payment or credit, ebilling and product forecasting are some of the key areas. All these tasks has to performed on the real-time basis. Inventory control, is one of the key areas, where a lot of companies claims to have saved lot of money , which otherwise was spend on manual inventory. Here, an attempt has been made to understand the ERP solution, being used at Actavis, which is mySCM from SAP. The system seems to be slightly low performing at the real-time, so a recommendation to adopt PeopleSoft Enterprise available from Oracle has been made. Advantages of the new system have been elaborated. Justification of change and a complete action plan has been prepared. A cost reduction, while using this system has been anticipated, mostly from inventory control. 2.0 Introduction: The changes over the past decade have expanded the business of many Fortune 500 and International companies. ERP had made an integral element within these large organizations. The modern ERP system perform “what if” analyzes for various processes, track human resource information, manage warehouses and allow sophisticated analysis and tracking of customer buying habits and preferences. These modern ERP systems are capable to track, monitor and share data across multiple locations (Karl et al, 2001, p. 22). The Actavis Group is a leading player in the development, manufacture and sale of high- quality pharmaceutical business and have more than 30 plants throughout the globe (About Actavis n.d.) and uses a Supply Chain Management (SCM) package of SAP Germany, to monitor, supply chain management, inventory management and sales records. Although the system is effective but it is very low while executing. Actavis, being multinational is advised to adopt an ERP package from Oracle for improving supply chain management, throughout globe. 3.0 Description of current situation: At present mySCM from SAP is being used at the local location of the company Actavis. A day-to-day inventory management is being monitored and production is advised accordingly. To achieve a better production, supply, demand management, the following points needs to be taken into consideration. Production planning at all locations throughout globe. Consumption and demand patterns. Supplying the product according to demand from one of the manufacturing location to obtain cost effectiveness. Distribution and customer services. The current software is not able to deal with all the points as mentioned above, therefore in current situation, there is a need to improve the supply chain management to achieve better results in sales, production in profits. 4.0 Possible Solutions: Supply chain management, which is defined as the science of integrating the flow of goods and information from initial sourcing all the way through to delivery to end user (Principles of SCM, n.d.). To improve the supply chain management, we must adopt proper ERP software, which includes purchasing, production planning, order processing and fulfillment, inventory management, transportation, distribution and customer service. There are more than 100 companies supplying ERP systems, but initially I could concentrate my focus on SCM from Ovitztaylorgates (Principles of SCM, n.d.) Supply Chain Management Solution from Oracle (supply chain management, n.d.). Going through the literature provided in the concerned websites, I could decide in favor of SCM from Oracle due to the following benefits. Able to integrate collaboration, planning, execution and coordination of the entire supply chain management. Execute production based on actual demands. Drive distribution, transportations, and logistics process that are integrated with real time planning processes. Monitor and analyze the entire supply chain. With these benefits of Oracle over its other competitors, I think it is the most appropriate solution for Actavis to adopt SCM of Oracle for overall integration of the supply chain management. 5.0 Description of proposed technique: The Oracle E-Business Supply Chain Management 11i.10 integrates all key supply chain activities, from design, planning and procurement to manufacturing and fulfillment. A unified data model provides a single, accurate view of entire supply chain to enforce lean principles across increasingly complex, global supply chains (supply chain management, n.d ) Oracle supply chain management solution is designed from the very ground and is capable to deliver all the resources, processes, data and information on real time. As supply chain activities of the system are based on real-time, it provides to customers accurate information and product price and availability. Oracle Supply Chain Management enables to collaborate with partners across global regions, manage complex suppliers networks with real-time information, and adapt quickly to global constraints and demand. The Oracle Supply Chain Management system has been tried by many customers across the globe, and has found that the system has a capability to integrate supply chain system in a very effective way. Fuzi Xerox asia Pacific (FXAP) has reported a saving of $ 5 million in 18 month on account of less inventory with the use of Oracle Supply Chain Management System (Fuzi Xerox,n.d.). Changan Automobiles group of China has reported that after implementing Oracle supply chain management system, they were able to reduce master production planning period, from more than one hour to 20 minutes, fully integrate financial, sales and manufacturing information for the whole company (Changan automobiles, n.d.). Therefore, the Supply chain management system is suitable for M/S Actavis for improving the supply chain. 6.0 Description of the new situation at Actavis: Oracle supplies four supply chain management products to address requirements across procurement, order management, manufacturing, product lifecycle management, maintenance, logistics, and supply chain planning and execution (supply chain management, n.d ). Out of these four, Oracle e-business suite, PeopleSoft enterprise, J D Edward Enterpriseone and oracle retail, PeopleSoft Enterprise best suits the requirement of Actavis. PeopleSoft Enterprise is suitable for medium to large manufacturing and distribution organizations. The entire product has been further divided into modules for smooth functioning of the whole products. These modules are customer order managements, logistics, manufacturing solutions and supply chain planning. All these modules have a few sub modules, so that these module functions properly. After the implementation of PeopleSoft Enterprise, the supply chain management product at Actavis, the customer order management module will deal with the customers in real time for complete order-to-order cash business processes. Bill and ebill modules will generate customized online bills and submit invoices in multiple currencies, manage bill cycles and streamline billing processes. Customers will be given the opportunity to pay online 24 hours a day and a receipt for bill will be mailed. Order management sub module will offer visibility into system wide product availability—from current inventory levels to order status information. It will synchronize electronically the orders for particular products with the availability of that particular product. Product Configurator sub modules simplifies the process of creating and tracking made-to-order products in your supply chain. It allows employees to identify unique product configurations to better serve customers. The logistic module is the main important module, because it deals with the inventory. PeopleSoft enterprises inventory management module will provide the real time access to the Actavis and at the same time reduce the cost of labor, inventory write-off. It will further boost the sales of Actavis , as a real time inventory will generate more opportunity to sell the stocked product and earn more profits. Manufacturing Solution focuses on production processes and ensures business goals by connecting customers, suppliers, and employees with manufacturing best practices. Eliminate waste and maximize demand-driven efficiency while aligning production processes. Customers can be aligned with the production or vice-versa. Engineering, flow production, manufacturing and quality are sub modules. Quality is one of the main criteria to survive a business in this competitive environment. If the manufactured product does not meet the quality aspect, the product has to be redesigned or replaced. Supply chain planning is one of the toughest areas to be covered by Actavis, and with the help of this module, the suppliers, customers and employees should be aligned in such a way, so that the planning process ensures accurate demand driven inventory levels to obtain a reduction in cost. Demand forecasting is also one of the areas, which plays a key role in supply chain management systems. Demand planning, inventory policy planning and supply planning are useful sub modules of the system. 7.0 Justification of change: The sift from SAP based supply chain management system to Oracle based PeopleSoft Enterprise (supply chain management system), will lead some advantage to Actavis. Some of the advantages have been summarized as given below. Oracle systems are much fast, real time and reliable compared to SAP systems. These systems are capable to connect suppliers and customers with company business processes in real time. The PoepleSoft Enterprise system is capable to integrate all categories of goods and services. This system is much analytical to monitor supply chain performance and adjust as per the business requirements. By using pure Internet architecture, the system guarantees secure and safe money transactions over Internet. The system is capable to handle order with CTI (computer telephony interface) and multiple routing options. This system is capable to define flexible pricing, from simple price list to multiple levels pricing structure, to obtain the desired profits. This system creates comprehensive customer profiles, track customer credits and avoids future credits. The system is capable to set up flexible buying arrangements for customers or group of customers to reward profitable buying behaviours. With these some of the advantages of Peoplesoft enterprise over mySCM , it is therefore desired that Actavis should shift its Supply chain management system and should adopt the PeopleSoft Enterprise of Oracle. The present cost of PeopleSoft Enterprise is competitive, and in future run the cost of the package will come down. One more benefit of the system will be seen on the expenses carried out on physical inventory will come down. With these benefits of PeopleSoft enterprise over its counterparts, it is therefore argued that, Actavis is ready to shift to PeopleSoft with the following implementation plans. 8.0 Implementation Plan with Time Targets: The following implementation plan has been prepared for Actavis. Start of trial program – 1 May 2006. Presentation to Management– 2 to 6 May 2006. Suggestion by management – up to 10 May 2006. Implementation of suggestion – up to 15 May 2006. Presentation to Management – 16 to 18 May 2006. Incorporations of suggestions – up to 20 May 2006. Trial run of software for management – 22-24 May 2006. Incorporations of suggestions – 28 May 2006. Trial run for middle level executives – 30 to 5 June 2006. Trial run for junior executives – 6 to 10 June 2006. Trial run for other staffs – 11 to 18 June 2006. Hands on training for all levels- 20 June to 30 June. Further incorporation of any suggestion – up to 5 July 2006. Final hand on training for all levels – 6 July to 12 July 2006. Start of the trial run – 15 July 2006. Feedback and necessary improvement- by 30 July 2006. Complete adoption of the system – 1 Sept 2006. 9.0 Conclusions and Recommendation: In today’s competitive environment supply chain management systems have received a lot of attention by users as well as by solution providers. This has become now an essential requirement for medium to large organizations. The amount on physical inventory systems is huge and is a potential saving for an ERP user. Many international companies are claiming, a huge saving in inventory while using integrated ERP systems. Not only inventory control, effective resource planning is generating a dynamic profit. The present system at Actavis is not capable to run in real time, as the system seems to be very slow, and internationally people are complaining about its effectiveness. Oracle’s Supply chain Management System seems to be very optimistic solution, and have numerous advantages from its competitors. A good product forecasting may lead to a numerous profits. Actavis will have to make the presence in forecasting stronger, although it is globally available in more than 30 countries. Improved product forecasting or demand forecasting if aligned with the ERP will integrate the business outcome of Actavis. Although Oracle has four supply chain management systems, PeopleSoft enterprise best suits the requirement of Actavis and therefore has been recommended. 10.0 References: Actavis, About Actavis, n.d. Retrieved April, 14,2006 from http://www.actavis.com/aboutactavis/ Karl M Kapp, William Latham, Hester Ford-Latham, 2001, Integrated Learning For ERP Success, London, CRC Press. Oracle, Changan automobiles speed management decisions with integrated enterprise resource planning data, n.d., Retrieved April, 14, 2006 from http://www.oracle.com/customers/profiles/PROFILE10062.HTML Oracle, Fuzi Xerox Asia Pacific Improves Supply Chain Management with Oracle E-Business Suite, n.d., Retrieved April 12, 2006 from http://www.oracle.com/customers/profiles/PROFILE6608.HTML Oracle, Supply chain management, n.d., Retrieved April, 11, 2006 from http://www.oracle.com/applications/scm/index.html Ovitztaylorgate, Principles of SCM, n.d., Retrieved April, 14, 2006 from http://www.ovitztaylorgates.com/TheSupplyChainManagementToolBox.html/ Read More