You can determine the success of an ERP project plan in various ways, including keeping your project within budget, achieving the goals of your business and meeting the date you have set to go live. If your work is plagued by poor performance by any individuals, you will not have a successful project.

The plan for your ERP, if handled properly, will help lead your company to success in a project. Any such plan needs to include the solutions to possible hurdles, the amount of work required, the specific requirements to be met, and and what your expected return on investment will be.

If you want your ERP project to be successful, be sure that your executives understand the goals you have for this project, and the strategies you will use to reach those goals. Review the project as it unfolds, including those in your company who have a stake in the project. Meet with the project team and your company executives to talk over the review’s important findings.

Meeting with executives is essential to a successful project. You will need to have the ability to set and manage your company’s expectations for this project. Include senior staff in on the meeting, including the highest ranking officers of the company, as well as any staff that will be helping you. This meeting will help in determining the project objectives. Discuss in-depth the business drivers that will affect the project, and then get into the technology that will be used.

A valid and successful ERP project plan should also include a review of the project as it is ongoing, by meeting with your company staff and whomever is the manager of this particular project. This is not yet the time for discussing software solutions, but instead a look into the way things are being done, and why this is so. After these are defined, then you can point to possible software solutions that will aid the requirements of the project.

After you finish the analysis, create a document that will describe the review process information. Include a solution that you and the rest of the project team have recommended, to handle any issues that have come to light. This document will allow assurances that the recommendations and project goals are adhered to.

Planning for your project should be well-organized, so that the implementation of your solution will be successful. Understanding the goals and business drivers is a vital step, as is evaluating the process and requirements. The result of this work will be a plan that is backed by recommendations that can be implemented. These steps are all vital in a successful ERP project plan.

Availability of Materials

MRP aims to ensure companies can fulfill all orders they have for manufactured products in accordance with a stated delivery schedule. This means companies must have effective systems for order entry, labor management and material purchasing, so a company can make enough units of a particular product and meet demand. In the past, companies would hoard large stockpiles of components and raw materials, so the company could easily accommodate demand. This solution left industrial companies vulnerable to market fluctuations and taxation. Also, the money companies had invested in inventory caused cash flow problems that challenged their ability to pay their bills and make payrolls.

Minimal Quantities

MRP aims to order and receive materials in just enough time to meet production demands. This means a system must coordinate customer orders and manufacturing capacity with procurement specialists. Inadequate MRP systems cause work stoppages that result in high costs, broken commitments and wasted time while workers sit idle waiting for the arrival of needed parts.

Planning and Forecasting

Companies using MRP systems attempt to plan for current demand and forecast future demand to ensure they have enough raw materials, components and subassemblies on hand to keep manufacturing levels. No one knows the future, but scientific methods now exist that can accurately predict the number of products needed to satisfy new orders. These predictions can consider seasonal demand, market demand and the condition of the general economy when guiding purchasing decisions.

Challenges for MRP

MRP systems depend on accurate data for useful operation. Improper inventory tallies, inaccurate order entry, unrealistic forecasts and inadequate capacity can cause production delays, unfulfilled orders and unhappy customers. Manufacturers with failing MRP systems drive customers to competing suppliers, complicating efforts to recover from supply problems. Therefore, companies must carefully evaluate their MRP strategies, software and other tools.

Automated inventory tools such as barcode scanners and RFID tags can help companies ensure accurate inventory reports. Professional forecasting tools can use accurate historical data to ensure that management bases decisions about procurement on reliable information rather than on random speculation.

The purpose of an ERP is to allow seamless communication between all parts of an organization and with all outside partners and customers. Using one software program allows all users to interact with the system using a common interface. This minimizes miscommunications and simplifies problem reporting and resolution.

ERP Delivery
There are two general delivery methods available. The one chosen will depend on the size and scope of the ERP needed.

One option is web-based ERP services. When this type of service is used, all of the computer hardware, databases, and other ERP programs reside at the service company. Software is provided to interface with the ERP. This may be the ideal solution for companies that want a turn-key solution that eliminates the need for upgrading their infrastructure or adding IT support for the ERP.

The other option is for the business to own the hardware and buy or rent licenses for the necessary software for their ERP. In this case, all of the necessary equipment will reside at the company’s locations. The company will need hardware such as servers to store databases and network hardware to connect the various departments and communicate with external entities. Depending on the status of the existing equipment, hardware may need to be purchased or upgraded. Maintenance, repair and support will typically be the responsibility of the business implementing the ERP.

Scope of the ERP
Whether a web-based service is chosen or the business chooses to implement their own ERP, the required scope of the ERP must be taken into consideration.

A nationwide enterprise business may need a comprehensive ERP system encompassing human resources, sales, inventory management and warehousing. In this case, the company will often hire an expert in this area to evaluate the company’s existing infrastructure and software and design a customized ERP.

A small business with one store may only need a smaller scale ERP to integrate such activities as inventory and sales. In this case, the business may be able to purchase an off -the-shelf system from a company that designs and sells ERP software.

An ERP can be designed or purchased for a business that needs a large-scale enterprise solution or a small business that has only limited needs. An ERP can help a business be more efficient and facilitate communication between departments and with outside organizations.

To examine the inventory levels, you’ll want to take a look at the company’s database and get reports on current inventory levels. Let’s assume you are a wholesaler of finished goods. While manufacturing companies will look at raw material levels, wholesalers of goods will examine finished goods inventory levels. Replenishing these levels needs to be accurate. Most companies keep track of their inventory with computer systems that record all incoming and outgoing merchandise. Drawing reports involves running queries in databases like Microsoft Access or SQL. Determining the right inventory levels include many factors such as: sales history, market trends, OEM fitments, forecasted demand, etc, etc. Special attention may be required by some suppliers because of backorders or discontinued items. New products are released as well in which case a new product rollout inventory will be necessary for all distribution centers to determine the products success.

Typically, products are ordered on a recurring basis so as to continually get shipments from the supplier. Although these shipments are recurring, product inventory should be ordered in quantities for four to six weeks of sales forecasts. This is done because circumstances may prevent the product from being shipped. Unforeseen manufacturing difficulties and carrier weight necessities can lead to increased product demand. Making sure the orders are placed with the supplier is vital for the overall company success because orders are filled in the order in which they are received.

Excel spreadsheets are a great tool for the ERP purchaser or replenishing analyst. They help forecast sales and determine reorder points for all products sold. Coordination between departments may be necessary in order to provide for vendor specials or sales or distribution of spending throughout many vendors. Discrepancies in inventory numbers may need to be physically verified and counted by hand and be inputted into the database as the actual figure. Many different ordering software programs are available to the ERP professional. SSA Distribution replenishment is a great software program which has many helpful tools to the analyst such as graphs and other forecasting tools.

Making this switch can be a big task, so it is vital to be prepared to implement your ERP in the most effective manner possible, making the switch as painless as possible. What follows are the basic steps that are involved in the implementation of an ERP system.

Planning

First a business or consulting firm will need to take an in depth look and research all the business functions to help determine the company’s ERP needs. Once one has a good idea of what exactly their business needs are, it is time to look into available ERP software to see if any of the available software meets the needs of your business. If the business is very large or incredibly complex, it might be useful to contact companies that specialize in the development of personalized ERP software.

This is also when you will create a basic time table for the completion of different steps within the implementation process.

Design

This is the stage where the basics of the system components will be determined and designed. This is also the stage at which prototypes for usability testing begin.

Introduction

Once the physical changes to the system have been made and the ERP software is is seen as close to ready to go, it is time to introduce the software into the business. This is when employees will be trained on how to use the software, and before the software officially goes live, user testing by actual employees should be performed to help work out any additional issues with the software.

After the users have been trained and the software revised in any way needed, it is ready to go live.

It is important to have regular testing scheduled to ensure that the software continues to work properly and provides for the needs of the business. Once the ERP is implemented, the convenience of having all aspects of one’s business managed by a high quality ERP program will be gleaned.

How ERP software works

Besides interconnecting the data, the system also makes it possible for some processes to be automated. For example, if there is an increase in sales volume, the software can present various options, including making an additional purchase order, adding to the inventory or expanding the business.

Working with a small ERP company

This can be a good choice, because a company that size is aware that every client is essential for their growth and survival, and they may rely on you for 5 percent of their income. However, there is greater risk involved in this case as well.

Here are some steps you can take to find an ERP company that is right for you:

•  View custom demos that provide examples of businesses similar to yours. When you do, if you feel uncertain about how the software will effectively implement some aspect of your business, have the vendor take care of that.
• Some companies will allow you to take a “test drive” of their ERP software in order to determine exactly what it does. You can only get the full picture after the software is implemented, but this will provide a worthwhile introduction it.
• Because this software stores vital information related to your business in a common data base, it is essential for you to protect that data from any unauthorized access. For example, your employees should only have access to essential information on a “need to know” basis directly related to their particular job.
• Remember that the more flexible the ERP software you choose is, the happier you will be. If your small business doesn’t have a defined business structure or processes set in stone, this is exactly the kind of integration system you need. In addition, software that is ultra user-friendly may not be as functional as you would like, so you will want to strike a “happy medium” when making your choice.

ERP integrates all parts of a business’s operations into a single system for more efficient operations and ease of access.

What Factors Into the Total Cost of ERP?

There are three main aspects that factor into the total cost of ERP:

1.The cost of the software system
2.The salaries or costs of personnel to operate, manage and troubleshoot system
3.Maintenance and upgrade costs

The cost of the software itself will depend on the size of the enterprise and the number of, or level of processes that will need to be integrated and maintained. One average, the software itself runs about a half a million dollars for a medium-sized organization. For smaller organizations the costs will run a little less, and obviously, for larger organizations, the cost will be higher.

A salaried staff member may be required to personalize, manage, upgrade and troubleshoot the ERP system once it is up and running. Depending on the size of the enterprise, more than one staff member may be required to keep up with the needs of the system and organization. There are also companies that specialize in the maintenance of ERP systems, so this is also a cost that you can outsource. This option might reduce the annual cost of implementing an ERP system.

The entire business must be transitioned to the system which will require the purchasing of new equipment and other resources, as well as the training of employees on how to utilize the new system for their daily needs.

The average total cost for all facets of an ERP system is about $15 millions. For larger, more complex organizations, this cost could run into the hundreds of millions. But many swear by the results they get from implementing this new system. Many have saved money on operating costs and thus, the system will pay for itself over time. It is, however, a large investment to make for a business of any size and should be considered from every angle before a decision is made.

The Big Bang method gets its moniker from the notion that it all happens at once in a singular event. The idea is to move all users to the new system at the same time on a selected date. It is faster than many other methods of conversion and is thus often lower in cost. However, it is more difficult to anticipate problems because a full production test cannot be done. This means complete preparation is more vital, and there is little room for error. Also, users might be less efficient than usual until they acclimate to the new system. For less complex systems, it might be worth the risk for the benefit of cost savings.

In a Phased Conversion, the aim is to conduct the change in stages, over time. In one phased plan the new modules can be introduced individually when ready. Another option is to phase in by business unit. For example, customer service first, human resources next, accounting, and so on will be moved to the new system one at a time. Conversion by location is a third phasing option, and allows larger companies to choose a location as a pilot adoption. With any phased approach, bridging between the new and legacy systems is necessary, though, as the nature of a continuous changeover can lead to complications and compatibility conflicts.

With Parallel Adoption, users can access both the new and legacy systems for a time, until the organization feels ready to retire the old system. The main advantage is minimal risk of being without a functioning system, and to have security in that knowledge while all wrinkles in the new system are smoothed. When the new system is fully ready, the old system can then be disabled. Costs of operating both systems simultaneously might be an issue with this approach, and users might be slower to voluntarily transition if they are resistant to change. The safety of this method makes it a tempting choice for many companies, though.

The top strategy is ultimately the approach that best fits the needs of the organization. Consider the size of the company, its locations, and the complexity and number of modules in the new system to implement. Finally, consider the potential costs of each approach in context with the other factors. Weighing all applicable considerations is the key.

The structuring of ERP processes began in earnest in the 1990s as a way to effectively plan manufacturing and associated accounting operations. Software applications were quickly developed to automate the ERP processes. These tools ranged in functionality but had begun to be called ERP systems. ERP systems have now become a subset of management information systems.

ERP systems are often utilized to integrate internal and external business operations. The internal company functions are the back office operations that allow the business to be managed efficiently. These often include business divisions such as human resources, legal, finance, engineering, and marketing. In many companies these business divisions operated in a semi-autonomous manner as decentralized business units prior to the implementation of ERP systems.

External business functions include front end operations involving customer and vendor relations. ERP systems allow more efficient transactions involving sales data, customer information, and preferred vendor data. ERP systems are not necessarily used as inventory management systems; however, the trend data that can be easily derived from ERP systems may help managers and planners forecast product demand through analysis.

Many applications have been developed over the last 20 years to fulfill the idea of having one application suit all business divisions and customer relationships. Some applications are free ware like OpenPro, and others are proprietary versions. These applications may be written in a variety of software languages for many different platforms. Most ERP systems are designed to be easily installed and rely on robust databases.

ERP systems definitely have some pointed advantages. The system provides greater visibility among operating business divisions which lead to greater customer satisfaction. For instance, a customer calling a sales representative about a late order will typically not get the run around. The sales person can give an honest explanation and may be empowered to remedy the problem on the spot.

Some areas of ERP that are constantly improving are system implementation and security. Migrating to a single software system from many decentralized systems is often very difficult. Features that employees are accustomed to using may not be there anymore, and files may not export easily to the new system. Additionally, ERP systems represent single points of failure and may require enhanced IT security features.

The term of Supply Chain Management was created back in the early 1980’s to describe the concept of a series of companies tied together to create a single product, the most classic example being the assembly line at an auto plant. Where one company, shipped to the factory for assembly, crafts raw materials into parts then sent to dealerships to sell to the public. That effort involves dozens of different companies along the line, but they all work towards the same goal, the manufacturing of a single product to sell.

Effective Supply Chain Management goes beyond the simple ordering of parts. It involves coordinating the efforts of several companies to work in concert with each other harmoniously. Not just to insure the smooth flow of parts and labor, but to react quickly when designs or directions change in production, and to take advantage of new opportunities in the marketplace.

The growth of the importance of Supply Chain Management mirrors the expansion of markets overseas with large companies competing on a global level. Such firms as Dell and Hewlett Packard are prime example of computer production companies utilizing supply networks consisting of dozens of smaller businesses to manufacture their product.

Good Supply chain management brings together the collaborative work between buyers and suppliers, product development, along with common systems and shared information that can benefit all companies as they join forces to create a product.

Supply Chain Management is an Effective Management System

Supply Chain Management

Incorporating the successful practice of good Supply Chain Management techniques requires the switch from managing the function of individuals within a company to bringing together different businesses to fulfill key supply requirements. To cite an example, let us say that the purchasing department places orders as the direction the company will take becomes known. The marketing department responds by contacting different distributors and retailers to find the right part or service at the best price. By incorporating all functions of the process under one management system, you streamline the efforts and which cuts down on one of the major cost overrun factors, time. The quicker decisions can be made, the faster the required parts or products are shipped, the sooner they can be assembled or integrated, and the less time is wasted.

The flow of information is what enables an effective supply chain management system to succeed. Such a process requires a combination of order, flow, development and commercialization under a unified management system that shares information readily and reacts quickly to new developments as they occur. To compete on a global basis, companies that utilize the services of other businesses must develop a good supply chain management process to keep competitive in today’s economy.

The main barrier to effective supply chain management generally stems from the same area as what makes it work. The people who ultimately make the decisions as to which direction their efforts will go. For example, if a car manufacturer discovers that a certain line of automobiles is falling out of favor with the public, it is there best interest to switch and create a new line that meets consumer demand. Such a change requires understanding what new types of vehicles to produce, the parts necessary to create them, and the coordination of the supply chain management network to follow suit.

If there is disagreement as to which way to proceed, then manufacturing slows down to the point where orders are not placed and the smaller businesses which specialized in creating specific parts for one type of vehicle now have to sit and wait for new orders to come in. Without effective coordination and planning, such slow downs can cause these smaller businesses to go under, meaning that even more time is wasted finding new suppliers.

There have been many historic examples of such event occurring and even with the best, most competent staff running the supply chain management system, breakdowns will happen. While it’s understandable that some of these breakdown occur because of events beyond a companies control, say for example a natural disaster strikes which affects one of suppliers, the slowdowns due to production changes can be avoided if the planning process happens far enough in advance for companies to switch gears, so to speak, without losing any time.

Good Things to Consider in Supply Chain Management

Other consideration are using overseas companies where the labor laws for example, may differ from the US, which might be looked up negatively by some customers and consumer groups if these countries use underage labor for example. However, the efforts to go “global” with a business network can have advantages in obtaining lower taxes, creating larger supply sources, and taking advantage of better working environments in some cases. Offsetting this is the problems of stretched supply lines from shipping overseas, cultural and language differences and even the differences in currency values can have a profound effect.

In creating an effective supply chain management system for your business, one of the most important considerations is where to locate your main manufacturing process, in essence, the location of the building where everything comes together. This concept is known as “centroid”, a place that is usually located in a large city where the local population supplies the employment and has easy access to transportation lanes, such as railroads or highways where the supplies come in. Dayton, Ohio is considered a “centroid” city as it not only fits the requirements, but is also home to many businesses that network with smaller companies in a supply chain management system. Riverside, California is another example of a centroid city as well.

Tax issues are another consideration when building your business, which is why states such as Texas and Florida are rather attractive to certain industries because there are fewer taxes and no state personal income tax as well. Proper research and planning are required in finding the best place to center the business.
Insuring good supply chain management practices means that not only the company benefits, but all those who work in the network of suppliers and retailers enjoy the benefits as well. Adding value over and above the revenue gained means building loyalty and confidence within the system. All this translates to better, more productive work as employees from all levels pull together and work harder to achieve the desired goal.

[ad#ad-2]

Read more about Supply Chain Management :

Supply chain management wiki