MBA (OPERATIONS MANAGEMENT) SEMESTER 3 OM 0011 ENTERPRISE RESOURCE PLANNING - 4 CREDITS (BOOK ID B1233) ASSIGNMENT- 60 MARKS Note: Answer

r all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1. Differentiate between Commercial and Open Source ERPs software packages. (Differences 5 marks; Type of organisation/company where is these ERPs are used 2 marks; description of one ERP software for each type of ERP 2marks; conclusion 1 mark) 10 marks Answer : it is a known fact that most big organizations select and implement Commercial ERP solutions rather than go with Open Source ERP software. Why so? What are the challenges then that Open Source ERP Vendors face when competing against a Commercial ERP package? Let us investigate and see how Open Source ERP Solutions stack up against the Commercial ERP counterparts. Time to Market The time to market, or the time it takes to implement a Commercial ERP package is generally longer (given that you may be subject to software availability timeline restrictions from the software vendor and implementation process methodologies from a large systems integrator). Typically, organizational processes need to conform to the software process itself, and effecting that change can take a long time. Open Source ERP implementations are generally used by smaller companies who are just setting up processes initially, are typically not averse to adjusting to a new process. For this reason, typical Open Source ERP implementations see smaller implementation cycles (mostly due to the simplicity of the project itself) Price Open Source ERP solutions are typically less expensive (most being completely free) to license than Commercial software. The only upfront cost associated with using them is the support and maintenance contract fees or some small amount as License fees when using a customized version that is being promoted by a specific company. But to assess true price/lifetime costs can be trickier! The following sections discuss this in more detail. Flexibility Open Source, means you now have the code, and can modify it yourself! How can a system provide more flexibility than this? Compare this to a Commercial ERP solution: To get any fix, patch upgrade or new functionality on your system and it will take time! However in case of an Open Source ERP you might need to keep your own team of developers to not only add the features, but to also maintain it yourself. So a complete IT Team may be required. This implies that even though the cost of initial software acquisition is low, the cost of keeping the software running can potentially be higher. Training & Ramp-Up Commercial ERPs typically need specific training for the developers/implementers (examples SAP, Oracle ERP) etc. But for Open Source, you have the entire source-code itself! Open Source ERP providers believe (as do most geeks) that there is no better documentation than the source code itself. Source code may be the best piece of documentation for a Developer, but for an End User it usually means nothing. While the code base is the most authentic documentation in a sense, but it takes time for someone to understand the organization of the code, workflows and how it is packaged. Commercial ERPs score over the Open Source ERP community because they have better documentation, many technology forums where developers can discuss their issues, find solutions, and most often a very large community to help you out if you need answers to tricky problems. SAP and Oracle Apps, probably have the worlds largest developer forums/community. If we consider the arguments above, Open Source ERPs seem to have an edge. But we rarely see a large organization going for an Open Source ERP solution. Heres why I believe Commercial ERPs have an edge: Support Network/Communities/Forums

There plenty of software professional service firms, who are willing to support a SAP/Oracle implementation. The eco-system is established and not only generates revenue for these implementation firms, but also delivers client value that is proven. Isnt it true that you will rarely get a Vendor to Support an Open Source ERP solution other than the Solution Provider themselves! If you are not sure that you can rely on a Vendor or your own capabilities, to support your current systems it might not be a good idea to invest in an Open Source ERP even if it is a fraction of cost today. You need to plan for adequate support, when you need it. And you need to plan ahead at least for a good 5-10 years! Tried & Tested Software Platforms Companies like SAP and Oracle have been in the ERP business far too long for anyone to have doubts about their implementation track record. Open Source ERPs are relatively new and do not have too many implementations to boast of. When deciding between a proven ERP solution and a new ERP solution (a decision on which your companys future rides) you will tend to lean towards tried and tested methodologies wont you? Intellectual Property Many large clients of enterprise commercial software are themselves not in the business of writing and maintaining software. They would rather rely on specialists, and license the relevant technology from them. Also, they are usually wary about intellectual property rights, and using open source software implies that they would have to contribute back to the software that other companies can benefit from as much as them. This can be a big deterrent and most companies do not want to share how they are leveraging a given enterprise software, with their competition. Needless to say, that commercial ERP vendors, also have the best Sales teams! Conclusion The best brand ambassador for Open Source today are probably Linux (big presence in Enterprise), Android (big presence in mobile, tablets), Firefox web browser, JBoss Application Server to name a few. However apart from Android and Firefox, not many are known for their user friendliness! The perception in the enterprise about Open Source is still very shaky if one comes to reliability (Linux and JBoss being the exceptions probably). Enterprises will swear about Blackberry security and reliability but not about Android will they (android being the more feature rich platform here!)? Similar perception goes with the Open Source ERPs. Open Source ERP solutions are still far from establishing a brand name for themselves (like Linux, JBoss). They probably will need to build communities like those for Linux and JBoss. They might also require angel investors like those that JBoss, RedHat, and Ubuntu have and at least a decade or more of serious concerted development in order to compete with Commercial ERPs! Q2. For a successful MRP system three types of information are very essential. Describe the types of information. (Master Production Schedule 3 marks ;Bill of Material 4 marks ;Inventory Records 3 marks) 10 marksAnswer : Master Production Schedule: A Master Production Schedule or MPS is the plan that a company develops for production, inventory, staffing, etc. It sets the quantity of each end item to be completed in each week of the planning horizon. It is the plan for all future production of end items. MPS Inputs Forecast demand Sales demand Inventory levels - target stock, days of cover Production lead times Batch size rules Shelf life, make span rules Resource capacity MPS Output Production plan Resource requirements Available stock projections

The MPS gives production, planning, purchasing, and top management the information needed to plan and control the manufacturing operation. The application ties overall business planning and forecasting to detail operations through the MPS. The MPS will drive detailed material and production requirements through the Material Requirements Planning module and via Production Scheduling to provide a detailed shop floor plan. Bill of Material: A bill of materials (sometimes bill of material or BOM) is a list of the raw materials, subassemblies, intermediate assemblies, sub-components, parts and the quantities of each needed to manufacture an end product. No physical dimension is described in a BOM, however the rough outline should include:[1][2] Creating a Bill of Materials should include:

BOM Level Part Number Part Name Phase Description Quantity Unit of Measure Procurement Type Reference Designators BOM Notes

When creating or using a BOM, who will be using it should be considered. It may be used for communication between manufacturing partners, or confined to a single manufacturing plant. A BOM can define products as they are designed (engineering bill of materials), as they are ordered (sales bill of materials), as they are built (manufacturing bill of materials), or as they are maintained (service bill of materials). The different types of BOMs depend on the business need and use for which they are intended. In process industries, the BOM is also known as the formula,recipe, or ingredients list. In electronics, the BOM represents the list of components used on the printed wiring board or printed circuit board. Once the design of the circuit is completed, the BOM list is passed on to the PCB layout engineer as well as component engineer who will procure the components required for the design.

Inventory Records: Manual or computer-based record of the quantity and kind of inventory (1) at hand, (2) committed (allocated) to firm-orders or to work-in-process, and (3) on order. It often also includes history of the recent transactions in each inventory item. Also called stock record. Q3. Explain the features, benefits and Limitations of ERP Inventory Management. (Explanation ERP inventory management 1 mark; features 3 marks ;benefits 3 marks; limitations 3 marks) 10 marks Answer : inventory management : NetSuite inventory management software offers a complete set of inventory management, manufacturing, and purchasing capabilities that improves supply chain management and delivers an end-to-end procure-to-pay process. Gain an in-depth, real-time view into key supplier, inventory and procurement indicators. Self-service capabilities for partners, vendors and customers improve collaboration throughout the entire supply chain. With

NetSuite, you'll be able to better manage inventory levels and costsand better meet fulfillment expectations, improving customer service. Benefits:

Get complete real-time visibility into demand, supply, costs and fulfillment measures and trends Manage margins with a clear view into inventory costs, turn rates and inventory profitability Eliminate manual inventory management processes and improve vendor satisfaction with a seamless procure-to-pay process Significantly improve your relationships with suppliers, vendors and partners by providing self service and real-time visibility Effectively and efficiently meet customer demand, helping drive and maintain superior customer service levels

Key Features:

Warehouse and Inventory Control o Enjoy real-time, detailed visibility into key inventory control and supply chain management measures, including inventory trends, stock on order, and supplier on-time performance
o o o o

Slash inventory costs by tightening control of stock levels while increasing operational efficiencies Increase product margins by effectively managing pricing based on different types of customers, channels and currencies Gain control over inventory replenishment and ensure that you have enough on hand to fill anticipated orders, while keeping excess stock to a minimum Extensive inventory management software features also include bin and lot management, landed cost, demand-based replenishment, customer and volume pricing, multi-location inventory, and more.

Purchasing and Vendor Management o Eliminate inefficiencies throughout your organization with convenient online purchase order creation that allows you to replace paper-based forms and time-consuming manual processes
o o

Streamline requisition processes and improve collaboration with vendors by giving them self-serve access to key data and information, including inventory reordering points and transaction histories Track costs and eliminate errors by creating a complete business process flow through purchasing, receiving and account payables.

Optimized Manufacturing Processes o Streamline the assembly process by efficiently managing production work orders, building multi-level assemblies, creating special purchase orders for components, and seamlessly integrating with backoffice operations Demand Planning o Calculate demand plans leveraging historical data or sales forecasts
o o

Model how expected sales and purchase orders affect future inventory levels Calculate supply plans and automatically generate purchase or work orders.

Limitation: ERP is an evolution of MRP which was solely focused on manufacturing and materials planning. ERP systems were designed to manage more functions of enterprises thus integrating all business management functions, including planning, inventory and materials management, engineering, order processing, manufacturing, purchasing, accounting and finance, human resources, etc. Though considered as a revolution during its time, ERP did not take into account any of the external relationships that a company had as enterprises were run as independent entities

during those times. Within an organization the system was able to support all functions but was unable to handle the various interactions that the enterprise had with its suppliers and customers. Conventional ERP helped automate individual departments but did not integrate its back-office benefits into the front-office to help businesses manage people, workloads and supply-chain issues; it could not establish consistent control of all the processes of the business Even within the organization, some of the difficulties faced by managers were Only the current status could be accessed, such as open orders. But managers often need to look beyond the current status to find trends and patterns for better decision-making. The data in the ERP application was not integrated with other enterprise systems and did not include external intelligence. Q4. What are the activities of Human Resources management systems? (explanation of activities 10 marks) 10 marks Answer : A human resource management system (HRMS) or human resource information system (HRIS), refers to the systems and processes at the intersection between human resource management (HRM) and information technology. It merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field, whereas the programming of data processing systems evolved into standardized routines and packages of enterprise resource planning (ERP) software. On the whole, these ERP systems have their origin on software that integrates information from different applications into one universal database. The linkage of its financial and human resource modules through one database is the most important distinction to the individually and proprietary developed predecessors, which makes this software application both rigid and flexible. The function of human resources (HR) departments is generally administrative and common to all organizations. Organizations may have formalized selection, evaluation, and payroll processes. Efficient and effective management of "human capital" progressed to an increasingly imperative and complex process. The HR function consists of tracking existing employee data which traditionally includes personal histories, skills, capabilities, accomplishments and salary. To reduce the manual workload of these administrative activities, organizations began to electronically automate many of these processes by introducing specialized human resource management systems. HR executives rely on internal or external IT professionals to develop and maintain an integrated HRMS. Before the clientserver architecture evolved in the late 1980s, many HR automation processes were relegated to mainframe computers that could handle large amounts of data transactions. In consequence of the high capital investment necessary to buy or program proprietary software, these internally developed HRMS were limited to organizations that possessed a large amount of capital. The advent of clientserver, application service provider, and software as a service (SaaS) or human resource management systems enabled increasingly higher administrative control of such systems. Currently human resource management systems encompass 1. Payroll 2. Time and attendance 3. Performance appraisal 4. Benefits administration 5. HR management information system 6. Recruiting/Learning management 7. Performance record 8. Employee self-service 9. Scheduling 10. Absence management 11. Analytics The payroll module automates the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay cheques and employee tax reports. Data is generally fed from the human resources and time keeping modules to calculate automatic deposit and manual cheque writing

capabilities. This module can encompass all employee-related transactions as well as integrate with existing financial management systems. The time and attendance module gathers standardized time and work related efforts. The most advanced modules provide broad flexibility in data collection methods, labor distribution capabilities and data analysis features. Cost analysis and efficiency metrics are the primary functions. The benefits administration module provides a system for organizations to administer and track employee participation in benefits programs. These typically encompass insurance, compensation, profit sharing and retirement. The HR management module is a component covering many other HR aspects from application to retirement. The system records basic demographic and address data, selection, training and development, capabilities and skills management, compensation planning records and other related activities. Leading edge systems provide the ability to "read" applications and enter relevant data to applicable database fields, notify employers and provide position management and position control. Human resource management function involves the recruitment, placement, evaluation, compensation and development of the employees of an organization. Initially, businesses used computer based information systems to:

produce pay checks and payroll reports; maintain personnel records; pursue talent management.

Online recruiting has become one of the primary methods employed by HR departments to garner potential candidates for available positions within an organization. Talent management systems typically encompass:

analyzing personnel usage within an organization; identifying potential applicants; recruiting through company-facing listings; recruiting through online recruiting sites or publications that market to both recruiters and applicants.

The significant cost incurred in maintaining an organized recruitment effort, cross-posting within and across general or industry-specific job boards and maintaining a competitive exposure of availabilities has given rise to the development of a dedicated applicant tracking system, or 'ATS', module. The training module provides a system for organizations to administer and track employee training and development efforts. The system, normally called a "learning management system" (LMS) if a stand alone product, allows HR to track education, qualifications and skills of the employees, as well as outlining what training courses, books, CDs, web based learning or materials are available to develop which skills. Courses can then be offered in date specific sessions, with delegates and training resources being mapped and managed within the same system. Sophisticated LMS allow managers to approve training, budgets and calendars alongside performance management and appraisal metrics. The employee self-service module allows employees to query HR related data and perform some HR transactions over the system. Employees may query their attendance record from the system without asking the information from HR personnel. The module also lets supervisors approve O.T. requests from their subordinates through the system without overloading the task on HR department. Many organizations have gone beyond the traditional functions and developed human resource management information systems, which support recruitment, selection, hiring, job placement, performance appraisals, employee benefit analysis, health, safety and security, while others integrate an outsourced applicant tracking system that encompasses a subset of the above. Assigning Responsibilities Communication between the Employees. The Analytics module enables organizations to extend the value of an HRMS implementation by extracting HR related data for use with other business intelligence platforms. For example, organizations combine HR metrics with other business data to identify trends and anomalies in headcount in order to better predict the impact of employee turnover on future output.

Q5. Explain any two benefits of an ERP implementation? (5 marks for each benefit) 10 marks

Answer : Advantages and Benefits of Implementing an ERP System

1.Integrated Information: The key benefit of implementing ERP is integration. ERP helps in reducing operational costs by coordinating various departments of the organization. The major idea behind ERP is to control accuracy as well as redundancy of data and data entry. This centralized working system is able to replace multiple, disconnected databases with a single system, incorporate different applications and data sources. It also aims to lowers help desk support and marketing cost. In addition, this real time application has the capabilities of interfacing internal and external entities. Moreover, ERP is an ideal application to improve the cooperation between departments and employees as well as communication with prospects and customers. 2.Enhanced and Efficient Technology: This software enhances day to day management activities. It also supports strategic planning that defines objectives for the business. Since it has better data accessibility, top management can also use this tool to make better and more effective decisions. In addition, ERP system has a capability of eliminating manual activities and streamlining critical business processes for many departments of an organization. The following are some more benefits that improve the efficiency of an ERP system:

Q6. Who is an ERP vendor and what are his roles? (Explanation of ERP vendor 4 marks; role 6 marks) 10 marks Answer : ERP vendor: VENDORS are the people who have developed the ERP packages. They are the people who have invested huge amounts of time and effort in research and development, to create the packaged solutions. If one studies the history of ERP packages and finds out how each package evolved, then it soon becomes evident that every ERP package grew out of the experience or opportunity of a group of people working in a specific business who created systems that could deal with certain business segments. Now with the ERP marketplace become crowded with more and more players entering the market and the competition increasing, today's ERP packages have features and functionality to cater to the needs of businesses in almost all sectors. ERP vendors spend crores of rupees in research and come up with innovations that make the packages more efficient, flexible and easy to implement and use. Also, with the evolution of new technologies the vendors have to constantly upgrade their products to use the best and latest advancements in technology. Choosing the right software vendor goes beyond evaluating software functionality. There has been a gradual movement among a handful of the largest software vendors to take a one-size-fits-all posture. Some vendors believe functionality ratings are no longer important since all software systems are beginning to look alike. While appearances may tend to support this theory, reality paints a different picture. Merely having a particular function does not guarantee that users will be able to capably work with it. If two vendors offer a function required in a specific industry segment, and one specializes in deploying it in that segment

while the other does not, the difference can be dramatic. The one-size-fits-all garment may fit everybody, but the question is does it look good to everyone? Vendor selection is not a popularity contest and bigger does not always mean better. While the financial stability, ensured longevity and broad spectrum of offerings provided by the top vendors are good reasons for selecting them, size is not without its downside. Size breeds bureaucracy and bureaucracy hamper personal attention and agility. While small vendors that are not quite household names may carry increased risks in the area of long-term longevity, they may actually provide a better solution if they specialize in your industry segment rather than covering a broad spectrum of industries. You have the greatest leverage with your vendor once you have made the decision to buy their software but have not yet issued the purchase order. Waiting for the end of their quarter can help you get the best price. Also view the financial stability of your future relationship as important - you will receive positive support from your vendor as long as it is profitable for them to do so. The relationship is a balancing act. Interest your vendors to get the job done right, on-time and within budget, but watch out for penalties that may increase project pressure and sour the relationship. It is important to remember that the vendor, as long as they provide working software and capable personnel, really as very little responsibility for your overall success. Responsibility for success of failure lies within the four walls of your business, and if you import failure in the form of a third-party, it's still your responsibility.

Role: First and foremost, the vendor should supply the product and its documentation as soon as the contract is signed. Only after the software is delivered, can the company develop the training and testing environment for the implementation team. The vendors are responsible for fixing any problems in the software that the implementation team encounters. So the vendor should have a liaison officer who should constantly interact with the implementation team. Another role the vendor has to play is that of the trainer - to provide the initial training for the company's key users, people who will play lead roles in the implementation of the system. These key users are the one who will define, together with the consultants, how the software is to serve the company. In other words, it is these inhouse functional experts who will decide how the functionalities are to be implemented, as well as how to use or adapt the product to suit the company's unique requirements. So it is very critical that these key users are given a thorough training on the features of the package. Vendor's training should achieve the goal of showing the key users how the package works, what are the major components, how the data and information flows across the system, what is flexible and what is not, what can be configured and what cannot, what can be customized and what should not, what are the limitations, what are the strengths and weaknesses and so on. The role of the vendor does not end with the training. The vendor also plays an important project support function and must exercise quality control with respect to how the product is implemented. It is the vendors who understand the finer details and functions of the product and can make valuable suggestions and improvements that could improve the performance of the system.