ERP Solution for Arkwright.docx

ERP Solution for Arkwright.docx

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ERPSolutionforArkwright

Arkwright’sERPSolution

EnterpriseResourcePlanning

TheconsultancyteamhasbeenhiredbyUnitedHoldingstoproduceamanagementreport,whichwillprovidetoadviceonhowArkwright’sperformancemightbesignificantlyenhancedthroughtheintroductionofaSAPpackage.

5/16/2012

Contents

Introduction3

SituationAnalysis4

Companybackground4

Internalproblems4

FinanceResourceManagement4

MaterialResourcesPlanning4

CustomerRelationshipManagement5

HumanResourceManagement5

SupplyChainManagement6

Externalenvironment6

Competitorsinthetabletindustry7

Treatsofthenewentrants7

Treatsofsubstitutes7

Thebargingpowerofcustomers7

Thebargainingpowerofsuppliers7

ProjectGoals7

Decreaseinventorycosts8

Increasevisibility8

Improvecontrollabilityofsupplychain8

Increaseflexibility8

Decreaseoperationcost8

Increasecustomersatisfaction8

Increaseavailabilityofinformation8

Increaseprofit8

BenefitsofERP8

Improvedsupplychainmanagement（SAPSCM）9

Systematicproductionplanning9

Optimizedinventorymanagement9

Moreefficientpurchasing10

Improvedmaterialresourcesplanning（SAPMRP）10

BetterCRM,FRM,HRM10

PrioritiesforComputerisation11

ProductionPlanning（PP）11

Creatingroutingandproductionorders11

Productcosting12

Displayautomaticgoodsmovementandrelevantaccountingdocuments12

MaterialManagement（MM）13

VendorMasterRecords13

Purchasinginforecords14

Controlling（CO）14

Creatingcostcentre15

Creatingactivitytypes16

CreatingCostCentreGroupfortheTabletAssessment16

Costcentrereport16

Salesanddistributions（SD）17

Customermasterrecord18

Salesprice18

Salesorder19

Remainingtargetsforcomputerisation19

FinancialAccounting19

WarehouseManagement（WM）19

Customerrelationshipmanagement（CRM）20

HumanResourceManagement（HRM）20

ProjectPlan20

Establishmentofknowledgemanagement20

Changeinbusinessprocess21

Training22

OtherkeyfactorstosuccessfulERPsystemimplementation22

Conclusion23

References25

Introduction

OurconsultancyteamhasbeenentrustedbyUnitedHoldingstohelpArkwrightimprovingitsperformancethroughthereplacementofallexistingsystemswithafullyintegratedenterpriseresourceplanning（ERP）system.ERPisdefinedas“amethodfortheeffectiveplanningandcontrolofallresourcesneededtotake,make,ship,andaccountforcustomerordersinamanufacturing,distribution,orservicecompany”（Khalid,2003:

494）.AfullyintegratedandglobalERPsystemwascreatedbythecompanynamedSAP（SimhaandWord,2009）.Thesoftware,developedbySAP,isnowwidelyusedbyover50,000oftheworld’sbest-managedcompanies（SimhaandWord,2009）.

Inthecurrentcompetitivebusinessworld,companiesdoeverythingpossibletosatisfycustomersfasterandlessexpensivelythantheircompetitors.Todoso,thekeyistohaveadvancedandefficientinformationsystems.Effectiveinformationsystemscansignificantlyimprovemanagementofbusinessprocesses.Oncecompanieshaveefficientbusinessprocesses,theycancompetesuccessfullywithotherpracticesinthemarketplace.ERPhasatremendousimpactonacompany’smanagementbyservingasacompany-widecomputingenvironmentthatincludesadatabasethatissharedbyallfunctionaldepartments（MonkandWagner,2009）.Itoffersprocessefficient,technological,strategic,financial,andorganisationalbenefitsoverdifferentandvariouscomputingsystems（David,2004）.

Inpractice,themostcommonERPmodulesincludeFinanceResourceManagement（FRM）,MaterialResourcePlanning（MRP）,CustomerRelationshipManagement（CRM）,HumanResourcemanagement（HRM）,andSupplyChainManagement,asshowninFigure1.

Figure1:

CriticalComponentsofanERPSystem

However,ERPpackagesindicateacertainwayofdoingbusiness,andtheusersarerequiredtofollowthatwayofdoingthings.DuetotheconstraintsinherentinERP,someofabusiness’soperationsandsomesegmentsofitsoperationsmightnotbeagoodmatchwithit.Therefore,itisnecessaryforanorganisationtoinvestigateitsownbusinessstrategy,organisationalstructure,corporateculture,andoperationbeforechoosinganERPapproach.Actually,mostcompaniesstudytheirrealneedsandthenentrustanexternalteamofsoftwareconsultantstohelpselecttherightsoftwaresuppliersandthebestwaytoimplementingERP（MonkandWagner,2009）.

SituationAnalysis

Accordingtothetheoriesthatmentionedabove,itisimportanttoanalysistheinternalproblemsandexternalmarketenvironmentthatJoshuaArkwright&Sonsiscurrentlyexperiencing.Thus,wecanprovideamorecompletesolutionforthecompany.

Companybackground

JoshuaArkwright&Sons,amediumsized,familyrunandBritish-basedmanufactureroftabletcomputer,wasacquiredbyUnitedHoldingsPLCinSeptemberoflastyear.ItwasinitiallyfoundedbyJoshuaArkwrightandhissonsin1980.Afternearlytwentyyearsdevelopment,JoshuaArkwright&SonshasbuiltasolidreputationintabletPCindustry,basedlargelyonitsfashionabledesignandhighqualityproducts.ItisworthmentioningthatArkwrightfirstintroducethetouchscreentechnologyintotabletPC.Bytheendof2011,Arkwrighthad200full-timeemployees,twoplantsandthreedirect-salestoreslocatedinLondon,BirminghamandManchester.Theaverageturnoverofthecompanyisapproximately25millionpounds.

Internalproblems

Currently,thecompany’smanagementhasarangeofissuessuchastheaccountsreceivableprobleminfinancialmanagement;poorcommunicationbetweendifferentdepartments;inefficientproductionplanandsoon.However,oneofthebiggestproblemsisthemanagementofsupplychain.

FinanceResourceManagement

Actually,Arkwright’sproductsarestillmuchindemandinthemarketplaceowedtotheirhighquality.However,thefinancesofthecompanyhadbeendegradinginthepastfiveyears.Anurgentneedinvolvedaseverecashflowproblem.Thecompanyhaddevelopedaseriousaccountsreceivablecollectionproblemduelargelytoweakcontroloncredits.Arkwrightusuallyallowsthesellingtosmallormediumsizedcorporateclientsoncredits.However,someofthecompanieswilldefaultonpaymentsbecauseoftheirownfinancialmatters.Andastheinefficientexchangeofinformationbetweenthesalesdepartmentandaccountingdepartment,thesecustomersstillcangettheproductsoncredits.Continuouslyforalongtimehence,thesebaddebtswillaffectcompany’sdailyoperation.Moreover,thecompanyhasbeenunabletoeffectivelycontrolcosts,primarilybecausetheirinvoicingprocedures,budgetplanninganddebtorcontrolhaveallbeenineffective.

MaterialResourcesPlanning

Thebillofmaterials（BOM）forArkwright’stabletPCisillustratedinFigure2.ItcanbeseenthatthemaincomponentsofonefinishedtabletPCincludeatouchscreenandanintegratedmotherboardwhichcontainsagraphicscardandawirelessnetworkcard.AlthoughArkwrighthadmadethecompleteroutingtowardscomputerisation,mostoftheirsystemshavebeenassignedandbuiltinapiecemealfashion,andmanyarenowinefficientandout-dated.Therefore,theconfiguredworkingplanofthecompanyisbackwardandineffectual.Morespecifically,theyhavebeenunabletosufficientlyflexibletorespond,atshortnotice,toadjusttheirproductionplans,eitherintermsofthemixofproductsrequiredorthelevelofproductionforanorder.Indeed,theproductioncontrollersofArkwrighthavefoundthatitisdifficulttochangetheproductionmix,asitrequiresaswitchfromonesetofdesigndocuments/billofmaterials/productionprocesses,toanother,atveryshortnotice.Poorcommunicationandcoordinationamongfunctionsthatfrequentlycharacterizesinamanualenvironment,maketheprocessmoreproblematicifBOMchanges.

Figure2:

TheBillofMaterialsofTabletPC

CustomerRelationshipManagement

Inpractice,muchofthefocusandattentionofArkwrighthasbeenrelatedtothetopicofproductflow,withsignificantconcernformatterssuchasdesign,technologyandquality.Itssupplychainstypicallybeginatthepointofmanufactureandendwiththesaleofproducttoconsumers.Thus,Arkwright&Sonsis,tosomedegree,themanufacturer–whoisfarawayfromcustomermarketortheenduser（Coyleetal,2003）.Briefly,thecompanyhadapoorperformanceincustomerrelationshipmanagementandneglectedtheimportanceofcustomerservice.

HumanResourceManagement

Generally,HRneedsdetailedinformationordatafromtheotherdepartmentstodoitsjobaccurately（MonkandWagner,2009）.However,theHRdepartmentofArkwrightalwayslackofaccurateandtimelydataformanagementuseduetotheout-datedandinefficientcomputersystem.Particularly,theyhavenotbeenableestablishadatabaseofskillsrequiredtodoparticularjobsandtheprevailingpayrates.Sometimes,theydonotknowwhatskillsareneededtoperformaparticularjobandhowmuchthecompanycanaffordtopayemployees.Also,thecompanyhasahigheremployeeturnoverbecauseofaloweremployeesatisfactionrate.Theyrarelyconcernstaffs’needs.

SupplyChainManagement

ProductionPlanning

Ingeneral,theaimofaproductionplanistoarrangeproductioneconomically,sothatthecompanycandelivermerchandisestocustomersbythepromisedshipmentdatesinamostcostefficientway（MonkandWagner,2009）.However,therearesomecommunicationbreakdownsexistbetweenArkwright'ssalesdepartmentandproductiondepartmentforalongtime.Ononehand,Arkwright’smarketingandsalespersonneldonotshareinformationwithproductionpersonnel;ontheotherhand,thecompany’sdailyprod