Dissertation Defence


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Dissertation Defence

  1. 1. PIM – Procurement and InventoryDissertation Project Presentation Management In-Module Work – Final Presentation AN EVALUATION OF THE ERP BENEFITS FOR PROCUREMENT FUNCTION: A CASE STUDY IN INDIAN AUTOMOTIVE INDUSTRY Name: Abhijay Singh Sisodia Course: M. Sc. - Engineering Business Management Supervisor: Mr. Graham Warren Examiner: Dr Adrian Watt Date: 24th September 2010
  2. 2. Outline Introduction Research Question and Objectives Literature Review Research Methodology Case Study – Force Motors Ltd. India Data Analysis Results Conclusion Recommendations for Case Study Company Proposed for Future Work Questions 2
  3. 3. Introduction• The present research is carried out in the context of emerging economies.• The field of procurement and ERP benefits have been well researched for the developed countries.• Additionally the research study was started with a focus on automotive industry where the procurement function has significant importance. 3
  4. 4. Research Question and ObjectivesRESEARCH QUESTIONWhat are the benefits for the procurement function for an automobile company arising with the use of ERP systems?RESEARCH OBJECTIVES Identify the expected benefits from ERP for procurement function of organisation by literature review. Investigate the present perceived benefits of ERP for procurement function in an actual automotive company. 4
  5. 5. Literature Review - Introduction Information Systems Benefits ERP Performance Measurement Organisational ERP ERP Collaboration Implementation Study ERP Investment Valuation Shang and Seddon (2000) Benefit Classification was adopted to identify ERP benefits for procurement Business Benefits function in each of the categories. 5
  6. 6. Literature Review - Identified ERP benefits The literature review identified ERP benefits into five categories following the Shang and Seddon classification:  Operational benefits (please refer Table 2-2 on Pg. 14)  Managerial benefits (please refer Table 2-3 on Pg. 19)  Strategic benefits (please refer Table 2-4 on Pg. 25)  IT- related benefits (please refer Table 2-5 on Pg. 28)  Organisational benefits (please refer Table 2-6 on Pg. 29) 6
  7. 7. Topics identified from Literature Review for interview ERP benefiting Procurement functionOperational Managerial Strategic Information OrganisationalProcess processes Benefits Technology benefits• Production planning • Purchase order/ • Strategic Alliance related benefits • Cross functional and control contract • Supplier • Database availability integration• Materials management collaboration • Enabling e- • Business learning Management • Supplier • NPD procurement • Communication• Procurement Management • Common vision • Decision Making • Procurement performance measurement • Supplier performance measurement Source: Dissertation Book Pg. 39 Figure 3-3 7
  8. 8. Research MethodologyTasks Techniques adopted for the studyPurpose Descriptive and exploratory studiesResearch strategy implemented A single case studyData collection Qualitative Interviews based agenda developed from the literature review Managers at Force Motors Ltd. India.Data analysis Please see Pg. 39-40 of dissertation. 8
  9. 9. Research Methodology Source: Dissertation Figure 3-2 Pg. 35 Literature Review Identify the expected benefits for procurement Data collection agenda Develop agenda for interview questions based on expected benefits Data collection Note taking Data presentation Summarize each interview Data reduction and analysis Summarize gathered evidence across major categories according to framework Discussion Classify the evidence with relevance to research question Conclusion Present brief conclusion of what has been acheived 9
  10. 10. Case Study Force Motors Ltd. India Site – Pithampur Assembly plant Product line – Ambulances, 10 seated LCVs, 3 wheelers pickup and auto rickshaw, Tractors, Armoured vehicles. Plant setup – 1987 Purchasing is more centralised in nature and is directed by headquarters base at Pune, India. 10
  11. 11. Data analysisThe gathered data was presented in tables (4-1 to 4-5) for each benefit category and identified similar responses for measures from each respondent.The ERP benefits were re-arranged in decreasing order of recognition.The observation of figures (5-1 to 5-5) enabled grouping into• Strongly recognised benefits• Moderately recognised benefits• Poorly recognised benefitsObservation of these benefits in comparison with the literature reviewhelped reached conclusion. 11
  12. 12. Results- Strongly recognised benefits Source: Dissertation Fig 5-1 Pg. 77Operational ERP Lead/ Cycle time reductionbenefits Materials requrement planning Calculation of order quantity Production planningManagerial ERP Monitor supplier perforamancebenefits Evaluate supplier against KPIs Track OrdersStrategic ERP Information sharingbenefits Collaborative forecastingIT related ERP Helps reach better suppliersbenefits Automatically update material movement ERP as an enabler to e-procurementOrganisatinal ERP Coordination among departmentsbenefits Embedding organisational policies in processes Efficient internal communication Data recording 12
  13. 13. Results- Moderately recognised benefits Source: Dissertation Fig 5-2 Pg. 78Operational ERP Monitor inventory quantity and valuebenefits Intimation of receipt Demand management Low work-in-progressManagerial ERP Database of existing suppliersbenefits Scheduling Track rejection, rework and claims Automated invoice processing and payment Monitor deliveryStrategic ERP Supplier collaborationbenefits New Product Development DocumentationIT related ERP Detect rate and area of consumable stockbenefits Easier and cheaper sourcingOrganisational ERP Documentation for knowledge managementbenefits 13
  14. 14. Results- Poorly recognised benefits Source: Dissertation Fig 5-3 Pg. 80Operational ERP Error reductionbenefits Quality improvements Productivity improvementsManagerial ERP Batch size calculationsbenefits Re-order point calculations Maintaining supplier days Alert new requirements to supplier Manage schedule agreements Spend analysisStrategic ERP Supports Innovationbenefits Harmonises policies Gain/Risk sharingIT realted ERP Updated product catalogbenefitsOrganisational ERP Process standardisationbenefits Collaborative external communication 14
  15. 15. Conclusion Dissertation study was found standing in line with the earlier research findings on ERP benefits.  The study identified a total of forty five criteria for measuring ERP benefits for procurement.  The data gathered through interviews and following analysis recognised the ERP benefits to be recognised by the respondents. The responses also helped recognise the difference in time related with each category of ERP benefits.  Some benefits are realised immediately with the implementation of ERP system  Certain ERP benefits are realised with the requirement of managerial effort.  A few ERP benefits are require implementation of strategic organisation policies in synchronisation with the ERP system. These results are in conformance with reports from Deloitte-Consulting (2002) and James & Wolf (2000). 15
  16. 16. Recommendations for Company Avoid simultaneous use of paper work and ERP for reporting. Implementation of quality management and assurance tools and techniques with suppliers. EDI and bar coding can be introduced for better collaboration with suppliers. More autonomy to managers from centralised procurement. Procurement performance measurement using Spend analysis. 16
  17. 17. Proposed Future WorkThe findings of the research study can be reviewed the company.1. The research could additionally use quantitative data for better accuracy in measurement.2. Multiple case studies can be conducted to reconfirm the reliability of results.3. The sample of data source could be expanded to include ERP and purchasing software vendors, consultants from different industry sectors. 17
  18. 18. ReferencesDeloitte-Consulting. (2002, April 20). ERPs Second Wave-Maximizing the Value of ERP Enabled Processes. New York: Deloitte-Consulting.James, D., & Wolf, M. L. (2000). Second wind for ERP. the McKinsey Quarterly, 2, 99-108.Shang, S., & Seddon, P. (2000). A comprehensive framework for classifying the benefits of ERP systems. Proceedings of the Sixth Americas Conference on Information Systems, (pp. 1005-1014). Long Beach, CA.Dissertation Book- An evaluation of the ERP benefits for procurement function: A case study in Indian automotive industry. 18
  19. 19. Questions Thank you. Abhijay Sisodia 19