INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMENT
Prof- Vatsal Shah
Pratik K S Negi
Enterprise resource planning (ERP) is an integrated computer-based system used to
manage internal and external resources including tangible assets, financial resources,
materials, and human resources. It is a software architecture whose purpose is to facilitate
the flow of information between all business functions inside the boundaries of the
organization and manage the connections to outside stakeholders. Built on a centralized
database and normally utilizing a common computing platform, ERP systems consolidate
all business operations into a uniform
and enterprise wide system
An ERP system can either reside on a
centralized server or be distributed across
modular Hardware and software units that
provide "services" and communicate on a local
area network. The distributed design allows a
business to assemble modules from different
vendors without the need for the placement of
multiple copies of complex, expensive
computer systems in areas which will not use
their full capacity
To be considered an ERP system, a software package should have the following traits:
Should be integrated and operate in real-time with no periodic batch updates.
All applications should access one database to prevent redundant data and multiple data
All modules should have the same look and feel.
Users should be able to access any information in the system without needed integration
work on the part of the IS department
ERP implementation in Logistics
Benefits of ERP in logistics
Operational efficiency - The very purpose of logistics is to supervise transportation and
associated function. Anybody in the department should be able to say the status of a good at a
particular point of time. This will make the logistics function more meaningful. Organizations
have never found this happening on many occasions.
Monitoring Vehicles - Companies always found it equally difficult to maintain vehicles so as
keeping a track of them because the former cannot take place if the later is not done properly.
Logistics also includes managing vehicles. An organization could have various modes of
transports for dispatching and receiving its consignments. Companies that have a specific
logistics department own trucks and Lorries or avail the services of travel agents. Bigger
organizations could also own cargo ships. The mode of transport and the modalities of operating
them purely depend on the financial soundness of the organization and relevant factors like
geographical location of customer and deadlines for delivering the products.
Companies resorting to transport facilities from outsider- When a company makes use of
railways or air transport or other modes of transport the burden or the question of maintaining
vehicles do not arise. On the other hand they have to play a vital role in aspects like applying
and renewal of licenses, comply with the safety standards and other mandatory requirements
and coordinate with the freight authorities in matters like payment of bills and preparing
vouchers. It might seem that ERP may have a lesser use because the control goes beyond the
organization. On the contrary the fact is that the freight authorities become another party to the
ERP database. The companies can make an arrangement with them in such a manner that they
are able to share the freight and relevant details of the organization. The same case will apply in
the case of third party travel agents. ERP logistics software will facilitate connectivity and
integration in all these areas mentioned above.
Managing company owned vehicles - When it comes to the question of vehicles owned by the
companies (like trucks Lorries or autos or any other locomotives for that matter) another
important task lies with the logistics department. They have to monitor and manage the vehicles
as well. This task is not easy as envisaged. The company may posses hundreds of vehicles and it
is difficult to know the standards of each one at a particular point of time. As the number of
vehicles increases the difficulty also increases. It is important to maintain those vehicles because
they are the backbones for transportation.
Communicating with other departments- The department of logistics needs to regularly update
and answer queries raised by the others. Since they deal with movement of goods their services
are required for everyone right from purchases department to sales department and others.
Prior to ERP intervention there was no proper means of supplying the required information to
the companies because the logistics department themselves are not aware of the status of the
goods at all times. Even if they were aware it required a lot of maneuvering and procedural
delays in eliciting the required information. Some of the factors were beyond the control of
Logistics department themselves. ERP logistics software has removed these drawbacks in two
ways. Firstly it had done away with the inherent defects of the logistics department itself.
Secondly it has paved way for the other departments to obtain the required information from
logistics department without even contacting them as everything is available in the common
database setup by the company.
After the evaluation of the benefits and possible positive outcomes of implementing the same in the
organization, we will consider the threats of the implementation. Then a detailed layout would be prepared
and adopting any one of the technique would be adopted for its implementation.