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CRITICAL EVALUATION OF THE IMPACT OF ERP
IMPLEMENTATION (MATERIALS MANAGEMENT MODULE)
REPORT OF PROJECT WORK DONE AT HOCL,...
2
Declaration
I hereby declare that this project report entitled “Critical evaluation of the
impact of ERP implementation ...
3
4
Certificate
This is to certify that the project entitled “Critical evaluation of the impact of
ERP implementation (mater...
5
Acknowledgement
I thank Almighty for giving me the strength and power required to carry out the work
assigned to me.
I w...
6
Executive Summary
Implementation of Enterprise Resource Planning (ERP) systems is one of the key
solutions organizations...
7
CONTENTS
Chapter Title Page No.
Chapter 1 INTRODUCTION 14
1.1 Introduction 14
1.2 Enterprise Resource Planning 15
1.2.1 ...
8
Chapter 3 COMPANY PROFILE 29
3.1 Products and their use 29
3.2 ERP implementation at HOCL 30
3.2.1 Project Preparation 3...
9
4.8 Sampling Technique 41
4.9 Sample Size 41
4.10 Sample Description 41
4.11 Summary 41
Chapter 5 ANALYSIS AND INTERPRET...
10
Chapter 7 CONCLUSION 70
7.1 Impact of ERP implementation 70
7.2 Effectiveness of ERP implementation 71
7.3 Suggestions ...
11
LIST OF TABLES
Table Title Page No.
Table: 5.1 Level of expertise in using SAP 43
Table 5.2: Benefits realized after ER...
12
LIST OF FIGURES
Figure Title Page No.
1.1 3-Tier Architecture 17
1.2 Integration of Business Processes 17
1.3 Overview ...
13
LIST OF ABBREVIATIONS
ABAP Advanced Business Application Programming
BCG Boston Consulting Group
BPML Business Process ...
14
CHAPTER 1
INTRODUCTION
1.1 Introduction
In today’s challenging economic environment, companies are faced with having to...
15
The success of ERP implementation can be measured by various factors. These include
the acceptance of the system by the...
16
Increased Information Availability
Integration of various Functions
Reduction in Inventory
Reduction in Cycle Times
1.2...
17
(ABAP).The R stands for real-time and 3 stands for three-step system architecture i.e.
Database server, Application ser...
18
1.4 Materials Management Module
The materials management or MM module supports the procurement and inventory
functions ...
19
Goods Receipt
Invoice Verification
Vendor Payment
1.4.2 Purchase Requisitions
The diagram shown below depicts the flow ...
20
1.5 Background of the Study
1.5.1 Hindustan Organic Chemicals Limited (HOCL)
Hindustan Organic Chemicals Limited (HOCL)...
21
1.6 Objectives of the Study
The objectives of study are:
To study the ERP implementation in various departments of HOCL...
22
CHAPTER 2
LITERATURE REVIEW
The review of literature is undertaken to learn and understand from the experience and
know...
23
Reduced manufacturing cycle time
Improved customer service- Customer satisfaction means meeting or exceeding
the custom...
24
Improved decision making: Because of the ease of analysis of information of
various different sectors of a organization...
25
is a must. Training needs must be accessed at different times and a refresher course can
be planned.ERP implementation ...
26
2.3 Key Performance Metrics of ERP Implementation
Effectiveness of an ERP implementation can be somewhat gauged by Key ...
27
2.4 Downsides of ERP
The ERP systems are generally very costly in terms of initial investment. They also come
with many...
28
Cost Benefit Utopia: A common expectation is to get the “skies for nothing”. Although
there have been efforts to optimi...
29
CHAPTER 3
COMPANY PROFILE
Hindustan Organic Chemicals Limited (HOCL) is a leader in Chemical Industry and was
incorpora...
30
metallurgical industries, effluent treatment plants, sewage treatment and for removal of
toxic pollutants from industri...
31
After this, the perceptions of key personnel regarding the relative suitability of ERP
packages in the HOCL context wer...
32
3.2.5 Testing
Unit testing and Integration testing were conducted to ascertain the suitability of the
developed ERP sys...
33
HCM (Human Capital management)
FICO (Financials & Control)
QM (Quality management)
HSE (Health, Safety & Environment)
3...
34
3.4.1 Issue of Materials to Functional Departments
1. Materials in stock in HOCL stores are issued to functional depart...
35
3.4.3 Return of issued materials
1. Incase of return of materials earlier issued by Stores to functional departments an...
36
3. In the case of nonmoving/ obsolete items, approval of competent authority is
taken for treating the same as scrap. D...
37
3.5 Purchase
The functional departments of HOCL require various materials to carry out their
operations/ works. These d...
38
Stores section of materials department (3) PR for Emergency purchase – used in cases
where the emergency situation is s...
39
CHAPTER 4
RESEARCH METHODOLOGY
This chapter deals with the aspects of research methodology used and the work done to
de...
40
• Study of benefits of ERP and challenges associated with it.
• Derivation of objectives.
• Development of the question...
41
4.7.1 Primary Data
The primary data has been collected by conducting “In -depth Interview” with the ERP
users. Primary ...
42
system, benefits released after implementation of ERP, quality of information, aspects of
training, improvement in perf...
43
CHAPTER 5
ANALYSIS AND INTERPRETATION
In this chapter, the data collected using the instrument have been analyzed and t...
44
Fig.5.1 Level of expertise in using SAP
Level of expertize in SAP
47%
46%
7%
Beginner
Well Versed
Expert
The majority o...
45
existed a high probability of loss of the document during transit or a user denying having
received the documents. With...
46
Table 5.2: Benefits realized after ERP implementation
Benefits Realized
Strongly
Agree
Agree Neutral Disagree
Strongly
...
47
Interpretation
There have been many tangible and intangible benefits obtained after implementation of
SAP. It is clear ...
48
5.4 Quality of Information
Other parameter analyzed was whether the information available was accurate and
available on...
49
Fig 5.3 Information Quality
Information Quality
0
2
4
6
8
10
12
14
16
18
Improved Accuracy Information Availability mad...
50
the new system and adapting to the changes. Training sets the environment for
organizational work culture to change to ...
51
5.6 Availability of Training documents
Training documents and manuals forms the Bible of an ERP implementation. They ar...
52
as the format of these do not match the users’ requirement and hence further modification
is required before being fina...
53
Fig 5.6 User Friendliness
0
2
4
6
8
10
12
14
16
18
Format of report generation
matches the need
System has features to
...
54
Table 5.5 Responses recorded on other aspects
Strongly
Agree
Agree Neutral Disagree
Strongly
Disagree
Availability of p...
55
5.8 Other Factors
There exist other critical success factors which affects the success of ERP
implementation. For examp...
56
0
5
10
15
20
25
30
Existence of False Data Data is up-to-date Reports being
misunderstood
Work getting affected
due to
...
57
case of system unavailability. Hence the preparedness in case of non-availability is not a
concern at HOCL.
5.9 Improve...
58
improvement in performance areas
0
5
10
15
20
25
Reduction
in
inventory
Reduction
in
purchase
cycletim
e
Easiervendorev...
59
data like the registration number of the truck currently in the premises. Majority of the
users do not see any consider...
60
Table 5.8 Mean Values of changes in performance measures
Performance Means SD
Reduction in inventory 3.4 0.83
Reduction...
61
Table 5.9 below shows the descriptive statistics for the benefits realized after ERP
implementation.
Table 5.9 Mean Val...
62
documentation stills continues (mean=3.4, SD=1.03) while the system slowdown issues
are also observed (mean=3, SD=1.04)...
63
also has a high degree of correlation with the aspect of improvement in co-operation
between departments. Providing rig...
64
CHAPTER 6
SUMMARY, FINDINGS AND SUGGESTIONS
6.1 Summary
This study is a critical evaluation of ERP implementation at HO...
65
Reduction in paper work When the files are available online and the workflow is
managed via the ERP system the amount o...
66
6.2.3 Training
Training is one among the most important aspects in ERP implementations. A tool in the
hands of an inexp...
67
6.2.6 Availability of proper rights/roles
All the users had necessary roles and authorizations to carry out the transac...
68
About 46% of the users agree that there has been a reduction in inventory after ERP
implementation, while the remaining...
69
6.3 Suggestions
The post implementation phase has gone well at HOCL.However there still exist scope
for improvements wh...
70
CHAPTER 7
CONCLUSION
The main objective of this study was the evaluation of the ERP implementation at HOCL
Kochi Unit a...
71
enjoying the fruits of the ERP implementation. For example, the payments can be made
instantaneously as all details reg...
72
case of crash and users are taking hard copy print as back-ups.This is only a fear arising
of non-availability of SAP s...
73
Bibliography
1. Alexis Leon, 2003, Enterprise Resource Planning, Tata McGraw-Hill
2. Amitava Sain, Debasis Ghosh, Rachn...
74
implementation, Business Process Management Journal Vol. 15 No. 4, 2009 pp.
588-608
12. Fayez Ahmad Albadri, Salam Abda...
75
environment, Journal of Enterprise Information Management Vol. 21 No. 3, 2008
pp. 285-309
23. Luvai F.Motiwalla, Jeff T...
76
industry,European and Mediterranean Conference on Information
Systems(EMCIS) 2006
34. Sherry Finney, Martin Corbett, 20...
CRITICAL EVALUATION OF THE IMPACT OF ERP
CRITICAL EVALUATION OF THE IMPACT OF ERP
CRITICAL EVALUATION OF THE IMPACT OF ERP
CRITICAL EVALUATION OF THE IMPACT OF ERP
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CRITICAL EVALUATION OF THE IMPACT OF ERP

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Project work completed and submitted at School of Management Studies -Cochin University of Science and Technology.

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CRITICAL EVALUATION OF THE IMPACT OF ERP

  1. 1. CRITICAL EVALUATION OF THE IMPACT OF ERP IMPLEMENTATION (MATERIALS MANAGEMENT MODULE) REPORT OF PROJECT WORK DONE AT HOCL, KOCHI UNIT Submitted to the Cochin University of Science and Technology In partial fulfillment of the requirement for the award of the degree of Master of Business Administration (FT) by RAKESH K. Reg. No. 85201029 Under the Guidance of Prof. (Dr.) Jagathy Raj V. P. SCHOOL OF MANAGEMENT STUDIES COCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY KOCHI-22, KERALA April 2012
  2. 2. 2 Declaration I hereby declare that this project report entitled “Critical evaluation of the impact of ERP implementation (materials management module) -Work done at HOCL Kochi Unit “submitted to the Cochin University of Science and Technology in partial fulfilment for the award of the degree of MBA is the original work carried out by me under the supervision of Dr.Jagathy Raj V.P., Professor, School of Management Studies and Mr. Vijayakumar Menon, Chief Materials Manager & ERP Coordinator - HOCL Kochi unit. This work did not form part any other project work submitted for award of any degree or diploma, either in this or any other University. Place: Kochi Date: Rakesh K.
  3. 3. 3
  4. 4. 4 Certificate This is to certify that the project entitled “Critical evaluation of the impact of ERP implementation (materials management module) -Work done at HOCL Kochi Unit “,submitted to the Cochin University of Science and Technology for the award of the degree of MBA is the original work carried out by Mr.Rakesh K., under my supervision and guidance. This work did not form part any other project work submitted for award of any degree or diploma, either in this or any other University. Place: Kochi Dr.Jagathy Raj V.P. Date: Project Guide Director, School of Management Studies, Cochin University of Science and Technology
  5. 5. 5 Acknowledgement I thank Almighty for giving me the strength and power required to carry out the work assigned to me. I wish to place on record, my profound gratitude and indebtedness to Dr. Jagathy Raj V.P., Professor, School of Management Studies for his guidance and encouragement during the course of the project. I express my sincere thanks to Mr.Vijayakumar Menon, Chief Materials Manager & ERP Coordinator - HOCL Kochi unit, who despite his busy schedule guided us on this project right from the basics of ERP in a very detailed manner. I am thankful to the employees of HOCL Kochi Unit for their co-operation and support during my study. I take this opportunity to thank all those who have directly or indirectly helped me in successful completion of this project.
  6. 6. 6 Executive Summary Implementation of Enterprise Resource Planning (ERP) systems is one of the key solutions organizations make use of to make its business more efficient and effective. The implementation of ERP systems has helped corporations, significantly improve their business metrics by process optimization, improving the entire supply chain process, integration across functionalities and increasing transparency across the organization. The success of ERP implementation is measured by various factors. This study was undertaken to evaluate the impact of ERP implementation at HOCL Kochi Unit (A Govt.of India Enterprise) in the post implementation phase. The study measures the effectiveness of ERP implemented, benefits obtained due to implementation of ERP and level of satisfaction among the users on various aspects like training, ease of use etc. A survey instrument was constructed to gather data from the users and the data was then analyzed to arrive at conclusions. The study shows that ERP implementation at HOCL Kochi Unit has brought many direct and indirect benefits.ERP implementation has led to changes in performance measures. The user satisfaction is found to be positive. There still exist some areas for improvement that have been identified based on the inputs gathered and data studied.
  7. 7. 7 CONTENTS Chapter Title Page No. Chapter 1 INTRODUCTION 14 1.1 Introduction 14 1.2 Enterprise Resource Planning 15 1.2.1 Need for ERP 16 1.2.2 ERP System Components 16 1.2.3 ERP Vendors 16 1.3 SAP 16 1.4 Materials Management Module 18 1.4.1 Main Procurement Cycle Documents 18 1.4.2 Purchase Requisitions 19 1.4.3 Material Master 19 1.5 Background of the Study 20 1.5.1 Hindustan Organic Chemicals Limited (HOCL) 20 1.5.2 HOCL moves to ERP System 20 1.6 Objectives of the Study 21 1.7 Scope of the Study 21 Chapter 2 LITERATURE REVIEW 22 2.1 Expected Benefits from ERP Systems Implementation 22 2.2 Success of ERP implementation 24 2.3 Key Performance Metrics of ERP Implementation 26 2.4 Downsides of ERP 27
  8. 8. 8 Chapter 3 COMPANY PROFILE 29 3.1 Products and their use 29 3.2 ERP implementation at HOCL 30 3.2.1 Project Preparation 31 3.2.2 Business Blueprint Preparation 31 3.2.3 Development phase 31 3.2.4 Master data Creation 31 3.2.5 Testing 32 3.2.6 Preparation of training manuals 32 3.2.7 Allocation of user licenses 32 3.2.8 Creation of User roles 32 3.2.9 Go Live 32 3.3 SAP Modules Implemented 32 3.4 Material Goods Movement 33 3.4.1 Issue of Materials to Functional Departments 34 3.4.2 Issue of Materials to Contractors 34 3.4.3 Return of issued materials 35 3.4.4 Goods issue for stock transfer 35 3.4.5 Scrap receipt & issue 35 3.5 Purchase 37 Chapter 4 RESEARCH METHODOLOGY 39 4.1 Rationale for the Study 39 4.2 Objectives 39 4.3 Scope of the Study 39 4.4 Methodology 39 4.5 Development of the Questionnaire 40 4.6 Type of Research 40 4.7 Sources of data 40 4.7.1 Primary Data 41 4.7.2 Secondary Data 41
  9. 9. 9 4.8 Sampling Technique 41 4.9 Sample Size 41 4.10 Sample Description 41 4.11 Summary 41 Chapter 5 ANALYSIS AND INTERPRETATION 43 5.1 SAP User Profile 43 5.2 Questionnaire Evaluation 44 5.3 Benefits Realized after implementation of SAP 44 5.4 Quality of Information 48 5.5 Training 49 5.6 Availability of Training documents 51 5.7 User friendliness of SAP 51 5.8 Other Factors 55 5.9 Improvements in performance areas 57 5.10 Comparison with legacy system 59 5.11 Descriptive Statistics for variables 59 5.12 Correlation Analysis 62 Chapter 6 SUMMARY, FINDINGS AND SUGGESTIONS 64 6.1 Summary 64 6.2 Findings 64 6.2.1 Benefits Realized after implementation of SAP 64 6.2.2 Quality of Information 65 6.2.3 Training 66 6.2.4 Availability of Training documents 66 6.2.5 User friendliness of SAP 66 6.2.6 Availability of proper rights/roles 67 6.2.7 Other Factors 67 6.2.8 Improvements in performance areas 67 6.3 Suggestions 69
  10. 10. 10 Chapter 7 CONCLUSION 70 7.1 Impact of ERP implementation 70 7.2 Effectiveness of ERP implementation 71 7.3 Suggestions 71 7.4 Limitations of the study 72 Bibliography 73 Annexure I Questionnaire 77
  11. 11. 11 LIST OF TABLES Table Title Page No. Table: 5.1 Level of expertise in using SAP 43 Table 5.2: Benefits realized after ERP implementation 46 Table 5.3 Information Quality after ERP implementation 48 Table 5.4 User Friendliness of SAP 52 Table 5.5 Responses recorded on other aspects 54 Table 5.6 Other Factors 55 Table 5.7 Improvements in Performance Areas 57 Table 5.8 Mean Values of changes in performance measures 60 Table 5.9 Mean Values of Benefits Realized 61 Table 5.10 Mean Values of Other Variables 61 Table 5.11 Correlation Analysis 62
  12. 12. 12 LIST OF FIGURES Figure Title Page No. 1.1 3-Tier Architecture 17 1.2 Integration of Business Processes 17 1.3 Overview of Material Management 18 1.4 Purchase Requisitions 19 5.1 Level of expertise in using SAP 44 5.2 Types of Benefits Realized 46 5.3 Information Quality 49 5.4 Aspects of Training 50 5.5 Availability of Training Documents 51 5.6 User Friendliness 53 5.7 Other Aspects 54 5.8 Other Factors of successful implementation 56 5.9 Improvements in Performance Areas 58
  13. 13. 13 LIST OF ABBREVIATIONS ABAP Advanced Business Application Programming BCG Boston Consulting Group BPML Business Process Master List CSF Critical Success Factors DN Demand Notes ERP Enterprise Resource Planning HOCL Hindustan Organic Chemicals Limited (HOCL) IDES International Demonstration Education System IV Issue Voucher KPI Key Performance Indicators LAN Local Area Network PR Purchase Requisition PSU Public Sector Undertaking R/3 Real Time 3-Tier RFQ Request for Quotation RN Return Note SAP Systems Applications and Products in data Processing SD Standard Deviation
  14. 14. 14 CHAPTER 1 INTRODUCTION 1.1 Introduction In today’s challenging economic environment, companies are faced with having to cut costs and improve efficiency within their organizations. Enterprise resource planning (ERP) has become a solution many companies use to integrate internal and external management information across organizations. The purpose is to simplify and expedite information flow to all areas within a business to improve efficiencies. Information availability can play a vital role in monitoring the business. A research done by a consulting firm tells suggests that more than six out of 10 companies (63.8-percent)firms implement ERP to improve efficiencies(source:2012 ERP Report, Panorama Consulting Solutions). Other reasons for implementation include better integration of systems across multiple locations and standardization of global business operations. Though the end result of any ERP implementation project is to reduce costs and improve time spent on business functions; ERP implementations are lengthy by nature and require due diligence in accurate the documentation of requirements, business process blueprinting and organizational change management.ERP implementation is not a one-time process but a lifelong process as changes need to be accommodated with changing times or business scenarios/needs.ERP softwares are costly and the return on investment can be measured by the benefits obtained. The direct advantages include improved efficiency, information integration for better decision making, faster response time to customer queries etc.The indirect benefits include better corporate image, improved customer satisfaction, improved relations between departments, better transparency, improved communication, etc.
  15. 15. 15 The success of ERP implementation can be measured by various factors. These include the acceptance of the system by the users, the training provided, the knowledge of the end-user, the support extended by the core team in resolving issues, user friendliness of the software, key benefits obtained after implementation, information quality and availability, improvement in the key performance areas, readiness to upgrade for future requirement etc. The benchmark would be to compare with the process improvements or savings in time or money after implementation of ERP. 1.2 Enterprise Resource Planning (ERP) Enterprise resource planning (ERP) refers to a computer information system that integrates all the business activities and processes throughout an entire organization. ERP systems incorporate many of the features available in other types of manufacturing programs, such as project management, supplier management, product data management, scheduling, etc. The objective of ERP is to provide seamless, real-time information to all employees throughout the enterprise. Companies commonly use ERP systems to communicate the progress of orders and projects throughout the supply chain, and to track the costs and availability of value-added services. The goal of ERP is to make the information flow dynamic and immediate, therefore increasing the usefulness and value of the information. In addition, an ERP system acts as a central repository eliminating data redundancy and adding flexibility. 1.2.1 Need for ERP In today’s competitive environment success depends on speed. Speed in product development, speed in assembly/packaging and speed in delivery and service to dealers and customers. To stay on the fast track to success, integration of OEMs, suppliers, dealers, and customers is essential. By implementing an ERP solution, the following benefits can be realized Provides the opportunity to examine and adopt the Best Practices from across Industries Increased Accuracy & Elimination of Duplicity
  16. 16. 16 Increased Information Availability Integration of various Functions Reduction in Inventory Reduction in Cycle Times 1.2.2 ERP System Components An ERP system depends on hardware(i.e., servers and peripherals),software(like operating system and database),information(i.e., organizational data from internal and external resources),process(i.e., business processes, procedures and policies)and people(end users, implementation team,consultants,IT staff etc.).These components must work seamlessly for the implementation to be successful. 1.2.3 ERP Vendors The key vendors of ERP include SAP AG,Baan,PeopleSoft,Oracle,Microsoft,IFS,Sage and Infor.There also exist local players like Ramco Systems,etc. and few proprietary in- built ERP systems developed in-house by a few companies. The ERP market is evolving and with innovative products competition is becoming bigger. 1.3 SAP SAP AG is a leading ERP vendor. SAP stands for Systems Applications and Products in data Processing. SAP saw the future potential for the delivery of information to the end- user via the PC, so SAP reinvented and developed their product further by developing a business solution for the client/server architecture environment; this became known as R/3 and was released in 1992. In the 1990s SAP and its R/3 solution would go on to become the dominant ERP solution, and also become one of the world’s biggest software houses. SAP R/3 applications are a range of software modules. They can be used either alone or combined to form business solutions. SAP state that their R/3 applications offer comprehensive functionality for all standard business needs within an enterprise. SAP R/3 uses a programming language called advanced business application programming
  17. 17. 17 (ABAP).The R stands for real-time and 3 stands for three-step system architecture i.e. Database server, Application server and Graphical User Interface (PC‘s user interface). The following are SAP R3’s application modules: financial accounting, treasury, controlling, enterprise controlling, investment management, production planning, materials management, quality management, project system, human resource management, sales and distribution, and plant maintenance and service management. The three tier architecture is represented in the Fig.1.1 below. Fig.1.1 3-Tier Architecture Fig1.2 represents how the SAP integrates different business processes. Fig. 1.2 Integration of Business Processes
  18. 18. 18 1.4 Materials Management Module The materials management or MM module supports the procurement and inventory functions occurring in day-to-day business operations. Procurement is a component of the Materials Management module that supports the purchase of materials and / or services by an organization from sources outside the organization. The overview of processes involved in material management and its interaction with other modules is shown in fig 1.3. Fig.1.3 Overview of Material Management 1.4.1 Main Procurement Cycle Documents The main documents include: Purchase Requisition Request for Quotation Quotation Outline Agreements Contract Scheduling Agreement Purchase Order
  19. 19. 19 Goods Receipt Invoice Verification Vendor Payment 1.4.2 Purchase Requisitions The diagram shown below depicts the flow of purchase requisition. Fig 1.4 Purchase Requisitions 1.4.3 Material Master The material master contains all the information about procurement, production, storage and sale of a material. As a central data object, the material master refers to a uniform data structure for all material related data that can be used for all different materials.The basic structure is defined in R/3 in the following manner: • Organizational structure of a company via the organizational levels in SAP R/3. • Data technique structure via the view concept by SAP R/3.
  20. 20. 20 1.5 Background of the Study 1.5.1 Hindustan Organic Chemicals Limited (HOCL) Hindustan Organic Chemicals Limited (HOCL) was set up by the Government of India in 1960 with the objective of attaining self-reliance in basic organic chemicals needs and to reduce country’s dependence on import of vital organic chemicals. The products of HOCL Kochi unit include Phenol, Acetone and Hydrogen Peroxide. 1.5.2 HOCL Moves to ERP System It was decided by the Government of India to implement ERP in PSUs.HOCL being a PSU had to comply with this directive. Prior to implementation of ERP, HOCL Kochi Unit used in-house developed legacy systems. The major disadvantage of the legacy systems was the fact that they were independent units and thus no integration was available. The ERP implementation at HOCL first took place in the Kochi Unit and Marketing Branch offices at Mumbai, Hyderabad, Chennai and Delhi in Phase I. Implementation at Rasayani unit will be in Phase II and has not yet started. Go-live was on 16th Sept 2010. ERP implementation can be termed successful only if the organization starts realizing the benefits projected by implementation of ERP system. Other critical success factors lie in the activities involved after implementation which include identifying user concerns, training needs, providing necessary training, competency of the core team etc. This study attempts to find out the direct and indirect benefits obtained after implementation of ERP.It tries to identify any areas of concern by conducting an in-depth study. It gauges the level of satisfaction among the end users. The study is limited to the material management module of SAP used by persons of various departments at HOCL Kochi Unit.
  21. 21. 21 1.6 Objectives of the Study The objectives of study are: To study the ERP implementation in various departments of HOCL, Kochi Unit. To critically evaluate the impact of ERP implementation. To measure the level of satisfaction among the end-user in using the ERP package. To identify the benefits obtained after implementation of ERP. To identify any specific areas of concerns and suggest solutions for the same. 1.7 Scope of the Study The present study is a critical evaluation of the ERP implemented with focus on the material management module at HOCL Kochi Unit. It evaluates the users of ERP system to ascertain the level of satisfaction.
  22. 22. 22 CHAPTER 2 LITERATURE REVIEW The review of literature is undertaken to learn and understand from the experience and knowledge of others who have done worked on similar areas. Publications by various authors helped in identifying the critical success factors that define success in an ERP implementation. 2.1 Expected Benefits from ERP Systems Implementation ERPs are designed to help manage organizational resources in an integrated manner. The primary benefits that are expected to result from their implementation are closely related to the level of integration that is promoted across functions in an enterprise. The professional literature has been proactive in determining the types of benefits that companies might anticipate from their ERP systems and to what extent organizations had actually attained those benefits on a post-implementation basis. Expectations for improved business performance after adoption may result from both operational and strategic benefits. The most significant intangible benefits related to internal integration, improved information and processes, and improved customer service, while tangible benefits related to cost efficiencies in inventory ,personnel, procurement and the time needed to close books, as well as improvements in productivity, cash/order management, and overall profitability. In assessing the extent to which they had actually attained those benefits, however, on a post-implementation basis, it was evident that they were not able to improve profitability or lower personnel, inventories, or system maintenance costs as much as they had hoped. On the other hand, respondents noted better-than-expected results in overall productivity and in order-management cycle time, as well as procurement, on-time delivery, and the ability to close financial cycles. The tangible and intangible benefits are given below: Reduced planning cycle time
  23. 23. 23 Reduced manufacturing cycle time Improved customer service- Customer satisfaction means meeting or exceeding the customers requirement for product or services .ERP systems have proved that they can produce goods at flexibility of Made to order approach without loosing the cost & time benefits of made to order operations means that each customer will get individual attention & feature that he/she wants. Also with the introduction of web enabled ERP systems, the customers can place orders, track the status of order & make payment sitting at home. Decreased lead time -The time elapsed between placing an order & receiving it is known as lead time. If a stock is not available on time, problems like missing a delivery schedule, losing the customer goodwill due to delayed delivery or loosing the customer completely occur. In order to avoid this, large buffer stock is maintained or a high reorder level is maintained which leads to high inventory costs. ERP avoids this by maintaining & processing the individual lead times of different materials in a inventory which at times could run into thousands of different materials & a efficient system is established. Reduced cost: The implementation of ERP eliminates clerical tasks. Hence resources could be better deployed. The control and monitoring facility helps in cost reduction. Manpower reductions, lesser inventories, lesser quality costs are reduce costs. Reduced inventory: By having a real-time information and visibility, inventory management is made very easier with ERP. Reduced error in ordering Increased throughput Increase in sales volume Improved competitive position Better coordination between managers Improved forecasting Reduced information delay: Information is available at the click of a button. There exists no dependency on others to get the required information.
  24. 24. 24 Improved decision making: Because of the ease of analysis of information of various different sectors of a organization and by ready to use comprehensive overview of the things in general ERP systems greatly help in decision making which becomes often tedious & time consuming otherwise. Information accuracy also assures that the decisions which are made are accurate enough & commercially viable. Streamline the business processes Improved competitive position Improved communication: There exists no chance of hiding of information. Features like SAP Mail available in SAP enhance the communication, allowing users to share information instantly. 2.2 Success of ERP implementation Firms emphasized Critical Success Factors (CSFs) required for the maintenance and successful deployment of these complete ERP systems. One of the first researches about CSF in ERP implementation is accomplished by Holland in 1999 titled “A Critical Success Factors Model for ERP Implementation”. He divided CSF in two dimensions including of strategic and technical, then he classified legacy system, business vision, ERP strategy, top management support and project schedule and plans under strategic dimension and client consultation, personal, software configuration, client acceptance, monitoring and feedback, communication and trouble shooting under technical dimension. Initially most firms did not pay adequate attention to managing organizational and people issues across the ERP implementation cycle. But studies prove that acceptance of ERP systems by the end-user and the end-user satisfaction is an important factor to measure the success of ERP implemented. Training is another important factor that determines success of ERP implementation. A powerful tool in the hands of wrong person can prove to be a nightmare. It is thus necessary to provide the required training to all users before an ERP rollout. Assessing the training needs and then providing the training at right time
  25. 25. 25 is a must. Training needs must be accessed at different times and a refresher course can be planned.ERP implementation is facilitated by a core team. The competency of the core team in handling both the technical and people issues plays a vital role in terming the implementation as successful. User friendliness is the aspect which needs to be considered. The good feel and usability of screens, the ease of data entry, and availability of reports in required formats reduces the burden on the user. Many a times users complain of double work being done even after implementation of ERP as the reports generated by ERP system may not be in the format required by the end-user. The ease of data entry and ease of finding the necessary columns or fields is important. The screen design should be ergonomic and clarity should prevail regarding which entry to be selected. In most of the cases there exist legacy systems. The employees in an organization are so used to the legacy system that they may find migrating to a new system very difficult. Resistance to change or still following the old manual procedures can lead to failure of an ERP system implementation. For example, despite availability of documents in servers people may still resort to maintaining unnecessary copies of physical records. Availability of training documents and manuals act as a Bible when a new person joins the organization. Training in most of the ERP implementation follows the approach that the trainer trains the user. This means that the core team gets training from the consultants directly and then they transfer the knowledge to end-users within the organization. The core team generally consists of persons who are experts in their functional area. The core team prepares training documents and manuals which consist of transaction codes, procedures and help documents. End users are ultimate users of the ERP system. These are the people who were doing the functions that are being automated or computerized by the ERP system. Employees may fear that the new system is hard to learn. Job profiles may change and people will be forced to undergo to develop new skill sets. If these fears are not addressed then the organization may find itself in trouble.
  26. 26. 26 2.3 Key Performance Metrics of ERP Implementation Effectiveness of an ERP implementation can be somewhat gauged by Key Performance Metrics/Indicators (KPIs) of business processes. KPIs are benchmarks with quantitative or qualitative values that help an organization assess the success and effectiveness of the processes that have been implemented in the ERP. However it may not be appropriate to expect significant improvement in these values immediately after the implementation. An organization needs to give itself the time to absorb and imbibe the changes brought about in by the ERP to realistically achieve the KPI targets. Examples of these metrics are as follows: Financial Perspective: The cost savings, budgetary compliance etc. Customer Perspective: The internal and external customers are included. The metrics could be in form of percentage reduction in billing errors, percentage of transactions finished on schedule, percentage increase in the on-time shipments. Internal Process Perspective: These include reducing the operational problems. Process improvements caused due to ERP implementation etc are also covered here. Human Resource Perspective: Examples include the level of user satisfaction, time spent on training, etc. Business benefits aside, ERP gives an information system three important capabilities: consistency and reliability of data across the organization, streamlined transaction processing, and provides operations level reporting. These capabilities, basic and important as they are, ensure that companies are ready for specific solutions that enhance performance. Improvements measured as a result of ERP implementation (Study by Aberdeen Group) shows some interesting findings. There has been 20% reduction in operating costs,18% reduction in administrative costs,22% reduction in inventory costs,17% improvement in on-time shipments,48% better utilization of resources,40 % reduced time to decision making,55% reduction/redeployment in headcount and a very good increase in sales and profit.
  27. 27. 27 2.4 Downsides of ERP The ERP systems are generally very costly in terms of initial investment. They also come with many hidden charges in the form of license fees, upgradation charges, consultation fees, training costs etc.Some of the downsides of ERP systems include Dependence on vendor for upgrades Expensive customization Staff leaving for better salaries Others ERP may be a panacea but a panacea after all needs to be administered with finesse and professionalism. The hurdles in the path of a successful ERP implementation in the Indian Mid Market context are: Expectations from ERP: There is a feeling that ERP is an intelligent wand that solves all business problems. The fact is that it is an application framework which has to be tuned to the organization’s requirement and run by humans who make the decisions. On the flip side ERP is often classified with an off the shelf accounting package whereas the fact remains that an ERP is an integrated framework that addresses most of the organization’s business functions. Unstructured Processes: A majority of the mid market segment organizations are closely held businesses where the business processes have evolved over years. Realigning of these business processes and streamlining of data to suite the ERP requirement is a major exercise where the participation of the clients is critical. Commitment from Management: Any ERP implementation is phased over a period of time. In quite a few cases it has been observed that there is a wane in the interest and commitment of the management during the implementation process. This result is cost and time overrun and in some cases the process gets nipped in the bud.
  28. 28. 28 Cost Benefit Utopia: A common expectation is to get the “skies for nothing”. Although there have been efforts to optimize the total cost of ownership, the fact remains that value which one can expect is proportional to the investment. An imbalance in terms of trying to derive more can lead to skewed delivery in turn the Quality suffers. A study by Boston Consulting Group (BCG) highlights that some 20 percent of the organizations implementing ERP reported that they could have achieved similar business value for 50-60 percent less. Many of their expenditures had gone towards false starts, non-essential features and over-reliance on expensive external consultants.
  29. 29. 29 CHAPTER 3 COMPANY PROFILE Hindustan Organic Chemicals Limited (HOCL) is a leader in Chemical Industry and was incorporated in 1960 under the Ministry of Chemicals & Fertilizers with its registered office at Rasayani in Maharashtra. Hindustan Organic Chemicals Limited (HOCL) is a chemical company, engaged in the manufacture and sale of various organic chemicals. It is headquartered in Mumbai, India. The Government of India set up HOCL with the objective of attaining self-reliance in basic organic chemicals needs and to reduce country’s dependence on import of vital organic chemicals. In the 1980s HOCL diversified its activities. Kochi had been identified as a growth centre due to the availability of raw materials, man power and other infrastructural facilities. As a result, HOCL Kochi unit came into existence. 3.1 Products and their use Products of HOCL Cochin unit are Phenol, Acetone and Hydrogen peroxide. Phenol is a versatile industrial organic chemical. The largest end use of Phenol is in Phenol-formaldehyde resins used in wood additives as well as moulding and laminating resins, paints, varnishes and enamels. Phenol is also used in the manufacture of preservatives, disinfectants, lubricating oils, herbicides, insecticides, pharmaceuticals, etc. Acetone is an important commercial solvent and raw material with wide usage in the chemical explosives and lacquer industry. It is commonly used as a solvent for Cellulose Acetate, Nitrocellulose, Celluloid, Cellulose Ether, chlorinated Rubber, various resins, fats and oils and an absorbent for Acetylene Gas. Hydrogen Peroxide has wide application in paper and textile industries for bleaching purpose as a substitute for hazardous chlorine. It is also used in electronic and
  30. 30. 30 metallurgical industries, effluent treatment plants, sewage treatment and for removal of toxic pollutants from industrial gas streams. 3.2 ERP implementation at HOCL It was the Government of India directive which required all the PSUs to implement ERP systems.HOCL being a PSU had to comply with the decision. The Head of MSS department, Shri K.V.Varkey was appointed as the Project manager for ERP implementation in June 2008. Wipro was appointed as the ERP Consultant in June 2008. A core committee was formed by the Project manager consisting of suitable officers from all departments of HOCL to facilitate the consultancy works. Wipro consultants interacted with the core committee members and department heads to ascertain their requirements, to study existing business processes and for doing the gap analysis. Steering Committee was formed by CMD including the Directors, General Managers and Project manager in August 2008.Project manager was given authority to communicate in star model with all steering committee members for faster decision making. The Steering committee was formed to take major ERP related top management decisions. Through interaction with the individual departments and core committee members, Wipro team collected all data required for understanding existing business processes, identifying expectations of personnel/ pain areas/ extent to which IT is currently used and identifying gaps if any in IT Skills of personnel for remedial action, acquiring sufficient knowledge to prepare process maps, FRS etc.that is required for tendering process related to buying ERP package / appointing ERP development consultant. The Key personnel of HOCL were involved in the ERP package selection process. SAP was selected as the ERP package after review by the key personnel and ERP vendors made presentations before key personnel regarding the strengths/ features of their ERP packages and the fitness for HOCL use.
  31. 31. 31 After this, the perceptions of key personnel regarding the relative suitability of ERP packages in the HOCL context were collected using a questionnaire.TCS was appointed as the consultant for the project. Different stages of the project are given below. 3.2.1 Project Preparation The TCS consultants studied the HOCL Business processes. Core team members were given Level 1 training in the IDES (International Demonstration Education system) system of SAP. They gained knowledge on functionalities available in SAP. The BPML (Business Process Master List) was prepared module wise briefly covering the key business processes. 3.2.2 Business Blueprint Preparation Business Blue prints were prepared by the core team members. Blue prints were prepared business process wise, giving a detailed account of various situations faced in business. The TCS module consultants carried out the process mapping, explaining how each process step will be carried out in the SAP scenario and what lies beyond the scope of SAP. 3.2.3 Development phase During this phase, the SAP system was configured and customized by TCS consultants as per the documented blue prints. Level II training of the core team was carried out in this phase. Tests were jointly conducted by TCS consultants and core team members concerned after configuration and customization. 3.2.4 Master data Creation While the TCS module consultants were busy with the development work, the core team members prepared the master data. Excel templates given by the module consultants were used to furnish data in a structured fashion and easy uploading into SAP.
  32. 32. 32 3.2.5 Testing Unit testing and Integration testing were conducted to ascertain the suitability of the developed ERP system. 3.2.6 Preparation of training manuals Training manuals with screen shots were prepared by core team members and circulated among the users. Training sessions were conducted to prepare the users for the post- implementation scenario. 3.2.7 Allocation of user licenses The user licenses were allocated in an optimum manner between users. User licenses were allocated to individuals where traceability is critical and shared in cases of lower volume of work on SAP system. 3.2.8 Creation of User roles User roles were created for allocating to users. A user role is a set of SAP transactions. All users are not authorized to execute all transactions. 3.2.9 Go Live The black out period commenced on 1st Sept 2010. Legacy system was stopped and a black out period of 10 days was planned. However it was delayed to due unavoidable reasons. The Go-live was on 16th Sept 2010. Finally by 1st Oct 2010 live transactions were carried out in SAP. 3.3 SAP Modules Implemented The following SAP Modules were implemented at HOCL MM (Materials Management) PP (Production Planning) SD (Sales & distribution) PM (Plant maintenance) PS (Project systems)
  33. 33. 33 HCM (Human Capital management) FICO (Financials & Control) QM (Quality management) HSE (Health, Safety & Environment) 3.4 Material Goods Movement Materials purchased by Materials department and stocked in the stores have to be issued for consumption by other functional departments or contractors performing various service contracts in HOCL as and when required by them. Also, issued materials will have to be returned to the stores by the functional departments / contractors if not consumed. Benzene if purchased from any source other than BPCL-Kochi Refinery will mainly have to be received by sea at Cochin port and discharged from the ship into Storage tanks hired by HOCL at one of the Storage tank installations at Cochin port. Stock transfer (Issue) of the Benzene so received at Storage tank terminal will have to be carried out to transport the product to HOCL plant for subsequent production consumption. Stock transfer of Phenol drums from Kochi plant to Rasayani depot plant of HOCL for subsequent sale is another kind of goods movement. Materials are issued to functional departments from Stores based on DEMAND NOTES signed by authorized officers in the functional departments. Materials are issued to contractors on the basis of a request letter from the contractor containing list of materials to be issued to them, duly endorsed by the authorized officer in the department managing the contract. ISSUE VOUCHER is prepared against issue of materials to contractors and the contractor is made to acknowledge receipt of materials in the Issue voucher. The Benzene received by sea at Storage tank terminal at Cochin port is issued for transportation using DELIVERY CHALLANS of HOCL. Phenol drums are issued for transportation to Rasayani depot plant through CENVAT INVOICES.
  34. 34. 34 3.4.1 Issue of Materials to Functional Departments 1. Materials in stock in HOCL stores are issued to functional departments against DEMAND NOTES (DN) signed by the authorized officers of the department. 2. The Demand note shall indicate the Cost center code, Demand note date, Item code, Description, unit, Quantity demanded and signature of the authorized officers. 3. The Stores officer assigns the DN to the Storekeeper in charge of the materials. 4. The Storekeeper verifies the availability of the materials as per DN before issuing the materials. 5. The Storekeeper enters the DN details in the LAN system including the actual quantity of issue and posts the DN. 6. The Computer generated DN serial number is written on the DN. 7. Periodically, the Stores officer sends hard copies of DN to Finance department. 3.4.2 Issue of Materials to Contractors 1. In the case of issue of materials to Contractors, the Contractor submits a request letter to the Stores officer indicating the contract details and material requirements. The functional dept managing the contract endorses the letter for issue of materials. 2. The Stores officer prepares ISSUE VOCHER (IV) in the name of the contractor indicating the contract reference no, IV date, Itemcode, Description, unit, Demanded quantity and Actually issued quantity. 3. The IV is signed by the contractor as proof of having received the materials. 4. The IV is entered in the LAN system and posted by the Storekeeper. 5. The Computer generated IV serial number is written on the IV. 6. Periodically, the Stores officer sends hard copies of IV to Finance department so that the recoveries as applicable can be made by Finance dept from the contractors bills.
  35. 35. 35 3.4.3 Return of issued materials 1. Incase of return of materials earlier issued by Stores to functional departments and Contractors, RETURN NOTE (RN) is used. 2. The RN indicates the details of the returning department/ contractor, details of materials returned such as item code, description, unit, quantity returned. 3. The Storekeeper enters the actual quantity received at Stores in the RN after ensuring that the materials are in acceptable condition. 4. The Storekeeper enters the RN details in the LAN system including the actual quantity of return and posts the RN. 5. The Computer generated RN serial number is written on the RN. 6. Periodically, the Stores officer sends hard copies of RN to Finance department for further action. 3.4.4 Goods issue for stock transfer 1. In the case of stock transfer of Phenol drums to Rasayani Depot plant, marketing dept creates a Sale order for the whole year with HOCL Rasayani as the buyer and consignee. 2. Transportation contract is executed for transportation of Phenol drums to Rasayani on stock transfer basis. 3. Excise cum tax invoice is prepared for each truckload and cenvat applicable is paid as in the case of sales. 4. The invoice is created at Nil tax since it is stock transfer. 3.4.5 Scrap receipt & issue 1. Scrap materials may be of two types (1) Scraps generated in the plant (2) Those generated due to conversion of obsolete/ nonmoving materials in stock to scraps. 2. In the case of scraps generated in the plant, the functional department concerned sends the same to Stores officer along with a note. In many cases, scraps are generated as lots. In some cases, like M S scrap, materials are weighed and quantity ascertained before the materials are delivered at the SCRAP YARD.
  36. 36. 36 3. In the case of nonmoving/ obsolete items, approval of competent authority is taken for treating the same as scrap. Depending on the type of material, it is suitably classified into one of the scrap categories like MS scrap, SS scrap, Aluminum scrap, Copper scrap etc. 4. Entries are made in the scrap register kept by the Stores officer. No entries are made in the LAN system. 5. The Stores officer gives the details of scraps available for disposal to Purchase dept. 6. The HOD of Materials dept calls a meeting of the SSIDC committee (surplus – scrap identification & disposal committee). The committee inspects the accumulated scraps in the scrap yard or other locations as applicable. The committee recommends the segregation of scraps if required and the mode of disposal. 7. Depending on the value, the SSIDC may recommend disposal through limited or open tender. 8. Depending on the value of scrap available, as recommended by SSIDC, limited or open tender is resorted to by purchase section. 9. The purchase department has a list of scrap vendors. Incase of limited tender, a tender will be floated as per the list of scrap vendors. Incase of open tender, newspaper advertisement is published, and tender documents are uploaded in HOCL website. 10. The quotations along with EMD will be opened on the stipulated date of opening in the presence of attending bidders. 11. EMD will be forwarded to Finance. 12. Comparative statement of prices is prepared including all taxes and duties as applicable. 13. Proposal for scrap disposal is put up by the officer concerned for disposal of scraps to the highest quoting bidders. Approval is obtained from the competent authority. 14. Sale order for scrap is placed on the successful vendor. 15. Scraps are sold based on the sale order against advance payment.
  37. 37. 37 3.5 Purchase The functional departments of HOCL require various materials to carry out their operations/ works. These departments raise indent (PR) for the procurement of the required materials. The Stores section under the Materials department initiates the replenishment of stocks of certain items (called stock items). PR is raised by stores section for such items. The Materials department floats open tender, limited tender or single tender for the procurement of the materials depending on the value and type of materials. In the case of open tender and some limited tenders, two-bid system is followed with techno commercial and price bids. In the case of limited tender, Enquiry (RFQ) is floated as per approved vendor list of HOCL. The quotations are subjected to technical evaluation and PO is placed on the lowest technically acceptable bidder after financial concurrence and approval of competent authority. The vendor list based on which RFQ is floated may contain indigenous as well as foreign vendors. Similarly, in the case of open tenders, offers may be obtained from both foreign and indigenous vendors. Where the lowest technically acceptable offer is from an indigenous vendor the procedure detailed below is followed. Purchase activity starts with an approved indent (PR), which may be raised by any functional department of HOCL. The value of purchase, availability of sufficient vendors for the item in the approved vendor list, and the category of the material decide the method of floating tender. In the case of spare parts, Enquiry (RFQ) is sent only to the OEM or authorized agent (single tender). Where the value exceeds Rs 75 lakhs, it is mandatory to resort to open tender procedure unless exempted by certain provisions of the purchase policy of HOCL. Where sufficient vendors are not available or where there is no chance of getting sufficient quotations through limited tender, open tender is followed. Indents (PRs) raised are of four types (1) PR for nonstock items (Nonstock items are those items where the Materials departmentt is not expected to replenish the stock) – PR of this category is raised by all user departments (2) PR for stock items (Stock items are those items where the stores section initiates action for replenishment) – used only by
  38. 38. 38 Stores section of materials department (3) PR for Emergency purchase – used in cases where the emergency situation is specified and approved by Unit in charge (4) PR for cash purchase – used only for procurement of locally available items of value below Rs 2500/-
  39. 39. 39 CHAPTER 4 RESEARCH METHODOLOGY This chapter deals with the aspects of research methodology used and the work done to develop the final instrument used for data collection. It also describes how the information has been organized and analyzed. 4.1 Rationale for the Study Most of the organizations spend a huge amount of money on improving their business function in order to gain competitive and strategic advantage. ERP (Enterprise Resource Planning) has become a business solution and backbone of business activities. This research aims at studying the impact of ERP implementation on the organization functions and performance areas. It tries to measure the benefits obtained after implementation of ERP.The study measures the benefits derived after post- implementation phase and tries to identify any gaps between the expectations and realizations. 4.2 Objectives The specific objective is to ascertain the advantages obtained by implementing ERP and to study the effectiveness of ERP implemented. Further the study tries to measure any bottlenecks that may exists and suggest measures for improvement. 4.3 Scope of the Study The study is restricted to the users of material management module of ERP.Users of this module from various departments have been studied. 4.4 Methodology The following methodology was followed for conducting the study: • Detailed study of the organization and the processes involved. • Detailed study about ERP with more emphasis on SAP R/3 software.
  40. 40. 40 • Study of benefits of ERP and challenges associated with it. • Derivation of objectives. • Development of the questionnaire. • Pre-testing and validation of the questionnaire. • Data Collection • Data Analysis and interpretation. • Preparation of findings and suggests remedial actions for concerns. The study involves use of survey tools to capture data from various users of ERP. Questionnaire was developed to collect data from the users. In-depth Interview with users was held to collect data and responses were recorded. 4.5 Development of the Questionnaire The questionnaire was framed to get the necessary inputs from the users. To ascertain the user satisfaction responses were recorded on a 5-point scale. Some of the questions demanded either yes or no response. To get further details, open-ended questions were also put forward. To get comparison between the old and new systems, the questions asked user to respond regarding the changes after implementation. The questionnaire is appended in Annexure I. 4.6 Type of Research Descriptive Research has been used for this project. Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The study is both quantitative and qualitative in nature. The study is based on the data collected from the users of ERP. 4.7 Sources of data Data has been collected from various sources; there is a combination of both primary and secondary data that has been used in this research.
  41. 41. 41 4.7.1 Primary Data The primary data has been collected by conducting “In -depth Interview” with the ERP users. Primary data has also been collected through questionnaire from 28 employees using ERP. 4.7.2 Secondary Data Articles have been sourced from magazines and journals dealing with current issues in ERP.Internet resources, research publications & text books related to ERP have been a major secondary source for the extraction of the expert’s opinion. The documents related to ERP provide by HOCL also helped in the study. 4.8 Sampling Technique The study here is concerned with the material management module and hence judgment sampling is considered appropriate for the study. The users of the material management module were considered. 4.9 Sample Size This research is restricted to a sample size of 28. The study deals with material management module only and the sample size which covers all the users and serves the purpose well. 4.10 Sample Description The sample under this study consists of ERP system users of materials management module of SAP. The users belong to various departments and are the users of MM module. Some of the users have been the part of the core implementation team also. 4.11 Summary The data collected using the questionnaire was analyzed .Classification into different categories helped to understand the specific aspects under study. The percentages were calculated. Charts and bar diagrams have been used to depict the results. Inferences have been drawn from these findings. The aspects studied include the usability of the ERP
  42. 42. 42 system, benefits released after implementation of ERP, quality of information, aspects of training, improvement in performance areas, comparison with the previous legacy systems, user’s level of satisfaction and areas of further improvements. MS Excel and SPSS 16.0 were used for analysis of the data.
  43. 43. 43 CHAPTER 5 ANALYSIS AND INTERPRETATION In this chapter, the data collected using the instrument have been analyzed and the interpretation made. All users of the material management module of SAP were interviewed and questionnaires were completed during the interviews. Other informal sessions were held to extract information required for analysis. The data gathered through these instruments were analyzed using statistical tools. 5.1 SAP User Profile All the users surveyed are using SAP on daily basis. The level of expertise in SAP is shown below in the Table 5.1. Table: 5.1 Level of expertise in using SAP Profile No. of Respondents Beginner 13 Well Versed 13 Expert 2
  44. 44. 44 Fig.5.1 Level of expertise in using SAP Level of expertize in SAP 47% 46% 7% Beginner Well Versed Expert The majority of users have a rich experience working for more than 10 years at HOCL.Considering the fact that ERP implementation at HOCL has taken place recently, these figures are encouraging. 5.2 Questionnaire Evaluation: The benefits realized after implementation of ERP were recorded on a Likert type scale ranging from strongly disagrees to strongly agree. The questions have been regrouped and classified under various aspects of the study. 5.3 Benefits Realized after implementation of SAP The benefits realized by implementation of SAP have been given below. Tracking of records: This refers to tracking of documents. In earlier systems, tracking was a difficult task as the required document had to be tracked from the file rack physically. This lead to loss of productive time and unnecessary hardships. Besides there
  45. 45. 45 existed a high probability of loss of the document during transit or a user denying having received the documents. With ERP systems the tracking of documents are made easy. Reduction in paper work: The implementation of ERP brings with itself the benefit of having all records on the server. Hence a concept of paperless office is possible. As files are available online, even routing for approvals can be done by sending a soft copy rather than a physical copy or using SAP’s approval work flow. Improvement in transparency: Decisions in organizations need approval of many authorities. By hiding of data, there could be a shift in the balance of transparent dealings.ERP eliminates such a situation as now information is readily available online. Enhancement in Decision Making: ERP integrates the data and information is available across various departments. This means departments can plan based on the inputs from the other. In earlier cases information was not readily available. The delay in having right information can cause delay in decision making process. With implementation of ERP, decision making is bound to be simpler and faster. Improved cooperation between departments: Any organization will have departments whose objective may be conflicting with others. For example Finance department wants to keep the costs down but any maintenance or repair work would require consumption of materials.ERP implementation helps in justifying an action. When actual needs are understood the differences are meted out and firm gains by improved cooperation between the departments.
  46. 46. 46 Table 5.2: Benefits realized after ERP implementation Benefits Realized Strongly Agree Agree Neutral Disagree Strongly Disagree Tracking records made easier 13 13 0 2 0 Reduced Paper Work 9 12 4 1 2 Improved Transparency 13 12 2 1 0 Enhanced real decision-making 9 13 5 1 0 Improved co-operation between departments 6 11 8 3 0 The responses recorded on the aspect of benefits obtained after ERP implementation has been shown in the Table 5.2.Fig.5.2 shows the graphical representation of the same. Benefits Realized 0 2 4 6 8 10 12 14 Tracking records made easier Reduced Paper Work Improved Transparency Enhanced real time decision-making Improved co-operation between departments Type of benefit Strongly Agree Agree Neutral Disagree Strongly Disagree Fig 5.2 Types of Benefits Realized
  47. 47. 47 Interpretation There have been many tangible and intangible benefits obtained after implementation of SAP. It is clear from the study that there have been improvements in record tracking, transparency and cooperation between departments after ERP implementation. About 93% of the users agree to the point that ERP implementation has made tracking of records easier.75% of the users agree that there has been reduction in paper work after ERP.The remaining 11% do not subscribe to the point that ERP has reduced paper work and 14% remained neutral on this aspect. On the aspect of improvement in transparency, about 89% of the users are of opinion that transparency has improved after ERP.79% of the users also felt that ERP has enhanced the real time decision making.61 % of the users say that ERP has led to improved cooperation between the departments, while 29% chose to remain neutral on this aspect and remaining felt no changes. With ERP documents can be tracked with minimal efforts. Besides it has been much more transparent now as one need not depend on others to view official files or documents. With data available with the click of few buttons, information availability has been made much faster. Earlier these data needed to be extracted from files. The tiring effort of finding files or searching for information in old files is now eliminated. Thus the cost of communication has come down significantly. The amount of paper consumed has also come down significantly. It could be noted that the paper and other stationery has come down by about 40 percentage. This is a significant change as in government organizations, the routing for approvals require various copies of documents for different levels of authority. Now with the data made available via SAP, all routing is done via SAP mail. We also understand that the concept of paper-less office cannot be implemented in a government organization. People still follow the routine of taking a hard copy printout fearing loss of data.
  48. 48. 48 5.4 Quality of Information Other parameter analyzed was whether the information available was accurate and available on time. We understand that ERP implementation has improved the accuracy of data. The old system had its own loopholes or demerits. Once a request is given in physical form, there exist very high chances of it being lost. Besides possibility of duplication and manipulation can cause serious consequences. This is eliminated by use of ERP system. Timely information should be available to make timely decisions and the quality of information is vital. By implementation of ERP these have been well addressed. Particularly the use of SAP mail facility enables sharing of information and tracking for later use. The sales person sitting in Mumbai office can now know how many truck loads of benzene or phenol have been issued from the plant. The responses have been shown in the Table 5.3. Table 5.3 Information Quality after ERP implementation Information Quality after ERP implementation Strongly Agree Agree Neutral Disagree Strongly Disagree Improved Accuracy 11 15 1 0 1 Information Availability made easier 6 16 6 0 0 Timely availability of information 11 15 2 0 0
  49. 49. 49 Fig 5.3 Information Quality Information Quality 0 2 4 6 8 10 12 14 16 18 Improved Accuracy Information Availability made easier Timely availability of information Strongly Agree Agree Neutral Disagree Strongly Disagree As seen from the Fig 5.3, about 93 % of the users felt that ERP has improved accuracy of information. About 79% of the users agree on the point that ERP has made information availability much easier.93% of the users had information at the right time when compared to earlier systems. 5.5 Training Training is one of the most important aspects in ERP implementation. A tool in the hands of an inexperienced or untrained user can do more harm than good. It is thus very important to measure the aspects of training. In the study we have tried to ascertain whether training provided has been sufficient. We also tried to gather the user’s training needs. Training and updating the user knowledge is a continuous process. This means that a proper tracking mechanism to capture their needs must be in place. The responsiveness of the training team or the core team plays a vital role in user accepting
  50. 50. 50 the new system and adapting to the changes. Training sets the environment for organizational work culture to change to the ERP system. In the study the following outcomes were observed. About 75% of the user felt that they have been provided sufficient training. The remaining 25% felt that they needed more training on aspects like configuration, report generation, searching for specific data. Few of the requirements were technical aspects like methods of calibration, financial aspects like capitalization of goods purchased etc.There was a mixed response to the question whether mechanism to track training needs are available. This could be possible due to the fact the training requirements were communicated by word of mouth and there exist no specific requirement recording mechanism. About 82% of the respondents were confident that the core team has the ability to handle the users’ need and make changes. The core team also scored 24 out of 28 respondents praising them for the responsiveness to the users’ need. There also exists proper mechanism to handle the complaints and issues that might arise in normal course of working with ERP. Fig 5.4 Aspects of Training Training Aspects 0 5 10 15 20 25 30 Sufficient training has been provided System in place to track training needs Core team competent to handle issues Responsiveness of core team to user needs Mechanism to handle issues and complaints Yes No
  51. 51. 51 5.6 Availability of Training documents Training documents and manuals forms the Bible of an ERP implementation. They are the medium to train the users as well as documentation for future purpose. The majority of the users responded that the training documents are complete and available and they were aware how to access them. Fig 5.5 Availability of Training Documents Availaibility of Training Documents 57% 7% 32% 4% Available Available but not Clear Available but incomplete No idea 5.7 User friendliness of SAP User interface is an important factor in any software. In case of ERP too, if the look and feel of the ERP system is not comfortable to use then the user may spend more time. Customizations are possible in SAP but the drawback is that too much customization can be a costly affair. The users were quizzed whether the use of SAP is comfortable with respect to data entry, report generation, location of data etc.26 users out of 28 agree on the fact that the screen and usability of features is satisfactory. There were little concerns of the report generated
  52. 52. 52 as the format of these do not match the users’ requirement and hence further modification is required before being finally put to use. We also tried to find out whether the ERP system (SAP) implemented has built in feature to prevent wrong entry. We understand these features are available and being put to use in cases like automatic blocking of transporters in case of expiry of licences.The SAP does not allow selecting the transporters whose licenses have expired. This is a kind of system like “prevention is better than cure”, a type of alert mechanism where in the user can alert the transporter to renew the licence.This has great significance at HOCL as materials carried are chemicals and transporters are required to have valid licenses else consequences will be severe.Similarily the system prevents wrong entry which makes it a security feature of SAP. Such systems were tailor-made for HOCL requirements to prevent a lapse in security. The responses have been shown in the Table 5.4 below. Table 5.4 User Friendliness of SAP User Friendliness Strongly Agree Agree Neutral Disagree Strongly Disagree Format of report generation matches the need 2 11 10 4 1 System has features to prevent wrong entry 3 16 8 1 0
  53. 53. 53 Fig 5.6 User Friendliness 0 2 4 6 8 10 12 14 16 18 Format of report generation matches the need System has features to prevent wrong entry Strongly Agree Agree Neutral Disagree Strongly Disagree An effective SAP implementation is realized when the user has the necessary rights and authorization to access the data required. We learn that there are no such problems observed at HOCL with regard to users not having rights, roles to access features he/she needs during his/her normal course of work. We also learn that issues like slowdown do occur rarely but the cause is attributed to the fact that simultaneous use of ERP systems by many users at a peak time might cause a delay in output. All the hardware was upgraded before ERP implementation to match the requirements of SAP system. Thus the slowing down is a minor issue occurring very rarely. One critical observation was the point that despite the availability of data in the system, the traditional files and paper work was still being used. We learn that this is due to needs from higher authorities who seek physical records despite data being available in SAP. There was a fear among few employees that in case of an enquiry, data in the system may not be available and thus they were taking physical copy of records for their own future reference.
  54. 54. 54 Table 5.5 Responses recorded on other aspects Strongly Agree Agree Neutral Disagree Strongly Disagree Availability of proper rights/roles 7 16 4 1 0 System Slowdown 1 7 9 9 2 Use of traditional files/documentation 3 11 8 5 1 Fig 5.7 Other Aspects 0 2 4 6 8 10 12 14 16 18 Availability of proper rights/roles System Slowdown Use of traditional files/documentation Strongly Agree Agree Neutral Disagree Strongly Disagree
  55. 55. 55 5.8 Other Factors There exist other critical success factors which affects the success of ERP implementation. For example, if there exists a false data in ERP, then the report generated at the end may not reflect the actual situation. The data uploaded must be updated in the server. To access such factors usually an audit is done. There also exist possibilities that in normal course of work, the ERP system is not available either due to major upgradation or maintenance. In such cases the user must have a backup plan else the work will get affected. There could be scenario that the person having the necessary roles or authorization is on a long leave. In such cases there should be another user who could manage in his/her absence. To assess these factors which play a vital role in post implementation phase, the following questions were raised to the user. Whether any false data still exists? Whether the data is up-to-date? Whether the reports generated from SAP are misunderstood? Possibility of Work getting affected due to non-availability of SAP? Availability of backups for data access in case of system unavailability? The responses are tabulated in Table 5.6 below. Table 5.6 Other Factors Other Factors Yes No Existence of False Data 19 9 Data is up-to-date 25 3 Reports being misunderstood 20 8 Work getting affected due to non-availability of SAP 22 6 Availability of backups for data access in case of system unavailability 19 9
  56. 56. 56 0 5 10 15 20 25 30 Existence of False Data Data is up-to-date Reports being misunderstood Work getting affected due to non-availaibility of SAP Availability of backups for data access in case of system unavailability Yes No Fig 5.8 Other Factors of successful implementation Interpretation As seen from the figure above, majority of users reported existence of false data. The respondents were referring to false or irrelevant data which still exists in SAP.Possibily a data cleansing needs to be undertaken considering the higher number of users highlighting this. Another concern was the point that the SAP reports as such might be misunderstood if not viewed properly. About 71% felt that reports could be misunderstood. More training on report generation and interpretation can solve this issue. Though a majority (about 79%) of them agreed that their work might get affected due to non-availability of ERP system, they were of opinion that such a prolonged non- availability is very rare and manageable. There exist proper backups for data access in
  57. 57. 57 case of system unavailability. Hence the preparedness in case of non-availability is not a concern at HOCL. 5.9 Improvements in performance areas The aspect studied here are reduction in inventory, reduction in purchase cycle time, easier vendor evaluation, better tracking of consignments, on-time shipment time, end customer satisfaction, ease in auditing, ease in stock verification, tracking of cost at micro level. Findings are tabulated in Table 5.7 Table 5.7 Improvements in Performance Areas Improvement in performance areas Strongly Agree Agree Neutral Disagree Strongly Disagree Reduction in inventory 1 12 12 2 1 Reduction in purchase cycle time 3 10 12 3 0 Easier vendor evaluation 6 8 12 1 1 Better Tracking of consignments, stock movements etc 7 12 7 2 0 On-time Shipments improved 2 6 19 1 0 End customer Satisfaction 2 12 12 2 0 Auditing has been made easier 3 13 11 1 0 Stock taking/verification made easier 6 16 5 1 0 Tracking costs at micro level made easier 6 20 1 1 0
  58. 58. 58 improvement in performance areas 0 5 10 15 20 25 Reduction in inventory Reduction in purchase cycletim e Easiervendorevaluation BetterTracking O n-tim eShipm entsim proved End custom erSatisfaction A uditing m adeeasier Stock verification m adeeasier Tracking costsatm icro levelm adeeasier Strongly Agree Agree Neutral Disagree Strongly Disagree Fig. 5.9 Improvements in Performance Areas Interpretation The major raw material used at HOCL is readily available via the pipe lines from BPCL plant. Hence there would be less impact of ERP on these. But there exist other items. The term inventory would refer to those items. About 46% of the users agree that there has been a reduction in inventory after ERP implementation, while the remaining 43% remained neutral on the aspect and 11% disagreeing on this aspect. On the point of reduction in purchase cycle time, majority of them were of view that there has been no significant impact due to ERP.This could be attributed to the fact, the regulations set by the government stipulate a minimum period for tender approvals. Thus the lag is built in the system and beyond the scope of ERP. Evaluation of the suppliers has been made easier than before. It is now easier and convenient to track the consignments or material movement. For example, we can get
  59. 59. 59 data like the registration number of the truck currently in the premises. Majority of the users do not see any considerable improvements in shipment time after ERP.About 68% remained neutral on this aspect. Majority of them agreed that ERP has led to better customer satisfaction. Customer queries could now be better responded with solid data. The auditing and stock verification have been made easier by use of ERP.The major benefit is the ability to track and monitor costs at the micro level.93% of the users felt that with ERP it is now possible to track the cost at various levels. Thus monitoring and controlling aspects could be done in a better manner. 5.10 Comparison with legacy system It is to be noted that few departments had their own legacy systems before ERP implementation. These were however standalone systems. The SAP R/3 cannot not be compared to these legacy systems in terms of features available. However an attempt was made to gauge the user perspective towards the ease of use compared to ERP.All but one of the respondents agree that ERP system is much easier to use than the legacy system. 5.11 Descriptive Statistics for variables In this section of the chapter, the descriptive statistics for the key variables in the study are discussed. The means and standard deviations for the changes in performance measures attributable to the ERP system implementation are presented in Table .The changes in performance measures were recorded on a Likert type scale ranging from 5=Strongly Agree to 1= Strongly Disagree.
  60. 60. 60 Table 5.8 Mean Values of changes in performance measures Performance Means SD Reduction in inventory 3.4 0.83 Reduction in purchase cycle time 3.3 0.91 Easier vendor evaluation 3.6 0.99 Better Tracking of consignments, stock movements etc 3.7 1.01 On-time Shipments improved 3.3 0.59 End customer Satisfaction 3.5 0.75 Auditing has been made easier 3.6 0.79 Stock taking/verification made easier 4 0.74 Tracking costs at micro level made easier 4.1 0.63 It can be seen from the above table the ERP implementation has brought maximum benefits in form of tracking costs at micro level (mean=4.1,SD=0.63).Stock verification is another area where the users felt ERP implementation had made the process easier(mean=4 ,SD=0.74).The other performance measures also show good improvement. There has been reduction in inventory (mean=3.4, SD=0.83).Vendor evaluation has also been made easier (mean=3.6, SD=0.99).The tracking of consignments has improved as now after ERP it is easier to track them (mean=3.7, SD=1.01).End customer Satisfaction (mean=3.5, SD=0.75) and improvements in auditing (mean=3.6, SD=0.79) are other improvements observed. The reduction in purchase cycle time (mean=3.3, SD=0.91) and improvements in the on time shipments (mean=3.3,SD=0.59) have the least improvements.
  61. 61. 61 Table 5.9 below shows the descriptive statistics for the benefits realized after ERP implementation. Table 5.9 Mean Values of Benefits Realized Benefits Realized Mean SD Tracking records made easier 4.3 0.82 Reduced Paper Work 3.9 1.1 Improved Transparency 4.3 0.77 Enhanced real decision-making 4.1 0.81 Improved co-operation between departments 3.7 0.94 From Table 5.9,it can be observed that tracking of records (mean=4.3,SD=0.82) and improvement in the transparency(mean=4.3,SD=0.77) are the greatest benefits obtained after ERP implementation.Realtime decision making has also improved (mean=4.1,SD=0.81).There has been improvements in the cooperation between departments(mean=3.7,SD=0.94) and in the amount of paper work involved(mean=3.9,SD=1.1).Hence overall we observe benefits after ERP implementation. Descriptive Statistics for other variables are given in the table below. Table 5.10 Mean Values of Other Variables Others Mean SD Improved Accuracy 4.2 0.83 Timely availability of information 4.3 0.62 Format of report generation matches the need 3.3 0.95 System has features to prevent wrong entry 3.8 0.7 Availability of proper rights/roles 4 0.74 System Slowdown 3 1.04 Use of traditional files/documentation 3.4 1.03 ERP implementation has improved accuracy (mean=4.2,SD=0.83) and information is now available on time(mean=4.3,SD=0.62).The use of traditional files and
  62. 62. 62 documentation stills continues (mean=3.4, SD=1.03) while the system slowdown issues are also observed (mean=3, SD=1.04).The user being quizzed whether necessary rights or roles were available to him/her to carry out transactions responded in positive (mean=4, SD=0.74). 5.12 Correlation Analysis Correlation tests are used to examine relationships between variables. They measure the strength and direction of a relationship between variables. Karl Pearson’s coefficient of correlation(r) is the most widely used method of measuring the degree of relationship between two variables. The value of ‘r’ lies between -1 and +1.Positive values of r indicate positive correlation between two variables whereas negative values of r indicate negative correlation. A zero value indicates that there is no association between the variables. The value if r nearer to +1 or -1 indicates high degree of correlation between two variables. Correlation analysis has been presented in the Table 5.11 below. It explains the correlation between timely availability of information and aspects like decision making, transparency and co-operation between departments. Table 5.11 Correlation Analysis Info_Availability_on_Time Pearson Correlation Coefficient* Enhancement_in_Decision_Making 0.697 Improvement_in_transparency 0.714 Improvement_in_cooperation_between_dept 0.683 *Correlation is significant at the 0.01 level (2-tailed). With ERP the information is available on time. We can observe that the availability of information on right time has a high degree of correlation with enhancement in real-time decision making.Similarily timely availability of information improves transparency. It
  63. 63. 63 also has a high degree of correlation with the aspect of improvement in co-operation between departments. Providing right information on right time avoids conflicts, fosters cooperation and improves transparency. Faster the information available ,faster can be the decision-making process.
  64. 64. 64 CHAPTER 6 SUMMARY, FINDINGS AND SUGGESTIONS 6.1 Summary This study is a critical evaluation of ERP implementation at HOCL.It can thus be inferred from the study that ERP implementation at HOCL has brought many benefits. The ERP implementation has been successfully carried out.ERP implementation has led to improvements in transparency, better cooperation between departments, faster decision making, reduction in the paper work etc.There exist some concerns regarding training needs as more training were requested by some of the users in specific areas.ERP implementation has brought in changes in performance measures. The high cost of investment is justified from the fact that SAP is the best available ERP solution and the return on investment can be seen in long run in form of employee reduction and gaining competitive advantage. 6.2 Findings The findings are grouped under various heads based in various aspects of study. The agreements and disagreements of the employees to various questions are considered while arriving at the findings. 6.2.1 Benefits Realized after implementation of SAP Tracking of records About 93% of the users agree to the point that ERP implementation has made tracking of records easier. With the documents now available online, tracking them is only a matter of few clicks as compared to earlier system of tracking the files or records. Thus the tedious task has been eliminated. This means savings in time as no more productive time will be wasted in locating a record.
  65. 65. 65 Reduction in paper work When the files are available online and the workflow is managed via the ERP system the amount of paper work may come down.75% of the users agree that there has been reduction in paper work after ERP.The remaining 11% do not subscribe to the point that ERP has reduced paper work and 14% remained neutral on this aspect. There has been a 40 percentage reduction in paper and stationary. Improvement in transparency On the aspect of improvement in transparency, about 89% of the users are of opinion that transparency has improved after ERP implementation. Enhancement in Decision Making 79% of the users also felt that ERP has enhanced the real time decision making. This can be contributed to the fact that the information is dynamic and readily available. Improved cooperation between departments Different departments have different objectives and sometimes a conflicting situation may arise that leads to straining of relations.ERP helps in justifying an action. When the actual needs are understood, the differences are meted out and firm gains by improved cooperation between the departments. According to this study, about 61 % of the users say that ERP has led to improved cooperation between the departments, while 29% chose to remain neutral on this aspect and remaining felt no changes. 6.2.2 Quality of Information We understand that ERP implementation has improved the accuracy of data. The old system had its own loopholes or demerits. Once a request is given in physical form, there exists very high chances of it being lost. Besides possibility of duplication and manipulation can cause serious consequences. This is eliminated by use of ERP system. About 93 % of the users felt that ERP has improved accuracy of information. About 79% of the users agree on the point that ERP has made information availability much easier. About 93% of the users had information at the right time when compared to earlier systems.
  66. 66. 66 6.2.3 Training Training is one among the most important aspects in ERP implementations. A tool in the hands of an inexperienced or untrained user can do more harm than good. In the study the following outcomes were observed. About 75% of the user felt that they have been provided sufficient training. The remaining 25% felt that they needed more training on aspects like configuration, report generation, searching for specific data. Few of the requirements were technical aspects like methods of calibration, financial aspects like capitalization of goods purchased etc.There was a mixed response to the question whether mechanism to track training needs are available. This could be possible to the fact the training requirements were communicated by word of mouth and there exist no specific requirement recording mechanism. About 82% of the respondents were confident that the core team has the ability to handle the users’ need and make changes. The core team also scored 24 out of 28 respondents praising them for the responsiveness to the users’ need. There also exists proper mechanism to handle the complaints and issues that might arise in normal course of working with ERP. 6.2.4 Availability of Training documents Training documents in complete form are available in majority of the cases. The user is aware of these documents and the methods of accessing them. 6.2.5 User friendliness of SAP The users were quizzed whether the use of SAP is comfortable with respect to data entry ,report generation, location of data fields etc.26 users out of 28 agree on the fact that the screen and usability of features is satisfactory. There were little concerns of the report generated as the format of these do not match the users’ requirement and hence further modification is required before being finally put to use. In few cases the data after being extracted to an excel sheet was reworked or reorganized to get reports in required format. But the overall score in terms of user friendliness of SAP is very good.
  67. 67. 67 6.2.6 Availability of proper rights/roles All the users had necessary roles and authorizations to carry out the transactions in SAP. In case the users wanted a change in rights, the same was managed by the MSS team using SAP Basis after approvals from the authority concerned. 6.2.7 Other Factors Existence of False Data Majority of users (68%) reported existence of false data. The respondents were referring to false or irrelevant data which still exists in SAP. Possibility of Reports being misunderstood SAP reports as such might be misunderstood if not viewed properly. About 71% felt that reports could be misunderstood if not interpreted properly. Data is up-to-date Data is updated on the server instantly and hence data on the server reflects the up-to-date data. Work getting affected due to non-availability of SAP Though a majority (about 79%) of them agreed that their work might get affected due to non-availability of ERP system, they were of opinion that such a prolonged non-availability is very rare and manageable. Availability of backups There exist proper backups for data access in case of system unavailability.HOCL team is well prepared in case of unavailability of main server as backup is available in another server. 6.2.8 Improvements in performance areas The aspect studied here are reduction in inventory, reduction in purchase cycle time, easier vendor evaluation, better tracking of consignments, on-time shipment time, end customer satisfaction, ease in auditing, ease in stock verification, tracking of cost at micro level. The major raw material used at HOCL is readily available via the pipe lines from BPCL plant. Hence there would be no significant impact of ERP on these. But there exist other items that are procured from outside. The term inventory would refer to those items.
  68. 68. 68 About 46% of the users agree that there has been a reduction in inventory after ERP implementation, while the remaining 43% remained neutral on the aspect and 11% disagreeing on this aspect. On the point of reduction in purchase cycle time, majority of them were of view that there has been no significant impact due to ERP.This could be attributed to the fact, the regulations set by the government stipulate a minimum period for tender approvals and is beyond the scope of ERP. Evaluation of the suppliers has been made easier than before. It is now easier and convenient to track the consignments or material movement. For example, we can get data like the registration number of the truck currently in the premises. Majority of the users do not see any considerable improvements in shipment time after ERP.About 68% remained neutral on this aspect. Majority of them agreed that ERP has led to better customer satisfaction. Customer queries could now be better responded with solid data. The auditing and stock verification have been made easier by use of ERP. About 93% of the users felt that with ERP it is now possible to track the cost at various levels. Thus monitoring and controlling aspects could be done in a better manner.
  69. 69. 69 6.3 Suggestions The post implementation phase has gone well at HOCL.However there still exist scope for improvements which are listed below. 1. The users felt a need for training in some specific areas like report generation etc.These should be taken into account. Besides considering the fact that the youth of today will be the managers of tomorrow, HOCL must train its young workforce. There still exist many persons who do not understand the in-depth or background working of SAP. 2. Since there exist a fear mentality regarding loss of data in case of crash, users are taking hard copy print as back-ups.This is only a fear arising of non-availability of SAP system in case of an enquiry etc.By allowing users a personal backup facility, consumption of paper can be still reduced. 3. Many users felt that the document management system must be integrated into SAP. This will enable more savings in time and reduce the complexity involved. Currently the drawings are available in other software package and not integrated with SAP. 4. To track the training needs, a feedback mechanism can be put to use which will generate the user’s need and areas to focus. It could be a excel sheet with shared access or system based on employee id put up on the intranet portal. 5. A review of user licenses can be undertaken to study if any reductions are possible. This could help in saving costs spent as licensing fee. 6. Reduction in the lag due to system regulations can be eliminated by tweaking them as per the need. The specifications like minimum number of days required for approval etc. needs some changes. This may require approvals from higher government officials. 7. Critical review for redeployment and labor reduction can be undertaken so as to derive the benefits of automated workflow.
  70. 70. 70 CHAPTER 7 CONCLUSION The main objective of this study was the evaluation of the ERP implementation at HOCL Kochi Unit and to find out the improvements that the ERP has brought. In order to achieve this, various aspects were studied. The questionnaire was used to record user responses on various aspects and in-depth interviews were held with the users to gain more knowledge. The study reveals that the company was successful in implementation of ERP.The benefits obtained after implementation of ERP justifies the investment made. On the aspect of satisfaction among the users regarding the use of ERP and training, majority of the users are satisfied with the present system. There have been significant improvements in the performance areas after implementation of SAP. The support from the Top Management has played a vital role in successful implementation. The implementation team was given authority to take decisions independently. The effort by the core team has led to successful ERP implementation at HOCL Kochi Unit. It is due to the dedicated effort of the core team that the ERP system has been tweaked to include even the minute details. The ERP implementation has given the company a competitive advantage. 7.1 Impact of ERP implementation The users have been relieved of various monotonous tasks. There have been savings in time and effective usage of resources. The biggest benefit is the seamless integration of data across various departments. Better tracking saves time. The approvals, routing of documents have been made much easier now. Even the customers and suppliers are
  71. 71. 71 enjoying the fruits of the ERP implementation. For example, the payments can be made instantaneously as all details regarding transactions with the parties are available online. Real time monitoring is possible with SAP.SAP mail has enhanced the communication aspect. There is a better coordination between various departments and an improvement in transparency has been observed. Tracking of cost at various levels make the tasks of controlling and monitoring easy. 7.2 Effectiveness of ERP implementation Implementation is only a part of successful journey. The success of ERP implementation is measured by various other factors. These factors include the acceptance of the ERP system by the user, the features available in the ERP system, user training, ease of use of the ERP system, dependability and reliability of information available etc.The study at HOCL show that these aspects have been well taken care of. The needs of the user are accessed and training is provided. Effective training has led to proper transfer of knowledge. The core team is competent to handle issues arising. The team also finds admiration in terms of responsiveness and support. To keep the cost down ,the amount of customization has been minimized. Besides the core team has stuck to international standards despite resistance. This is equally important considering that the international terms and standards are well accepted and future up gradations will be easier. Above all the learning culture has helped in effective implementation of ERP at HOCL. 7.3 Suggestions There always exists scope for improvement. Some of the suggestions have been summarized below. These suggestions are on the basis of data collected during the study and interpretation of the data analyzed. A need was felt by users to include training on report generation and other specific areas. Currently there exist no formal system to track the users’ training needs. It is through word of mouth that the training needs are communicated. A feedback mechanism can be employed to track the training needs. Provision to reserve for training programmes can be made available via the intranet. There exists a fear mentality regarding loss of data in
  72. 72. 72 case of crash and users are taking hard copy print as back-ups.This is only a fear arising of non-availability of SAP system in case of an enquiry etc.By allowing users a personal backup facility, consumption of paper can be still reduced. Many users felt that the document management system must be integrated into SAP. This will enable more savings in time and reduce the complexity invoved.Currently the drawings are available in other software package and not integrated with SAP. A review of user licenses can be undertaken to study if any reductions are possible. This could help in saving costs spent as license fees. Critical review for redeployment and labor reduction can be undertaken so as to derive the benefits of automated workflow. We understand that some of the departments are already working towards this which is a good sign. Some of the users were of the opinion that there still exist wrong data in SAP. This could be their perception and need not reflect the reality but the matter needs to be studied by the experts. The implementation at other locations can consider the option of cloud based ERP systems to minimize the costs involved. 7.4 Limitations of the study 1. Success of ERP implementation is dependent on various factors. It is possible that this research may not have captured all those factors even though an extensive literature review was conducted and experts in the area were consulted for inputs. 2. This study is limited to the users of material management module of ERP. 3. The study does not focus on the financial aspects like increase in profits, increase in sales etc after implementation of ERP. 4. Some of the benefits of ERP implementation cannot be directly measured and are visible only in the long run. These may include reduction of manpower etc.
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