1. PIM – Procurement and Inventory
Dissertation Project Presentation Management
In-Module Work – Final Presentation
AN EVALUATION OF THE ERP BENEFITS
FOR PROCUREMENT FUNCTION: A CASE
STUDY IN INDIAN AUTOMOTIVE INDUSTRY
Name: Abhijay Singh Sisodia
Course: M. Sc. - Engineering Business Management
Supervisor: Mr. Graham Warren
Examiner: Dr Adrian Watt
Date: 24th September 2010

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