Enterprise resource planning (ERP) systems integrate core business functions like manufacturing, distribution, accounting, and human resources in a single system. ERP experienced rapid growth in the 1990s as companies replaced legacy systems. While ERP implementation at Cadbury improved efficiency, a failed implementation at Hershey cost the company $150 million due to order fulfillment issues. Lessons from failures show the importance of adequate testing and phased implementations.

1. ENTERPRISE RESOURCE PLANNING

2. Introduction
 Enterprise resource planning (ERP) is a category of business-management software—
typically a suite of integrated applications—that an organization can use to collect, store,
manage and interpret data from many business activities, including:
• Product planning, purchase
• Manufacturing or service delivery
• Marketing and sales
• Inventory management
• Shipping and payment
 ERP provides an integrated view of core business processes, often in real-time, using
common databases maintained by a Database Management System.

3. Expansion Of ERP
 ERP systems experienced rapid growth in the 1990s. Because of the year
2000 problem and the introduction of the ’euro’ that disrupted legacy
systems, many companies took the opportunity to replace their old
systems with ERP
 ERP systems initially focused on automating ’back office’ functions that
did not directly affect customers and the public. ’Front office’ functions,
such as customer relationship management, dealt directly with customers,
or e-business systems such as e-commerce, e-government, etc.
 Developers are making effort to integrate mobile devices with the ERP
system.

5. Functional Areas Of ERP
 Sales and Distribution Module
The sales module implements functions of order placement, order scheduling,
shipping and invoicing. It provide the right solution and efficient flow of
information.
 Human Resource Management
ERP Human resource Management is a suite of integrated solution, facilitates
HR operations by reducing time-intensive administrative tasks and lowering
costs by deploying self-service applications. The solution offers many
different sub-systems under the HR module which are Personnel
Management, Organization Management, Payroll Management, Time
Management and Personal Development.

6.  Manufacturing Module
Manufacturing module provides a collaborative environment for performing
manufacturing tasks. It contains the necessary business rules to manage the
entire supply chain process whether within a facility, between facilities, or
across the entire supply chain.
 Supplier and Purchase Order Management
Purchase Module streamlines procurement of required raw Materials,
packaging materials and other non inventory materials. The purchase module
is well integrated with the Production Planning and Inventory Control Modules
and also the supply chain process.
Functional Areas Of ERP

7.  Inventory & Material Management Module
Inventory module facilitates the process of maintaining the exact level of
stock in warehouse and helps to manage and report the inventory
information. The functions involves identifying inventory requirements,
setting targets, monitoring item usages, reconciling the inventory balances
and reporting inventory status.
 Total Quality Management
TQM is tightly integrated with Quality Control Management and Quality
Assurance. The TQM configuration and acceptable tolerance is a configurable
feature, enabling the Quality Department to scale the ERP even with any new
product development.
Functional Areas Of ERP

8.  Plant Maintenance Module
Plant maintenance module in ERP provides with technical and business reports
for different work area within the plant, location, Organizational unit, Machines
and downtime analysis for each different categories or machines. Preventive
Maintenance Schedule and record can be captured.
 Financial Module
ERP Financial module is tightly integrated with all departments' functionality and
generates valuable financial reports such as Profitability Report, Cost Centre
Analysis report, Management Information Report. The financial module in ERP
provides financial functionality and analysis reports for different departments
and cost centres.
Functional Areas Of ERP

10. Case Study On ERP

11. ERP Implementation Success

12.  Cadbury’s Kraft implemented SAP ERP 6.0 (System Analysis and Program
Development) in what SAP called one of its largest global ERP
implementations.
 Kraft credited ERP with reducing operational costs.
 11,000 employees were sending data to the company's SAP solution and it
was linked to 1,750 applications by 2008.
 That same year, Kraft also added SAP's master data management solution,
NetWeaver, with an eye toward integrating legacy systems.

13.  Cadbury was left with a glut of chocolate products at the start of the year, after
the installation of a new SAP-based enterprise resource planning (ERP) system
led to an excess of chocolate bars building up at the end of 2005.
 The new U.K. computer system is part of a five-year IT transformation project,
called "Probe", aimed at integrating the Cadbury Schweppes' supply chain,
purchasing, manufacturing, distribution, sales and marketing systems on a
global, SAP-based ERP platform.
 Cadbury Schweppes is aiming for an ultimate savings from the Probe project, but
its implementation has been far from smooth. The project was beset by problems
and delays when it was first introduced in Australia in 2002.

14. Benefits Of ERP On Cadbury
 Cadbury was on a fast paced growth and could not continue with the
existing systems and the pace was too slow due to added inefficiencies.
ERP added efficiency and guided the led all the issues fast paced growth.
 The implementation of ERP brought in a new way of warehouse
management system and brought in structure to branch offices and the
depots.
 While implementing the ERP systems, the company has built it upon the
past strengths of the company thereby not losing out on its competitive

15.  The initial implementation took time and then the successive
implementations took lesser time and cost and there is a huge advantage
in saving cost while in the implementation phase itself.
 The reaction from competition does not matter in this because this is not
a change that was advertised to the market. This is an internal process
restructuring and was a welcome change within the company which badly
needed the change.
 The company also has built in a robust regular feedback system to
monitor the changes and check if they go according to the initial plan. The
entire implementation is cross functional and hence it is important that
there is a high increase in the efficiency.
Benefits Of ERP On Cadbury

16.  The ERP vendor was also selected from among the best in class vendors
which helped the process occur in a streamlined fashion and avoided any
possible chances of hiccups during the initial implementation phase.
 The system has also been deployed up to the vendors. They have a portal
called vendor connect where they can see their inventory movement and
make plans accordingly. Hence the restructuring happens not only
internally but also across to the supplier which will add on to the benefits
that are accrued.
 It was considered at low cost and high result implementation which by
itself highlights the success and the benefits.
Benefits Of ERP On Cadbury

18. ERP Implementation Failures

19. To Enhance Company’s
Competitiveness & Customer Service
• During late1996, the management of Hershey gave its approval to a
project named Enterprise21
• For this Hershey selected SAP's R/3 ERP software, Manugistics SCM
software and Seibel's CRM software and IBM Global Service so as to
manage integration among these three systems.
• Overall Project Cost was US $10 Million
• The recommended implementation time for the project was 4 yrs. and
Hershey demanded for 2.5 yrs.
• Hershey decided to go with Big Bang Approach instead of phased
approach.

21. Impact Of ERP Failures
• Problems pertaining to order fulfillment, processing and shipping started to arise; Hershey would
not be able to meet its committed date of delivery
• Several of Hershey's distributors who had ordered the products could not supply them to the
retailers in time, and hence lost their credibility in the market
• Product inventory started to pile up and by the end of September 2000; the inventories were 25%
more than the inventories during the previous year
• After Hershey’s announcement in the market about problems due to malfunctioning of the newly
installed computer systems, Hershey's stock price plunged by 8% on a single day.
• Hershey's failure to implement the ERP software on time cost the company US $150 million in
sales. Profits for the third quarter 1999 dropped by 19% and sales declined by l2%, in its 1999
annual report.

22. Reasons Of Failure
• Over-squeezing implementation schedules
• Big Bang Approach instead of Phased Approach
• Mistake of sacrificing systems testing for the sake of expediency
• Cutover Activities and Go-Live was scheduled in Hershey’s busiest business
periods.

23. Learning From Failure

24. The First Lesson
 An ERP implementation project should not be forced into an
unreasonable timeline. Over-squeezing implementation schedules is a
sure-fire way to overlook critical issues.
 Testing phases are safety nets that should never be compromised.

25. The Second Lesson
 Never schedule cutover during busy seasons. Even in a best-case
implementation scenario, companies should still expect steep learning
curves and operational performance dips. By timing cutover during slow
business periods, the company gives itself more slack time to iron out
systems kinks. It also gives employees more time to learn the new
business processes and systems. In many cases, it is even advisable to
reduce orders in and around the cutover period. This tactic is aimed at
minimizing exposure to damages caused by potentially undetected errors
and less-than-perfectly-trained users.

27. Advantages
 Sales forecasting, which allows inventory optimization.
 Chronological history of every transaction through relevant data compilation in every area of
operation.
 Matching purchase orders (what was ordered), inventory receipts (what arrived),
and costing (what the vendor invoiced)
 Eliminates the need to synchronize changes between multiple systems—consolidation of
finance, marketing, sales, human resource, and manufacturing applications
 Facilitates standard product naming/coding.
 Provides a comprehensive enterprise view (no "islands of information"), making real–time
information available to management anywhere, any time to make proper decisions.

28. Disadvantages
 Customization can be problematic. Compared to the best-of-breed approach, ERP
can be seen as meeting an organization’s lowest common denominator needs,
forcing the organization to find workarounds to meet unique demands.
 ERP can cost more than less integrated or less comprehensive solutions.
 High ERP switching costs can increase the ERP vendor's negotiating power, which can
increase support, maintenance, and upgrade expenses.
 Overcoming resistance to sharing sensitive information between departments can
divert management attention.
 Harmonization of ERP systems can be a mammoth task (especially for big
companies) and requires a lot of time, planning, and money.

29. Benefits
 ERP can improve quality and efficiency of the business. By keeping a company's internal
business processes running smoothly, ERP can lead to better outputs that may benefit
the company, such as in customer service and manufacturing.
 ERP supports upper level management by providing information for decision making.
 ERP can improve data security. A common control system, such as the kind offered by
ERP systems, allows organizations the ability to more easily ensure key company data is
not compromised.
 ERP provides increased opportunities for collaboration. ERP provides a collaborative
platform that lets employees spend more time collaborating on content rather than
mastering the learning curve of communicating in various formats across distributed
systems.