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Benefits of erp


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All Benefits of ERP

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Benefits of erp

  1. 1. 1. Generally ERP deployment lead to the tremendous benefits which are direct and indirect. 2. Direct benefits include: improved efficiency, information integration for better decision making, faster response time to customer queries, etc.
  2. 2. 3. Indirect benefits include: better corporate image, improved customer goodwill, customer satisfaction and so on. 4. Fundamentally the potential benefits are:- - Reduction of Lead-Time - On-Time Shipment - Reduction in cycle time - Better customer satisfaction
  3. 3. 5. Others are • Improved supplier performance • Increased Flexibility • Reduction in quality costs • Improved resource utility • Improved information accuracy and decision- making ability
  4. 4.  The lead-time is the elapsed time between placing an order and receiving it. It has a great role in purchasing and inventory control.  The consequences of the non-availability of an item that is required for production can result in a lot of problems such as missing the delivery schedules, losing the customer to the competition
  5. 5.  Cycle time is the time between receipt of the order and delivery of the product.  Manufacturing spectrum can be viewed in terms of make-to-order where cycle time and cost of production are high or make-to-stock.  In both cases ERP systems can reduce the cycle time.
  6. 6.  Customer satisfaction means meeting or exceeding customers’ requirements for a product or service.  Degree of satisfaction can be assessed using the following measures:-  Product or service has the features that are most important to the customer.  Response to the customers’ demands in timely manner.  Product or service is free of defects and perform as expected.
  7. 7.  ERP systems play a significant role in reducing cost of quality by ensuring that the company has an efficient and effective quality assurance and management systems.
  8. 8. The ERP systems contain features which support supplier management and control processes that help organization in managing the supplier relations, monitoring the vendor activities and managing the supplier quality
  9. 9.  Flexibility is a key issue in the formulation of strategic plans in companies.  Product flexibility is the ability of the operation to efficiently produce highly customized and unique product.  ERP Systems have the features that increase flexibility in both the organization as whole and manufacturing operations.
  10. 10.  With ERP systems, businesses are not limited to a single manufacturing method, such as ‘make-to-stock’ or ‘make-to-order’.  Instead, many manufacturing and planning methods, can be combined within the same operation, with unlimited flexibility to choose the best method or combination of best methods for each product at each stage throughout its life cycle.
  11. 11.  Manufacturers place increased emphasis upon planning and controlling capacity.  The creation of an accurate, achievable production schedule requires the availability of both material and capacity.  The capacity planning features of most ERP systems, offer both rough-cut and detailed capacity planning.
  12. 12.  The system load each resource with production requirements from Master Production Scheduling, Material Requirements Planning, and Detailed Capacity Planning.  The ERP systems also have simulation capabilities that help the capacity and resource utilization scenarios and choose the best option.
  13. 13.  In order to manage the information, in order to deliver high quality information to the decision-makers at the right time, in order to automate the process of data collection, collation and refinement, organizations have to make IT an ally, harness its full potential and use it in the best way.  The major drawbacks of the legacy systems was that it lacked an integrated approach.
  14. 14.  System integrator, Panorama Consulting Solutions, conducted the research survey during the four-month period of September, 2012 to January, 2013. The results are based on data from 172 respondents who completed a survey on the Panorama website. Seventy-one percent reported revenues of $300 million or less and 21 percent of respondent companies had revenues of $1 billion or higher.
  15. 15. 27 percent of respondents realized less than a third of anticipated project benefits 11 percent realize no benefit at all from their ERP implementation 22 percent achieved between a third and one-half their expected benefit In other words, fully 60 percent of the ERP projects in the survey realized less than half their desired benefit. By any reasonable measure, these projects are problematic:
  16. 16.  The survey data presents a contradictory view of ERP success and failure. Although most ERP implementations run late, over-budget, and do not deliver planned results, only 10 percent of respondents called their ERP implementation a failure. At the same time, 60 percent called their ERP project a success and 30 percent expressed neutrality on the success / failure issue. These numbers indicate that buyers' expectations are too low — it is indeed unfortunate these numbers are so low.  Important lessons. Implementing an ERP system is always complex because the deployment drives changes to both data and processes that extend across departmental boundaries inside the organization.