M.C.A. SEM. I Enterprise Resource Planning (ERP) Unit-4. Chapter-35. Prepared By : Ekta Bhatt

Transcription

1 M.C.A. SEM. I Enterprise Resource Planning (ERP) Unit-4 Chapter-35 Prepared By : Ekta Bhatt 1

2 ERPs started their journey as one solution that fits every industry. Where industries are same Where industries are different 2

3 This is true for certain processes which do not differ much across industries. For example, the way recruitment process happens in one company is not very different from the way happens in another: The skill requirement for the new vacancy is analyzed, CV collection through advertizing or agency, Screening CV and shortlisting, Interview and finally Candidate is selected. So this process is not very different happens in automotive company or an oil and gas company except few minor variations. 3

4 There can be numerous such processes across organizations which happens exactly the same way. Some of these are as follows: Human resource management (HRM) processes like recruitment, payroll processing, talent management, etc. Corporate services like travel management Maintenance management Corporate governance (is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. 4

5 However there are cases where the processes are not same across the companies. These processes can fall into three different categories: Country-specific processes Common processes that can vary across industry Industry exclusive processes 5

6 These are the processes in the areas of customs, excise, import and export, direct and indirect tax, value-added tax, payroll, safety standards, etc., Where every country has a separate set of rules. This needs specific country versions for ERP solutions. Increasingly, ERPs are coming up with country-specific versions to meet such requirements. For ex, SAP has come up with a country specific module for india. This is known as SAP CIN (SAP country india) 6

7 Every manufacturing company does production, But this process can be entirely different, the way an automobile company does manufacturing of a new car to the way a steel maker makes steel and food processing company produces its finished goods. As the process and process steps are entirely different across companies here, One ERP does not fit everyone. 7

8 The processes which have such wide variations across industries are: Production management, Sales and distribution management, Procurement (process of sourcing material from vendor, inspecting it and finally paying the vendor for accepted material) and material management, etc. ERP need to come out with separate versions of each industry for such processes. For ex, all leading ERP vendors like SAP and Oracle have different versions of manufacturing process. 8

9 These are processes which are needed by one industry and not needed by others. For ex, oil and gas company need capabilities around oil exploration for finding new oil reserves but Is not something important for a consumer goods company. Similarly, a product promotion is an important feature for a consumer goods company to boost sales, but that may not make any sense for a petroleum company where prices in countries is dictated by the respective governments ERPs need to come up with specific industry solutions for every industry to meet its requirements. For ex, SAP has industry solutions for twenty seven such industries. 9

10 As some of the industries has industry exclusive processes, several small vendors had come up with ERP solutions targeted for one particular industry. Some of the examples here are: Retek for retail industry (now taken over by Oracle) Aspentech for oil and gas Mincom for mining These ERPs are typically good fit for the targeted industry as they were build on years of research of that industry. 10

11 Large ERP vendors like SAP and oracle quickly spotted this opportunity and started building industry-specific functionalities in their application. SAP today has specific industry solutions for most of the industries. 11

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13 In similar way, Oracle also has industry specific solutions and some of it was built by taking over lower industry specific ERP vendors. For ex, Oracle had bought over Retek (retail specific functionalities). So, Today s ERP market for every industry segment targeting to build solutions for each of them. 13

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15 There are two clear emerging trends: ERPs are getting into Micro Verticals Industry boundaries are blurring and industry specific ERPs are finding it difficult to survive 15

16 Increasingly, large ERP solution vendors are entering into more specialized segments within the industry. For ex, sub-verticals like: Dairy Tobacco Food apparel Personal care and home care products Electronic industry can have several segments like: Semiconductor manufacturers Network equipment providers 16

17 This something happening across industries. For ex, Manufacturers are getting into retailing (arvind mills leading indian apparel manufacturers opened raymond retail stores across the country), Electronics manufacturers have their own retail stores today (for ex, sony has sony stores in all mojor cities), And auto manufacturers are getting into auto financing. 17

18 This means that lines between manufacturing, service, retailing, and financing is blurring. So if a manufacturing company buys an industry-specific ERP solution from low level vendor today, tomorrow while expanding to its service business, it needs to look for another ERP from another vendor and starts his ERP journey all over again. Compared to that it is much easier to go for an ERP vendor which offers solution for many industries and keep on implementing relevant industry-specific modules as the company ventures to new industry segments. This also made survival for industry-specific ERPs difficult in these days. 18

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20 There can be numerous such processes across organizations which happens exactly the same way. Some of these are as follows: Human resource management (HRM) processes like recruitment, payroll processing, talent management, etc. Corporate services like travel management Maintenance management Corporate governance (is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. 20

21 there are specific capabilities which are needed by a particular industry and not by others. For ex, An oil and gas company needs capabilities around oil exploration for finding new oil reserves but this is something not important for a consumer goods company. Similarly, a product promotion is an important feature for a consumer goods company to boost sales, but that may not make any sense for a petroleum company where prices in countries is dictated by the respective governments 21

22 There are a lot of industry-specific ERPs like: Mincom for mining, Aspentech for oil and gas. i.e. ERPs that cater the need of a particular industry only. Manufacturing industries like: Oil and gas, Auto, Pharma, Consumer goods, mining 22

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24 This industry can be divided into three major segments: Upstream: it includes processes related to exploration, development and production of crude petroleum. This is also referred to as E&P (exploration and production) sector. 24

25 Midstream: Midstream industry processes, stores, markets and transports commodities including crude oil and gas. Transportation of oil and gas is generally through pipeline and as these are explosive materials, their transport and storage need to be under controlled condition 25

26 Downstream: Downstream industry includes -oil refineries, -petrochemical plants, -petroleum products distributors, -retail outlets and -natural gas distribution companies 26

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30 Select/acquire crude Optimize product mix Store products Refine crude Move products Replenish products Sell products 30

31 Industry Requirements Exploration Developing Petroleum fields Managing refinery operations Lubes manufacturing operations Expectations from ERP solutions Means finding and developing a new oil/gas reserve. ERP solutions need to support the exploration cycle and related activities like managing surveys, exploration data analysis, etc. Processes related to establishing size of the field, identifying most efficient production Involves processes related to producing crude oil, produce final refined output and finally delivering products to the distribution network. Involves process related to planning forecasting demand of lubes products, sourcing base oil, managing packaging plant operations and finally delivering to distribution network 31

32 Industry Requirements Oil and gas commodity trading Managing bulk transport of inflammable materials and hydrocarbon products Terminals management Managing service station operations/fuel management Retailing Expectations from ERP solutions Integrate trading into bulk supply chain. Transport methods such as pipelines to achieve delivery. Transportation of oil and gas is generally done through pipelines or tankers. Their transport and storage need to be under controlled condition. ERPs for this industry need to have capability to monitor transport. Actual quantities need to be delivered against scheduled. Involves processes like monitoring stock levels in terminal tanks, tanks order and tank shipments. Involves processes like point-of-sale (POS) integration of fuel sales quantities, analyzing and adjusting of fuel pricing etc. Supporting retail specific functionalities for ERP like managing pricing, promotions, accounting, POS integration, etc. 32

33 While both SAP and Oracle have specific industry solutions (IS) for this industry. Another leading enterprise solution for this industry is AspenTech. AspenTech started as an ERP for petroleum industry and is used widely by lot of oil and gas companies. 33

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35 AspenONE has modules in following process areas: Process engineering: Aspen basic engineering, Aspen economic evaluation Supply and distribution: Aspen retail, Aspen Inventory Management, Aspen Petroleum supply chain planner Advance process control: Aspen DMCplus Planning and Scheduling: Aspen collaborative demand manager, petroleum scheduler, etc. Production management and execution: Aspen InfoPlus 35

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37 Auto industry is one of the largest industries globally. This industry has lots of requirements: kanban: Process for controlling production and material flow. Replenishment is triggered only when production actually requires material. ERP in this industry need to have advanced capability in this area. 37

38 Planning/scheduling for multiple models at the same time in assembly line Same auto assembly line can produce multiple car models during same day or same production shift. They needs ERP solution that can suggest optimized schedule with minimum changeover and minimum loss of production. 38

39 Warranty management Claim management is complex process. Full finished products (e.g. car) can have separate warranty from its parts (e.g. tyre, battery) So customers claim entered at dealer s end, checked agaist contractual data, accepted or rejected, And if accepted then it triggers other process like, payment and service operations. So this process needed to be automated. 39

40 Just-in-sequence deliveries by suppliers directly to assembly line Deliver materials directly to assembly line based on production sequence. Supplier s systems to automated. Managing vehicle information and vehicle life cycle Its important to track vehicle information from millions of vehicles (i.e. which customer bought which vehicle, on which date, which parts are on warranty, etc.) Not only provide service throughout life cycle of vehicle but to support product recall (faulty parts) 40

41 Managing Dealer Business Any value chain is not only made up of OEM (Original Equipment Manufacturers i.e. car makers) but also of dealers who sell and service vehicles. Dealer needs to manage function of dealer s operations, including customer management, vehicle service and parts management, integration with OEM, etc. Managing vehicle information and vehicle life cycle Its important to track vehicle information from millions of vehicles (i.e. which customer bought which vehicle, on which date, which parts are on warranty, etc.) Not only provide service throughout life cycle of vehicle but to support product recall (faulty parts) 41

42 Car leasing: ERPs for auto industry need to support vehicle finance and leasing capabilities. Leading ERP solutions for Auto Industry: Both SAP and Oracle have specific industry solutions (IS) for this industry. SAP IS auto solution is used by lots of global car makers like General Motors, Mitsubishi etc. 42

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44 Patent Management: Managing patent of new drugs is complex process and associated with R&D function. Managing patent is an important need of pharma companies from ERP solutions. Clinical Trial Management: New product development is critical for pharma companies. Critical trial is an element of product development process where product is tried and tested in controlled environment and results are recorded. 44

45 Laboratory information management systems (LIMS) LIMS systems automate work processes and administrative functions of a laboratory. Process includes sample log-in, testing, creation of reports, inspection plan, sample plan, test equipment calibration etc. Also helps in R&D. ERP provides solutions for pharma companies need to have LIMS capability. 45

46 Secure tracing and tracking: The goal of drug tracking and tracing is to prevent unsafe product from entering the supply chain, so that every unit of medication is authenticated. EPC (electronic product code) allows individual product unit to be tracked, traced and monitored using RFDI (radio frequency identification. ERP support this. 46

47 Product/patient safety In most countries a pharma company by rule needs to track all customer complaints, need to have visibility on the progress of investigation for such complaints and quick resolution. ERP systems for this industry need to support these requirements, anticipate potential product safety, need to provide early warning signals so that corrective actions can be taken on time, etc. 47

48 Secrecy of Formulation While it is common for companies in other industries to define their bill of material of products in ERP system (raw material information) Lots of pharma companies want to keep this information secret. ERP catering to this industry had made special provisions to meet its requirements. 48

49 Both SAP and Oracle have specific industry solutions (IS) for this industry in the form of SAP IS life science solution and Oracle Life Science/Pharma Solutions Again SAP is market leader in this industry. 49

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52 Consumer goods industry is not one industry and has several segments like: Food and beverage Apparel/textile Footwear Non-food FMCG (fast moving consumer goods) products (soft drinks, cosmetics, cleaning pads, etc.) Consumer electronics 52

53 Each of these segments can be divided into several sub-segments, each having their own specific requirements from an ERP solutions. For ex, food and beverage segment can have several sub-segments like: Fresh foods, Beverage, Dairy, Packaged foods 53

54 Strong distribution planning: Promotion planning/trade promotions Brand management Managing large number of SKU (stock keeping unit) Manufacturing outsourcing/contract manufacturing Collaboration with retailers Route management 54

55 Direct store delivery (DSD) Food safety Managing cold chain (mainly for fresh foods) Managing empties and returns (mainly for beverages) Markdowns (mainly for apparel industry) Managing fashion, style, design (mainly for apparel industry) 55

56 Both SAP and Oracle have specific industry solutions (IS) for this industry. Increasingly, these vendors are targeting more micro verticals in this industry like for dairy, solutions for fresh foods, solutions for beverage, etc. SAP has two specific IS for two sub-verticals of CPG industry: SAP Apparel Footwear Solutions (AFS) SAP IS Beverage Solution 56

57 Other vendors are also providing solutions like: Applied Data Communication (ADC), Invatron systems, etc. have focused solutions on fresh item mangement. Invensys has solution for dairy industry. 57

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59 Mining is considered one of the basic industry. There can be several segments in this industry depending on type of mine like: Underground mine, Surface Mine Deep sea mine, etc. 59

60 Mining industry also depend on type of product to be produced like: Coal mine, Iron ore mine, Copper mine, etc. 60

61 Safety Handling hazardous (chance of injured) materials Managing logistics at remote locations Transportation optimization Washing/beneficiation Blending (combining or mixing ) Commodity pricing Commodity auctions Corporate social responsibilities 61

62 While leading ERPs like SAP have specific industry solutions (IS) for this industry in the form of IS mining. There are few industry specific vendors : Gemcom, Mincom and Datamine are 3 such leading vendors in this space Globally large mining companies like BHP (australia based), Rio Tinto (Brazil Based), Anglo American, etc. used the ERP solution for running their mining operations. 62

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