ERP Implementation in Ispat Steels Enterprise Integration with Information Technology Poster

Transcription

1 ERP Implementation in Ispat Steels Enterprise Integration with Information Technology Poster Guided by: Dr. Veena Bansal Presented by: Swarnima, Udit, Vivek Organizations Overview Name Location Products Production Capacity Employees Annual Sales Annual Direct Labour Cost Annual Purchase Volume Annual Cost of Goods Sold Ispat Steels Pvt Ltd Madhya Pradesh Steel Products and Sponge Iron (TMT, Billets, primarily raw materials for other industries) B2B products Sponge 400 TPD (Tonnes per day) and Molten 300 TPD 1500 (Managerial) (Manual Workers) INR 18 Crores INR 2.5 Crores INR 6 Crores INR 15 Crores Organizational Structure of Ispat Steels Page 1

2 Clogged processes Page 2

3 Need for an ERP Implementation in Ispat Steel Pvt. Ltd. Business Forecasts To cater to high-demanding customers in automotive, construction and heavy equipment sectors, tight integration of electronic orders, market trends and business forecasts are the typical requirements. ERP can be very useful for business integration, trend analysis and predictive modelling of requirements. Product variations & Customer Specific Requirement Steel grades have improved consistently. Then came ribbed bars and in 21st century, thermo-mechanically treated bars providing utmost strength and stability. Change of grades essentially means change in raw material configuration. An ERP system helps the floor manager to automatically design the components based on the order and helps handle the processes from the sales order to the finished goods. Integrated IT Model One of the major benefits of ERP implementation in a steel plant is that, it offers an integrated IT model which supports all processes from raw material handling to order shipments through effective data sharing and parallel processing. ERP systems have evolved a lot during the 21st century and are able to integrate and handle machine controls systems, process controls, inventory management, production schedules, forecasting, reporting, human resources management, shipment planning etc. On-premise or on-demand ERP solutions offering robustness and cost efficiency can be chosen based on the specific requirements of the steel corporation. Complex production scheduling combining both continuous and batch production The batches need to be selected based on characteristics during production, preparation and shipment planning. This means that the planning process needs to be able to derive batches with characteristics inheritance and history tracing. Finally, the scheduling part of the planning system needs to be able to work with multiple and dynamic bottlenecks that is, bottlenecks which can change based on incidents such as production problems in certain process steps. ERP systems today can handle all of these situations. Business Processes Re-engineering Going in the direction of vision of the company to achieve global benchmark excellence, there is a need to shift attention on the re-evaluation and assessment of the current business processes. By implementing an ERP System it forces an organization to re-engineer their process thereby making them more effective and efficient than before. Multiple Planning Strategies Steel production often requires a combination of production planning strategies. Flat or strip products would follow made-to-order ; long sheets and bars are made-to-stock. Costing for made-to-stock happens based on standard approaches but for made-to-order, costing happens based on the nature of the order and material requirements. Such complexities in planning strategies and costing can be handled by ERP solutions in the most efficient manner. Page 3

4 ERP SELECTION The ERP selection process is an important step in the future financial and operational success of any manufacturing or distribution organization. It has a systematic, structured, and well-executed software selection process. 10 Steps of the ERP Selection Process 1: Business Assessment 6: Communicate with Potential Vendors 2: Appointing a Selection Team 7: Create RFI 3: Assess Business Requirements and Constraints 8: Shortlist and Demo's (Presentations) (Organisation Requirement) 4: Determine Selection Criteria (Parameter Selection) 9: Select Your ERP (Select ERP basis on AHP) 5: Find Compatible Vendors(Vendor Selection) 10: Formalize Your Project Plan The following parameters were considered for shortlisting three ERP for our organisation requirement: Business Process Support or Functionality : 90% support Data Fit : Data items manage in the company Implementation Time : Lower time for implementation Total cost of implementation :Low cost in comparison to company size Platform Independence : Web based platform independence Process Involvement : Bringing best practices to improve process Flexibility and Scalability: Support evolution of company by extending services. User Friendliness : Less Training Cost and easy usage Vendor Status : Position of vendor in Market Stages of ERP Selection Page 4

5 The Three ERP we choose which best met out company requirements are abas Software Study related to parameter Cost: $4000/per user on lease and financing basis. Complete implementation for each module no choice or on demand facility. Platform: Window, UNIX, Linux (Not web based) Functionality: More than 100% (All function needed for our steel plant). It has an overall Broad functional coverage. Even handle complex and multi-function at the same time. Reliability and popularity: Over 2,500 companies in the manufacturing, distribution, and service sectors have selected Abas from many years (10-15 years old). Not very good example for Indian originated company. All services are US bases some services are available in India also but only few. Scalability: No of installation per user is and user range is (simultaneous logins). Time for implementation: Smooth and efficient implementation, close to the standard. Shorter implementation period, approximately 30% below the market average. It require nearly 4-6 month for complete implementation for a mid-size company. Vendor: Many US based only standard reliable vendor. However for Indian market this is not a good vendor. eresource Study related to parameters: Cost: Low cost as compare to already highly established US bases ERP solution system. Company expanding due to low cost and high selectivity criteria. Functionality: Highly Functional in all sense cover all process.you can buy according to your need the functionality you require (on demand requirement basis). Platform: Web Based (Machine independent).hence can be used anywhere any time. Reliability: Leading platform of ERP in India. Received many award and are trusted by many small and medium size companies. Enters in the US market recently and perform well. Scalability: Medium scalability not good for a very large company where lot of employee and complex engineering process are there. Vendor: Most trusted by vendor in India. Good vendor and services available in India. ErpNext study related to parameter Cost : Open Sourced Functionality: Cover basic functionality not specific. But it is very nice for a small scale company. It has excellent GUI and user guide to start with an ERP. Best ERP to start with a new small size start up. It follows the new technology for interactive usage by employee. Platform: Web Based(Hence can be used anywhere any time) Reliability: Due to open source nature it is highly reliable and hence free form most of the errors. Scalability: Not much scalable. Fixed functionality can t handle complex billing and multi using functions. Vendor: Very new in market not good vendor available. Time for Instalment: Less than 5 days for small scale industries. Nice use of software architecture related practice. Page 5

6 Process Followed for Selection: 1. Choose company structure choose eight parameter which are considered by taking consult from involved team members. For example Cost, Functionality, Reliability, Scalability, Vendor, Implementation Time and Platform. 2. Create a matrix for level (3) parameter which is pairwise comparisons of the parameters filled by team members. 3. Computed the relative importance of weight of parameter i as Wi using expert choice and from a vector <W1, -----, W8>. Select the top 5 out of these 8 weights for comparison analysis. 4. Choose 3 best ERP solution which somewhat satisfy your need and requirement. 5. For each parameter of step 2 do a pairwise analysis on the 3 ERP solution selected. After this you will have 5 tables. Apply expert choice similar to 3 to compute weight vector for each parameter on the basis of ERP solution. 6. Calculate overall score of each ERP solution using formula ( ) ( ) 7. Choose the one ERP solution with the highest score. Analytical Hierarchical Process for ERP Selection Table 1 Pair-Wise Comparison of the Parameters Functionality Scalability Cost Reliability Time Platform Vendor Flexibility Weight Normalized Weight Functionality Scalability Cost Reliability Time Platform Vendor Flexibility Summation Table 2 Pair-wise Comparison of ERP Solutions A (Abas Software), B (ErpNext) and C (eresourceerp) Analytical Hierarchical Process Cost Functionality ERP(A) ERP(B) ERP(C) Weight ERP(A) ERP(B) ERP(C) Weight ERP(A) ERP(A) ERP(B) ERP(B) ERP(C) ERP(C) Reliability Scalability ERP(A) ERP(B) ERP(C) Weight ERP(A) ERP(B) ERP(C) Weight ERP(A) ERP(A) ERP(B) ERP(B) ERP(C) ERP(C) Page 6

7 Table 2 Continued Time ERP(A) ERP(B) ERP(C) Weight Weight Matrix ERP(A) ERP(B) ERP(C) ERP(A) Cost ERP(B) Reliability ERP(C) Functionality Scalability Time Table 3 Parameter and Overall Score Top 5 parameter Cost Reliability Functionality Scalability Time Overall Score of parameter ERP(A) ERP(B) ERP (C) Hence eresourceerp is the best suited ERP for Ispat Steels Matrix of Change Figure 1 1 Customer Care A Narrow Job 2 Product Variation (Customer specific product) B Tedious purchase process 3 Time Management C Untimely Delivery 4 Integration D Quality Management 5 HR E Plant Maintenance 6 Dispatch Tracking Page 7

8 Implementation Team Formation Regression Model for estimating effort in workdays: ( ) ( ) ( ) ( ) ( ) Table 4 Parameters for Team Selection Number of Users 1400 Number of Sites 35 Number of Interfaces 50 N umber of Modules 5 Effort as Work Days Person Months Time in Calendar Months 2.5* = 25.3 Team Size = 18 Table 5 Cost-Benefit Analysis of ERP Implementation Particular Associated Figure Associated Figure in INR Benefit Comments Sales Possible Increase in Sales 5% of Sales Gross Margin 50% Over increase in efficiency Procurement Cost Cost of Material Purchased 33% of Sales Procurement Cost 4% of Purchased Materials Cost Reduction in PC 50% PC Reduction Labor Cost Cost of Manpower Possible Reduction in Manpower Cost 2% Manpower Reduction Inventory Carrying Cost Inventory Holding Cost 0.8% of inventory value Page 8

9 Raw Material inventory value Possible Reduction in Raw Material inventory value 5% of Sales % Current Work-in-progress and intermediate storage value 2.5 % of Sales Possible Reduction 50% Current finished goods stock inventory value 12.5 % of Sales Possible Reduction 25% Shorter Debit/Credit Cycles Annual Benefit 0.05% of Sales Total Cost Particular Associated Figure Associated Figure in INR Cost(INR) Comments Computer Hardware 0.8% of Sales Software 1 % of Sales Recurring Cost is.15% sales Systems and Programming 5 times the cost of Software Data Inventory Record Accuracy 1 % of Sales Bill of Material and.4% of Sales Structure Routing Accuracy 0.2% of Sales Forecasting 0.4% of Sales People Project Team 0.5 % of Sales employees full time for 25 months Training 1.6 % Sales Consultancy Cost 2 % of Sales Total Cost Page 9