Studying The Erp System Problems

Studying The Erp System ProblemsHindustan Unilever Limited is Indias largest fast moving consumer goods company. The common HUL brands include Kwality Walls icecream, Knorr soups and meal makers,Lifebuoy,Lux,Pears,Breeze,Sunsilk and Dove shampoos, Vim dishwash, Lakme beauty products etc.Problems approach by the company before ERP implementationThere was an arrival of modern trade in India. Its timeworn infrastructure and mixed bequest musical ar cooking stovements were unable to comely the requirement for proceeding and suffice capabilities of the modern trade.A legacy system means the computer has been in operation for a longer time and so its functions. Hindustan Unilever was non able to streamline its course operation. There was a need of a good deal more smooth flow of information. HUL was facing a challenge of ensuring the optimization of business to have solutions to changing market postulate.Company was withal facing the challenge of reducing its stock replenishmen t cycle.Need for ERP implementationTo optimize business process and alter IT concern.2. Consolidation of process is necessary.This must be done intimately as well as across the value chain of mountains.3. For the preservation of investment related to legacy origin and cash-to-order management system.Cash to order management system is for the business partners.4. Integrate with business partners IT infrastructure quickly and seamlessly.5. To improve information sharing with partners even if they argon not using mugs solution.6 .Increasing Supply Chain efficiency through process centric collaboration across the enterprise-internally and externally.7. Enhancing the value of legacy system.8. ERP system was also needed to ensure the distribution of goods at the right time at right placesIn this period of modern trade one needs to endure a service level that is higher than what the industry provides right instantaneously and their supply chain has to be such that it is superior to its competitors.Their older version of ERP system was such that it was not able to meet these needs.Hence they were in search of a system which would help in catering like meeting future transactions of modern trade.HUL also realized that good communication skills and tight communication links was necessary for the optimization of its business and achieving higher efficiency of their supply chain . However, ensuring good connectivity between HULs IT system with its distributors was not an easy.Earlier the company was using an e-business system which was developed inhouse. This was to manage the processes of replenishment and order fulfilment. This was done by exchanging inventory and sales data between itself and their distributors. Synchronization was also necessary. But because their customers had multiple, different systems of their own, integrating their system with those customers to and ensuring smooth data exchange was a challenging occupation for them . Furthermore, the mo dule of the E- transmission line system was customized..So as their business experienced growth, there were problems managing themselves with changing business needs.HUL has developed a standard distributor management system in a distributed general trade environment. If one wants the extended supply chain to be covered, the operations of the distributor needs to be integrated tightly with its internal Enterprise resource planning solutions .The system is functioning quite good, Hindustan Unilever Limited wants to its investment t be preserved in this area. Therefore the new ERP coating must be able to integrate itself with this back-office application, so that the company can continue to use its borrowed money well or leverage and maximise this into the future.ERP slayingIt was in 2004 when HUL decided to renovate its IT system with tire out. By utilizing SAP as their provider of standard IT solutions , utilizing its enterprise which is full of different features, solutions and i t fine experience in the consumer goods industry,thy provide be able to execute their global geological fault strategy. This strategy was aimed at streamlining and standardising the business processes across all its operations including global operations.It was to accelerate their transformation of business and simplify their IT department.The deal for HUL was SAP NetWeaver Process Integration (SAP NetWeaver PI) which enabled process-centric collaboration internally and across HULs extended value chain.SAP NetWeaver PI facilitated communication and an sell of info between different applications to matureher or multiple applications irrespective of whether it is an SAP or non-SAP solution.Why SAP implementation?It supported wide range of integrated Advanced Business Application Programmiing(ABAP) and SAP applications which are based on Javaused throughout Hindustan UnileverProvided opportunity to drive new heighten change and transport system functionality of SAP Solution Manager Phase 1 of HULs SAP implementationIt was in Sept 2007. It was marked with the end of its legacy ERP and its e-business systems. The solutions which were deployed included SAP ERP primal piece (SAP ECC), SAP NetWeaver PI, SAP NetWeaver Business Intelligence (SAP NetWeaver BI), SAP NetWeaverComposition Environment (SAP NetWeaver CE), SAP NetWeaver Portal, SAP Solution Manager and SAP Supply Chain Management (SAP SCM).The most important thing for them is that by implementing SAP NetWeaver platform, they are fit to consolidate and exchange data which is critical for business across their internal processes and also externally with their partners,their various suppliers and different partners too. For eg, HUL is now able to retain or hold back its investment in Central Unify and Unify which is also their aim.It is realistic due to SAP NetWeaver PI.It is due to this software that integration of the the legacy inventory and order-to-cash management system is now possible with the rest o f the SAP-based system. SAP NetWeaver Portal is another SAP NetWeaver component that HUL is most impressed with , which is right now used for customer collaboration. Integration of HULs IT system with itsdistributors IT systems is now possible by replacing its e-business system with this portal. This therefore results in the replenishment and order fulfilment process. With SAP NetWeaver PI, we have finally streamlining, advancement and integration of their process capability hs finally become possible because of their SAP NetWeaver PI. This also has resulted in the enhancement of HULs ability in meeting modern trades demand.Phase 2 of SAP implementationIncludes implementation of SAP Customer Relationship Management, SAP Transportation plan and Vehicle Scheduling, SAP Advanced Planning Optimisation Production Planning and Detailed Scheduling.Manufacturing/Production softwareThe scattering Module of MFG / professional offers users Functionality in the areas of Purchase, Inventory, Sales and Distribution, Configured Products and SCM are offered in the Distribution Module of MFG/PRO.MFG/PRO DistributionThis software is useful in the following areas Purchase Quotations of sales Orders of sales and Invoices Inventory Physical Inventory Analysis of sales Configured Products Enterprise framework Transfer and Enterprise Operations PlanMFG/PRO Financial ServicesIt includes General Ledger, Accounts Receivable , Accounts Payable, Multiple Currency, CostManagement, Cash Management , Fixed Assets , Global measure ManagementBenefits of MFG/PRO1.There are highly qualified team members with advanced technical skills and they also possess international exposure.2.Team scalability is as per the business requirements3.For ensuring that the expectations are met on time and within budget,a tactical methodology is followed.4. Fluctuation in manpower is low.5. Customer satis and nightfaction level is at its peak as the helpdesk is open for the wholly day and night.6. Economi cal Benefits are considerable.MFG-PRO Process Step-1The first step is getting the order.a. One gets the order online.b. All orders are consolidated from website to excel yellow journalismc. The excel sheet is accordingly send to the Operations Departmentd. veridical Requirement Planning is then done in MFG/PROCalculation how much inventory is in the stock how much inventory is required will be done by MFG/PROStep -2 Step 2 includes management of raw materialsSupplier is informed about the quantity of raw materials to be supplied ordering is done here)Raw material is then received from supplier.Goods Receipt Report(GRR) is then brisk by MFG/PRO.Step 3Qulity Control is done hereMaterial is then transferred to the Quality Control DepartmentDifferent stages are(1) Q.C. unfinished (2) Q.C. Accepted (3) Q.C. RejectedThe one which is accepted is transferred to warehouse. One which is rejected is sent back to suppliers.MFG/PRO does the accounting entry of it.Step 4 Also called payof f stageRaw Material is Transferred to Production unit.MFG/PRO prepares Production Report is prepared by MFG/PRO Daily Production is recordedStep 5 The process reaches the dispatch stageGuidiance how much to dispatch will be done by MFG/PRO.The Remaining is stored in warehouse.3. A mail to the customer will be sent by MFG/PRO.Step 6 Payment to the supplier is done here A Message to the central department is sent by MFG/PRO, after 1 week of receipt of material wages will be done centrally. The entry of it will be done by MFG/PRO when the payment is done..Payment from Customer later the 3 weeks of dispatch of the finished goods to customer, central department will be messaged by MFG/PRO to ask for payment from the customer. Entry will be automatically done by MFG/PRO when the customer does payment.Waste checkingManual method is followed for capturing the waste.MFG/PRO will compare Material reduced Finished Stock Increased and theri difference would be calculated as waste.Profit Ca lculationProfit Statement will be prepared by MFG/PRO every month.There will be comparisons of previous profit statements.PAY GINI SoftwareUsed mostly for HR departmentmixed services provided by this SoftwareAttendanceCalculation of salaryProvident Fuud CalculationsAccounts of all EmployeesCustomer Relationship ManagementIt is done through CRM software that manages various processes that the company always uses for tracking and organising its contacts with its genuine and future or prospective customers. Hindustan Unilever uses it to manage front end operations,backend operations,various business relationships,analysis and operational CRM.The growing information needs have to be met and the business practices have to be standardised.For HUL implemented Secondary Sales Force Automation (SSFA) Application across its redistribution stockists. Computer Manufacturing Company (CMC) has already implemented the Dealership Management Application Software for HUL distributors as part of earl ier engagement. Connection between the redistribution stockists with thecentral database takes place through Internet-based network for online fundamental interaction on orders,information sharing,dispatches and monitoring.Companys Existing Scenario Their existing environment consists ofSAP ERP application , SAP NetWeaver Exchange Infrastructure Component , SAP NetWeaver Business Intelligence Component , SAP NetWeaver Portal component, SAP Supplier Relationship Management Application , SAP Customer Relationship ManagementApplication.The company now enjoys70% speedier transports for non-ABAP (Advanced Business Application Programming) softwareGreater degree of automation and accuracy Elimination of disruptions and mistakes almost completely in ABAP and non-ABAP change transportsReduction in costs through reduced dependency on specialists which possess specialist skillsThird-Party Integration Database Oracle Hardware IBMHUL Before ERPThere were 1,000 suppliers and 7,000 stockiest in o ver one million sell outlets.HUL has 100 factories, 121 warehouse depots, 13 sale branches and 93 third-party manufacturing sites. It has 23 central offices, two research centers . CF agents used to Planning of distribution was done by CF agents based on the demand which was raised by stockists. 60-90 days credit for the goods were given to C F agets and stockists.In 1995, 44% was the HULs net current assets as a percentage of capital employed, andinventory was 20% of divisional turnover for detergent and for personal products it was 24% divisional turnover.HUL after ERPHLL previously had a stock replenishment cycle time of two weeks after ERP implementation, it came down by three and half days, which translates into substantial savings in inventory costs. After ERP current assets as a percentage of capital employed was down to 8 percent, and inventory in key divisions was down to 5-6% of turnover.In the case of detergent,the stock level decreased to less than 3 weeks of sale from 6 weeks of sale. Finish goods stock level at distribution decreased from three weeks to one week. The stockists of HUL who were habituated to get 60-90 days of credit from HUL are now offered a special discount if the payment is in advance. As a result, orders are placed by stockists unaccompanied for those stocks that can be replenished quickly. The channel inventory has drastically reduced in the entire network.