Enterprise Resource Planning (ERP) System Essay

Enterprise Resource Planning System integrates business functions all over the organization and creates and automated platform where all departments can interact with each other and view progress made in several projects by them. It creates an entire chain from order taking to delivering the order and then recording company revenues and profits in a homogenous manner such that no loop holes remain. Riordan Manufacturing Inc. is considering implementation of an ERP solution in several business function of the organization.

For most efficient solution the firm will prefer to implement ERP in its production, warehousing, logistics, sales, marketing, finance and human resource department. It will provide the organization with a foundation it requires to achieve the $50 million revenue mark by cutting costs at various levels and increasing sales due to enhanced customer service. However, while implementing it will require designing a desired system, converting its existing data, analyze that data, record all past data and information and train its employees,

OUTLINE I. Enterprise Resource Planning System II. Business Requirements Definition III. Scope and Goals IV. Measures For Success V. Summary Of Project Feasibility VI. Proposed Systems Requirements List Enterprise Resource Planning System “ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and the warehouse, and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems.

Finance, manufacturing and the warehouse all still get their own software, except now the software is linked together so that someone in finance can look into the warehouse software to see if an order has been shipped. ” Riordan Manufacturing Inc. aims to implement an Enterprise Resource Planning system that integrates information from its manufacturing, distribution and inventory management departments across all plants and facilitates the organization to achieve its revenue targets in the long run.

Business Requirements Definition The firm will be required to analyze existing system procedures and design new system such that it meets all information requirements. For implementing the system Riordan Manufacturing Inc will need to streamline its data recording procedures, install multiple hardware components such as computer terminals and storage devices, software components such as backend databases that will store and consolidate all organizational data and an ERP software package that provides necessary functionality.

Most importantly, it will require educating and training its personnel for using the respective ERP system. Scope and Goals SCOPE: The main objective is to have access to integrated information all over organization. For this purpose functions that will be included in the Enterprise Resource Planning system are Manufacturing, Supply Chain Management, Financials, Sales and Marketing.

The ERP system will consolidate bills of raw material, production scheduling, production capacity, workflow management, quality control, cost management, manufacturing Process, manufacturing projects, manufacturing flow, inventory, order entry, purchasing & procurement, product specifications, supply chain planning, supplier scheduling, inspection of goods, claim Processing, commission calculation, general ledger, cash management, accounts payable, accounts receivable, fixed assets, Sales and Marketing, commissions, service, customer contact and customer purchase history. GOALS: Riordan Manufacturing Inc. s mainly looking to combine production, inventory and distribution data all over its plants, which means linking its North American as well as China based plants. This will facilitate the organizations business model to control its costs by maintaining optimal inventory level and improving delivery efficiency. Currently the data exists within organization but in a very rudimentary and redundant form. Manual as well as technological means are being used to record and manage data, therefore, it is un-dependable and information is not uniformly distributed in the organization which causes difficulty in decision making.

Implementation of this project will enable a standardized distribution an access to information through out the organization. Since inventory management and other departments will have common access to existing data, the work involved in creating and processing purchase orders will be minimized. Purchasing documents, such as purchase requisitions, purchase orders, or contracts, can be created by referencing data that will already be existing in the system. This simplifies the process considerably, while at the same time preventing errors by copying data that might otherwise require data entry.

Employee data for payroll and recruitment purposes is also moved between finance department for pay rolling and human resource department for record keeping. If this data is unified for the management of whole organization, respective departments can have a better understanding about skill and performance level of employee in each department. In an era of Customer Relationship Management when organization are competing and differentiating through innovating customer services it is essential that organization consolidates data and information regarding its marketing and sales team’s activities.

ERP takes a customer order and provides a software road map for automating the different steps along the path to fulfilling the order. When a customer service representative enters a customer order into an ERP system, he has all the information necessary to complete the order (the customer’s credit rating and order history from the finance module, the company’s inventory levels from the warehouse module and the shipping schedule from distribution or logistics module). This will ensure product quality and efficient delivery.

This will enable it to effectively manage customer relationships. Measures For Success Firm’s objective to achieve $ 50 million revenue within 2 years can be a reasonable measure for success. This objective has been aimed to achieve through increasing sales to existing customers by increasing sales force promotions, price discounts, and customer user group services and expanding sales to new customers by implementing public relations activities, trade shows, brand development and sales force promotions.

Tracking effectiveness of marketing and sales functions through an ERP system will enable organization to have a more clear understanding that where it currently stands, how far behind is it to achieve its targets, which customers does it need to target and which promotional tools shall be used to target specific customers. Summary of Project Feasibility A summary of Project Feasibility for Riordan Manufacturing Inc. is discussed below in terms of technical, economic and operational.

Technical Feasibility: The proposed solution requires multiple hardware components such as computer terminals and storage devices, software components such as backend databases that will store and consolidate all organizational data and most important an ERP software package that provides necessary functionality. Economic Feasibility: The system will enable organization to achieve most favorable inventory levels which in turn will reduce its production, warehousing and inventory management cost.

Customer Relations will be improved because it will be simpler to access client record, offer them promotions and discounts depending on their Customer-User Group which will eventually lead to increased revenues. Operational Feasibility: Management at headquarter in North America will be able to access and monitor production and supply status in China. Customer Services can be enhanced because history of all customers will be tracked and recorded in system and delivery of orders can be optimized. Thus, supply chain will be improved. Enterprise system will also facilitate managers in decision making.

Supplier history will also be tracked; specifics of procured products and materials will be recorded enabling error-free procurement of production materials. Proposed Systems Requirements List Currently Riordan Manufacturing Inc. is has historical records in many disparate databases, as well as in paper files and microfiche. Depending on the respective business function appropriate operating procedures are required to be in place which will assist in day-to-day operations. The production plan maintains records of the number of units produced of each item by shift, which can be rolled up to the product group and year.

Procedures to streamline production workflow are to be streamlined such that production schedule, raw materials and inventory can be managed. Marketing plans and results from past market research studies are stored in a file cabinet in the marketing department. This data is required to be in structured format in the databases, so it could be consulted if and when needed in future regarding development of projects pertaining to similar background. The company has 15 – 20 major customers, including a government contract for fans. The firm has 12 minor customers.

Each member of the sales force maintains his/her own set of customer records using a variety of tools. Some sales team members use paper and pencil, others sales management software such as Act, and others a hybrid. A uniform procedure of recording sales of all products and magnitudes is to be designed. The marketing department, with the support of the finance and production departments, maintains profit and loss statements, by item and by group. Data recording procedures are to be standardized such that all production unit, all sales, expenses and other costs are recorded in system.

The system will automatically generate accurate profit and loss statements and other financials, reducing an excess responsibility of marketing department. Existing data in several formats needs to be converted in a homogeneous form before it is entered in the ERP system. That is conversion of data is foremost and essential. Also, this data is required to be analyzed depending on what is its source or origin. The ERP system requires vigorous testing before it is implemented so that any problem that might arise once system is implemented are highlighted before hand.

The testing phase will also bring to light any problem or hitch that has not been tended to or anticipated. Any customizations that business might require are also detailed at this stage. Finally, Riordan Manufacturing will be required to train its personnel according to the ERP system implemented to achieve desired and above mentioned results. The training procedure will need to inform users regarding not only ERP and its benefits but also its specific uses relevant to their respective department.