Based on the case that is provided, it is obvious that the company still uses a LAN-based application. The system is not able to handle the vast amount of data that flows in and the protocols and processes used in the IT application have too many loops, have to retrieve data from an old database that cannot handle the large volume of traffic. Also, there are integration problems as the system cannot accept information from OEM systems and cannot serve the requests that are made. The problem areas are material handling and inventory, finance, HR, manufacturing, and SCM.
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The following assumptions have been made.
All internal departments such as finance, production, inventory, planning are competent as stand-alone but there are only problems of integration.
Business requirements are forecast as steady for the next financial years.
Suggestions for new ERP System
The following top-level recommendations are given for the ERP system implementation. The system would have two components one for external customers or the OEMs who buy the products and the internal customers that are internal departments such as finance, purchase, stores and inventory, production, and others (BEA, 2008).
- The company should shift to a web-based application that is accessible from any computer with an Internet connection.
- Since the company is a supplier to many OEMs, who may have their own legacy systems, the question of which platform and application to use arises. The new web-based application that would be developed would again have problems in understanding requests from OEM customer systems. To get over this problem, a Middleware is proposed at the gateway level of the application. The middleware would serve as an interpreter for both DC&H and also for OEMs.
- The database would be having a number of tables with the primary key based on the component number and the OEM code, which is unique. All data would be stored with reference to this number.
External customers include OEMs that buy the products and vendors that supply the raw material (Connors Mar, October 1999).
- OEMs need to send their periodic (monthly, quarterly, etc) schedules, as per their organization’s EDI document format. The format would be for purchase orders, authorization, vouchers, bills, cheque details, etc. The requirements would state the OEM code, the part number of the components, rate, quantity, delivery schedule, etc.
- The middleware would interpret the incoming documents as per the mapping done for the documents. The middleware would look at the OEM code and part number and map it with DC&H documents format. So fields such as part name, quantity, rates, PO number, and other details would be interpreted correctly.
- At the beginning of any month, the planning department would have the breakdown of what each OEM wants, part numbers, and other details. Each component would have a defined cycle time and lead-time with specified vendors for the raw materials such as castings and forgings. Planning can decide the best economic order quantity and place the orders with the vendors who would be given a schedule. Accordingly, a production schedule would be created and given to production departments so they know which components to load on which date, quantity required, and so on. A firm commitment can be made to delivery schedules. Packing and dispatch can prepare the packaging and accompanying documents such as invoices, excise and tax documents, etc.
- Based on the lead-time for finished products, sales can alert their supply chain on the expected date for finished product arrival. Transport companies can be given a pickup schedule, based on the weight and size of the packed components, part numbers, destination, documents that would be sent in the document docket, etc.
- When OEMs receive the invoice, through the middleware as well as printed, they can process the documents and receive the goods.
Internal departments include finance, purchase, planning, production, and others (Ptak, 2003).
- When vendors raise an invoice, a payment voucher would be created, giving the invoice number of the vendor as the reference. The voucher would have details such as vendor code, components for which invoice was raised, etc. The voucher after being processed would be entered into the journal as per the appropriate general ledger accounting code. At day end and even at any point in time, finance can generate a report of the status of all payment vouchers.
- When the company raises an invoice with the vendor, a receipt voucher would be created with all details as mentioned above. When payment is received for an RV, the status would be changed to paid. At day end and even at any point in time, finance can generate a report of the status of all receipt vouchers.
- Planning can use the information from the orders sent by the OEMs and create a work schedule for the coming months. They can send the procurement schedule for each part number giving the quantity and date required.
- Production will receive the production schedule and arrange their production activities accordingly.
- The management can generate reports for different parameters such as business from each OEM, raw material costs, production efficiency, and so on.
Answers to Requirements
Answers to the case are given as below:
ERP Will meet future requirements: Enterprise resource planning helps in integrating different business functions in large enterprises. This helps in reducing delays in information processing, brings transparency into the operation, and increases efficiency (Connors Mary. October 1999)
How the business functions will be integrated: Integration is done by building a web-based application that receives and gives information from all systems. A powerful database would be created with primary keys for the component number and customer code. All departments would need o enter information in the interface (Ptak, 2003).
How ERP will support the growth requirements of our HR, M/S, SCM, and FI/CO business applications: The system is scalable and administrators will be able to create new masters for part numbers, customer code, and others. HR will use information about employees based on the employee code, name, and department. Information about each department will be entered into the system. HR requirements can be analyzed using metrics of production, efficiency required, level of opening, and others. The system can also be integrated with the attendance monitoring system and payroll where employees use swipe cards to register their attendance (BEA, 2008).
DC&H expansion into the European market: The system is web-based and scalable. Hence any authorized user can access the application from anywhere in the world using the Internet and the log-in ID. New customer codes can be added along with the part numbers required. A number of masters for currency, address, bank details, etc. can be created (BEA, 2008)
SCM, CRM, and JIT: Supply Chain Management, Customer Relation Management is obtained through excellent reporting that the system as. CRM staff can search for a record based on the part number, stock available, rate, OEM, and delivery status and help to resolve queries by customers and vendors. The search system can be used by finance, production, planning, sales, etc. to search for information. JIT will be achieved by planning by scheduling the work orders based on inputs from OEMs and other agents. The schedule will be given to purchasing for procurement of raw material and to production for planning. Thus JIT would be achieved (Ptak, 2003).
FI/CO application: Requirements if finance and the head office will be met by the feature of reports generation. Finance would be creating payment and receipt vouchers and the information would be sorted as per customer code, part numbers, raw material cost, revenue generation, and others. Reports can be defined as per predefined criteria (BEA, 2008).
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Possible Problems: The application would essentially rely on the business efficiency and if the production system is wasteful, if liquidity problems exist, then these can impact the functioning. It is recommended that before ERP is implemented, a BPR activity be taken to improve the efficiency of the system. The company can be expected to go through a long learning curve (Ptak, 2003).
The paper has discussed an ERP solution for DC&H Company. The solution is a web-based application with a middleware that is able to interpret information from OEM and vendor systems, using mapped EDI format. The application will also integrate all internal functions such as finance, planning, production, etc. The system will have a reporting system to allow users to generate a range of reports based on part number, customer code, raw material cost, revenue, etc.
BEA. 2008. Business Integration and SOA: a Revolution in Business Agility: BEA Systems. Web.
Connors Mary. 1999. The 1999 Manufacturing Enterprise Applications Comparison Guide Cd-Rom for Erp, Supply Chain, Plant Floor Automation and Cmms. Thomas Pub Co. ISBN-13: 978-1882554133.
Ptak Carol A. 2003. ERP: Tools, Techniques, and Applications for Integrating the Supply Chain, Second Edition. ISBN-13: 978-1574443585.