ERP integrates an entire company into one information system that operates on real-time data it

receives from throughout the organization. The shared database ensures that every location and
department can access the most reliable and up-to-date information.

An ERP system incorporates many operations management topics, including process design and
management, aggregate planning, capacity and inventory management, scheduling, quality
control, and project management.

ERP Planning

Business owners and executives often expect that installing an ERP system will be a long,
difficult and costly process. But it doesn't have to be that way, if you make the right choice. A
true solution responds to your needs for reasonable cost and minimal disruption, as well as
smooth-running software.

It might help to compare ERP software to the choices you have available when you buy a new
suit for your organization

On the surface, there are very attractive reasons for going ERP. Benefits include:

A single system to support rather than several small and different systems

A single applications architecture with limited interfaces

Access to management information unavailable across a mix of applications

Access to best practice systems and procedures

More integration hence lower costs

More "automation" of tasks Generic Costs and Impacts

The costs and impacts are understandably not played up by the Vendors. Some of those are:

Implementation effort will be bigger then ever talked about or even imagined. We are yet to
hear from an organisation who have implemented ahead of schedule and under budget.
 Because of the richness of functionality, the "toybox effect" can take over. Users see all the
functionality available and suddenly they want it now. The scope can grow out of control.

The existing environmental mix between what is done manually and what is done by the system
will swing dramatically after implementation. Many more tasks will be automated. Automation
will significantly reduce the flexibility of how you operate as a business.

Users need to become more computer literate. Many see this as personally challenging - even
beyond their ability - and will not cope, or leave the company.

The word "Enterprise" in ERP means that whatever happens in one area has a ripple effect in
other areas. Understanding the implications of actions of one area, on other areas of the
company, is not something that happens overnight. Training tends to focus on how do I do my
job. It should also focus on what are the impacts of my job, in other areas.

Near enough is no longer good enough. Data integrity becomes critical. The computer cannot
make human judgments. If stock is moved, it is no good somebody remembering where they put
it. The information needs to be put into the system or there will be a domino effect. E.g. Stock is
moved from location A to location B and the information is not put into the system. The system
will tell someone to get the material from A and when it is not there, they have to go looking. At
the same time it is telling someone else to put new material in B, but B is full. The first person
finds the original material in B and logs it into the system. We now have double the quantity in
the system again and it doesn't reorder. And so it goes on and everyone is blaming the system.

ERP systems tend to replace old systems. As such it is a quantum leap for all areas of the
company. This happens at a Technical level as well as a Business Level. New ways need to be
learnt in a very short space of time.

Things have to be done consistently. No longer are we able to do something one way in one
branch and another way in another branch. The system is going to determine how we do things in
all locations. Even within one location, special treatment may not be possible any more without
changing the configuration of the system. If the system says you can either have 0, 15, 30 or 60
day credit terms, you can no longer offer 45 day terms without changing configuration. If
consistency can be implemented, there is good potential for cost savings as well as getting rid of
special arrangements that reduce profit.
There are different phases which may be involved during the successful planning and
implementation of ERP:

1. Know your goals for your ERP implementation Choose the product that promises to meet
those goals and put measurement tools and processes in place to gauge your success. In
particular, he said, set goals for performance, response time and downtime.

2. Don't do any project without a plan, particularly an ERP project which touches almost every
part of your organization. Create process with regular milestones and participation from affected
organizations. And be sure to test, test, test, all the way through. All of these things seem like
'nice-to-haves' rather than critical elements in a project, but can make the overall project much
more successful.

3. Involve users in your ERP project planning phase. The software is not going to do you much
good if you don't have employee buy-in.

4. Don't do the planning and implementation alone if you don't have the in-house skills to make
it happen. "Determining which options and features to use requires experience,". If the in-house
team doesn't have that experience, find a local ERP expert who is trustworthy and who
collaborates well with your team.

5. Be realistic in your cost projections. Double the consulting firm's estimate

6. Don't keep adding to your project. In the planning and evaluation stage, people see the
capabilities of products and want to use each new one they discover. "Commit to what you want
to do initially,". "Get your return on investment and then expand. Otherwise, you'll have a never-
ending and unsuccessful project."

To host or not to host?

7. If you'd prefer the hosting model for your ERP, then scrutinize your application service
provider (ASP) well. First of all, you must be able to trust this ASP with your data. "Find out if
that hosting company provides cookie cutter solutions or can customize the ERP suite to fit your
needs, Many outsourcers don't know enough about ERP to customize it. Then again, if a cookie
cutter solution is okay for you, then fine, use an outsourcer and you don't have to take care of
your ERP."
8. Follow the money. "Hosting should take out a lot of internal costs of labor," "It should save
you moneyby spreading payments over a period of time. You should be paying less over a
period of time for hosting than you would do it yourself." The hoster should provide this
analysis. If you're not paying less, don't use an ASP, he said.

Evaluation

9. Choose an ERP package that is industry-standards based. "You don't want to find yourself out
on a limb with customers who can't interact with your proprietary, out-of-standard
implementation,"

10. Look closely at maintenance costs. "You can pay a great purchase price and find that it costs
a fortune to maintain,"

11. Evaluate your processes and decide if changing them to fit a particular ERP suite would be
beneficial, "Either you're looking for customization or going for out-of-the-box," he says. "With
the latter, people have to change how they do things in order to conform to the package. That
may work for a company that needs to make changes anyway. Often, however, it's better to
choose a suite that can conform to your needs."

12. Discuss a vendor's stability with the vendor reps and outside experts. Find out if the company
is losing market share, which might make it a candidate for a takeover or failure,

13. "Whenever a company and its ERP package are acquired, it's not usually good news for the
customer," "Often, the vendor is buying the client base and is not that interested in the software
itself. Instead, they'll try to get clients to move to their own platform." In this situation,
customers may have to migrate without good business reasons.

14. Get the numbers. "Get empirical evidence of return on investment from the vendor and/or a
consultant," also, simulate the ERP suite in your company and make your own calculations.

15. Get vendors to come clean about their upgrade cycles. "Once they get you as a customer,
their goal is to sell you new features and upgrades," You want a company that upgrades and adds
necessary features and doesn't lock you into an expensive upgrade cycle.
 16. Find out how much customization assistance the vendor will offer, Reed said. "If you
customize the ERP package to fit your business scenarios without vendor support, you can limit
your support options from that vendor down the road."

17. Be efficient in contract negotiations. "If vendor can answer 25 critical questions and give
most of what you want, you're going to be in good shape. Focus more on critical items to get
through negotiations more quickly."

18. You can't get everything you want. "Do accept that there is always going to be a functionality
gap,". Usually, you have to let 10% go. If the gap is more than 10%, keep shopping."

After the implementation

19. Pay attention to the quality of your data and the daily workflow. This is especially important
during the transition time after implementation and during periods when your business is
changing or growing. Watch for seasonal variations, too.

20. Don't sign up for long training sessions. Instead, do some initial, condensed training on your
own site, and then set up a regular class schedule that gives users time to learn before they move
on. "Vendors want to sell customers, say, 40 days of training over six weeks,". By the time the
class is over, the trainees have forgotten the first half of the lessons.

ERP implementations are littered with tales of lost millions and withdrawals after
implementation. Many of the most experienced IT organisations have failed. So what are the
secrets? What are the traps? This question could produce at least a book, and probably a sequel.
Here are a few things the Vendor is not going to tell you about. They are by no means the most
important, but they are missed in many implementations.

We recommend the following steps for implementing a successful ERP system:

1. Assess your needs.

Do you really need such a sophisticated system? The system itself wont fix all the problems of
an organization. Often, some process re-engineering and communication across the organization
can do the trick, and you can handle data management in a much simpler and inexpensive way.
Many world-class manufacturing and service operations use relatively simple, unsophisticated
systems to manage their ERP needs.
2. Fix your processes.

Implementing an ERP system wont fix broken, inefficient processes. Before investing in an ERP
system, evaluate and, if needed, redesign your processes.

3. Acquire and verify consistent data.

When you begin populating an ERP system with data, remember that the outputs are only as
good as the data going in. If different departments are operating on different sets of data say,
sales data in one department is different from sales data in another then the software system
isnt going to produce accurate data for the company.

4. Customize your software.

ERP vendors offer highly standardized software, typically with optimized modules for particular
industries. One of the major concerns companies have about implementing an ERP system is that
it locks the company into standardized processes.

This inhibits process innovation within a company because deviating from the ERPs process
ends up requiring many software work-arounds. When setting up an ERP, make sure the system
can accommodate process improvements from Step 2 and not force you into the standard
processes that have been built into its software.

When customizing software to accommodate an improved process, be sure your competitors

dont get ahold of the same programs and eliminate any competitive advantage youve gained.

5. Train your employees.

Employees must understand the purpose of the system and how to input data and interpret the
reports that the system generates.

6. Continuously improve your processes.

Continuous improvement is the heartbeat of all successful companies, and changing processes
almost certainly involves modifications to ERP software. Many companies find themselves
locked into their current processes to avoid the time and money needed to update their software.
Avoid stagnation by developing a good relationship with your software provider.

Advantages of using ERP in in Drydocks

In the absence of an ERP system, a large manufacturer may find itself with
many software applications that do not talk to each other and do not
effectively interface. Tasks that need to interface with one another may
involve:

a. design engineering (how to best make the product)

b. order tracking from acceptance through fulfillment

c. the revenue cycle from invoice through cash receipt

d. managing interdependencies of complex Bill of Materials

e. tracking the 3-way match between Purchase orders (what

was ordered), Inventory receipts (what arrived), and Costing
(what the vendor invoiced)

f. the Accounting for all of these tasks, tracking the Revenue,

Cost and Profit on a granular level.

Change how a product is made, in the engineering details, and that is how it
will now be made. Effective dates can be used to control when the switch
over will occur from an old version to the next one, both the date that some
ingredients go into effect, and date that some are discontinued. Part of the
change can include labeling to identify version numbers.

Computer security is included within an ERP to protect against both outsider

crime, such as industrial espionage, and insider crime, such as
embezzlement. A data tampering scenario might involve a disgruntled
employee intentionally modifying prices to below the breakeven point in
order to attempt to take down the company, or other sabotage. ERP security
helps to prevent abuse as well.