Implementation of Enterprise Resource Planning (ERP) systems in textile companies of Pakistan

October 16, 2006 at 12:00 am | Posted in Arsalan's Dawn Article | 3 Comments

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The term ERP originally implied systems designed to plan the utilization of enterprise-wide resources. Although the acronym ERP originated in the manufacturing environment, today’s use of the term ERP systems has much broader scope. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization’s business or charter. Business, non-profit organizations, non governmental organizations, governments, and other large entities utilize ERP systems.

 

ERP systems aimed to manage efficiently all aspect of enterprise-wide data. Application of ERP systems are not only used in manufacturing industries but also services industries like banks financial institutions, hospitals, airlines etc.

 

In early 1950s, when world manufacturing industry was booming and becoming global, the manual planning was becoming very difficult. Next was the stage of mass customization of products where the variability in manufacturing highly increased and added tremendous burden on planning. It became very difficult to manage and plan the material flow in the production systems. Even the best production planners and managers could not get hold of the management and material aspect of the manufacturing.

 

Then the Material Requirement Planning (MRP) systems were introduced in 1970s. These are IT systems; combination of software and hardware, used to manage and plan materials in the manufacturing organization. MRP systems efficiently worked out the biggest problems of planning. Industries like automotive, chemical, electronics, telecommunications and textiles greatly benefited with the MRP systems. These MRP systems are customized to the requirements of each particular company.

 

MRP systems have limitations regarding data integrity across the company. This lead to the creation of a new class of planning system in 1980s known as Manufacturing Resource Planning (MRP-II) systems. These systems have high level of data integrity across manufacturing setups. But when the companies’ vision are expanding day to day and shifting focus from ‘manufacturing value realization’ to ‘business process value realization’, the need of high level system was felt. A system which could integrate data aspects of forecasting, ordering, manufacturing, sourcing,  human resource, marketing, sales, supply chain management, accounting and financials, quality management, projects management, customer relationship management and data warehousing. This lead to the creating of new class of systems known as Enterprise Resource Planning (ERP) systems which came into market few years back.

 

Numerous companies are using ERP systems nowadays to manage broader aspect of their business. It has also the possibility of managing different businesses under one portfolio. ERP is used both by manufacturing sector and services sector. As world businesses are becoming highly competitive, the ERP systems proved to be a vital factor to gain competitive advantage across industries.

 

With ERP systems, the burden on the management of tactical and operational aspects of manufacturing is highly reduced and major emphasis is being given on strategies, designing and innovation. Thus the industry is no more stagnated but dynamic and growth orientated.

 

Despite of the availabilities MRP, MRP-II and ERP systems, unfortunately, Pakistani textile industry never consider implementing these systems into their manufacturing and business environments.

 

Though Pakistani textile industry is experiencing adverse affects of high level of product and volume mix in their manufacturing environment but they are continuously relying on people for planning. Majority of the textile mills use manual planning systems on pen, paper and calculator and huge paper file storages. Some has shifted to computers mainly for better presentations of written data for top managers and executives (usually on simple spreadsheets and word processors with data storage facility). Significantly none of the companies had installed intelligent systems that could aid manufacturing planning and data integrity across different departments.

 

Following major issues are worth mentioning in this scenario:

 

Manual constrains impart bad planning and decrease overall manufacturing system efficiency and increase the chance of late deliveries. As a result, orders are not delivered on time. The sales and marketing are unaware of the production process and could not efficiently track the process for on time shipments. It is impossible to know about exact lead time of the manufacturing for a particular product thus triggering false promises with customers and shaking customer’s confidence to do business.

 

With the existence of parallel reporting systems; manual and on computer, the data reliability is greatly suffered. With lots of wrong, inconsistent and lost data being shared across the manufacturing environment, the overall operational planning is greatly affected. This turns the whole focus of the company strategies to correct operational data errors.

 

Production and material backtracking is practically impossible in this case and there is no chance of overall system improvement and as a result the company continuously and repeatedly makes same errors all the time.

 

Inadequate planning create rush order manufacturing which highly increases operational costs and wastages.

 

The reason why Pakistani textile industry doesn’t implement, or are hesitating to implement ERP systems are following;

 

Lack of vision and awareness among company’s strategic decision makers.

 

Lack of properly educated and trained people at top management positions

 

Less emphasis on IT projects. IT is usually considered as luxury rather than necessity.

 

Lack of benefit realization of ERP systems and misconception of ‘loss’ as a result of ERP system implementation.

 

Less availability of consulting and software companies to customize and implement standard ERP packages. ERP packages are designed to be customizable to the concrete needs of an organization and to its legacy systems. 

It is worth mentioning here that the decision to implement ERP system totally comes form the company itself. It is not a collective effort of companies to implement a common ERP system but an individual company’s effort to implement an ERP package in customized form according to the vision and business practice. Doing this, the company can gain competitive advantage and will thrive for growth among its peers.

 

Major fashion retailers and western textile buyers have installed ERP systems. While developing business and supply contracts, they require the suppliers to have the standardized ERP systems for information and data sharing over internet networking. In this case an ERP system becomes a necessity for survival of the manufacturing company.

 

There are various ERP packages available in market which textile industrialists could take advantage of. The key manufacturers of ERP systems are Peoplesoft, ORACLE, SAP, BAAN, IFS, BPCS and JD EDWARDS. They manufacture highly customized version of ERP systems for corporate customers. These are expensive packages. They have also affordable customizable versions of packages for normal customers. Microsoft is also stepping into ERP business with relatively cheap and customizable packages like
MS-NAVISION, MS-AXAPTA and MS-DYNAMICS. It also has numerous products for small business and enterprises in this area and is highly affordable.

 

Secondly the textile industrialists could have the ERP modules developed by local Pakistani software companies. Pakistani software companies are quite experienced enough to develop software modules but lack operational know-how of the industry. Hence, prior to implementation, proper technical and industrial experts should be consulted.

 

Once ERP systems is successfully installed, it ‘takes care’ of the whole business process itself with highly reduced variabilities and make it easily manageable.

 

Pakistani textile industry should seriously consider implementing ERP systems in their manufacturing environments to gain enough competitive advantage towards their competitors. This will enable them to think and move ahead towards the area of product designing, innovation and business process enhancements.

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3 Comments »

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  1. leasing line

    Good information about leasing line.

  2. Erp is not fail, we are developer of erp and make many success erp, yes the growth rate of erp in india is low, but hope that it rapidly growth.

    Campus ERP Software, ERP Solution In India, Erp Services, Campus Training on http://bridgelogic.wordpress.com/

    Bridge Logic offers Campus Erp Solution, Erp Services, Web Based Erp Software Development, Bulk Email Marketing, CRM Software, CMS Solutions and Application Software, Attendance Management System punch card Finger Touch.

    Thanks and Regard’s
    Michal Bridge
    http://www.bridgelogicsystem.com/
    (An Erp Solution Provider)

  3. ERP reduces the Effort and Cost but Cloud ERP will reduce it more

    Vivek
    Vision Around Technology


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