Case Study: SMEs Can Also Think About ERP

Case Study of Alfa Pneumatics

Alfa Pneumatics is a manufacturing co. for pneumatic tools for pumps and Marine industry, operating on tight margins and turn over of less than 10 cr. Management of the company had realistic plans of growth in future but wanted to cut down the operating cost and time. But against the future plans, company had serious issues with material supply process from supplier, tracking the same at sub-contractor’s site and managing sales data due to which, delivery against sales order used to get delayed, costing to the co. dearly. To overcome these, Alfa Pneumatics implemented Ebizframe, an ERP solution from Eastern Software Systems Limited.

Before going for Ebizframe, manual data entry in each department caused major worries for the management as no data, either in sales, purchase or inventory tallied with the actual at hand. This made decision making for the management of the company impossible or a huge risk. It got out of hand when technical specifications followed by production team, suppliers, sub-contractors and customers were all haywire. This in turn caused variations in required and supplied from suppliers and materials going and coming in from sub-contractors. The same caused rejections from customer’s side causing cost again.

It was then that company decided to go for an ERP to solve all these glitches. Implementation of Ebizframe started by Nov 2003 and went live by March 2004. Ebizframe was adopted with minor customization and major re-engineering of their business processes to improve on performance.

Challenges of understanding the concepts and quick adoptability by staff during implementation of Ebizframe were tackled well by team from both sides. All specifications for raw material, semi finished and finished goods are now incorporated into the system. Turn around time of delivery against order is reduced by 12 to 15 days. Also, company has now got the required controls over suppliers and sub-contractors. Company is has got crystal clear MIS reports of receivables and payables. As of now, Sales (including exports), Purchase, Inventory, Production and finance are live.

Correct, uniform and smoother flow of information across suppliers, sub-contractors and customers caused delight in each due to timely receipts and payments against deliveries with precision. Even dead stock has come down by 18 to 20% of whole. Stock tracking at inventory & sub-contractor’s site was accurate due to live inventory related reports. Production processes are streamlined based on the production advice from Sales as per order bookings made.

For future, company has plans for customization of reporting in Ebizframe considering growth plans.

Read Business Management Books to increase your knowledge and business. Also read ERP vendors in Indian Market.

ERP Implementation

ERP software implementation is a typically complex job and it involves greater risk of failure. ERP implementation requires top management support and willingness to complete ERP project in given time. Usually ERP implementation takes 3 months to 1-2 years time, it depends on the size of the company, number of sites, scope of the change (customization) and willingness of the customer to take ownership of the project. The most important aspect of any ERP implementation is that the company who has purchased the ERP software takes ownership of the project. Implementing ERP is not an in-house job. To implement ERP, companies used to take consultation services from ERP vendors or third party consulting companies. These consultancy services include consultation, customization of product and long term support.

In consulting service, consultants used to map the software with existing business process. They understand the business in detail and define the role of the ERP user. Consultants will prepare a list of processes in Vital, Essential and Desirable (VED) category. In the standard implementation they will suggest to finish vital part only. After standard implementation of ERP software they will find the gap to fulfill his essential and desirable (wish list). They will do some customization to fulfill complete wish list. For support, Customer can take AMC. In AMC customer will get product updates, upgrades, new features and few man month free of cost. AMC charges vary from company to company. It may have on % basis or on amount basis. AMCs can be for product, services or for both.

Read more about ERP definition and business strategies. Also know the ERP Implementation Best Practices, cost, timeframe and benefits.