Topic: The Past, Present and Future of ERP

discuss How did ERP evolve? MRP I Nature of functioning,

Applications; MRP II Key elements; Transition from
MRP to ERP . Advantages and disadvantages of ERP.
What are the next generation enterprise resource planning
strategies and applications?
analyse on success story and one failure story of ERP and
summarize it.

Enterprise Resource Planning was born from its predecessor,

Manufacturing Resource Planning (MRP). During its formative years in the
1960s, MRP was referred to as Manufacturing Requirements Planning. MRP
and the first ERP systems were designed as an organizational and
scheduling tool for manufacturing firms. The function of the next
generation of ERP software systems stretched beyond the confines of
what it could do for an individual manufacturing firms internal use, and
began including customers and suppliers. It wasnt long before other
industries began to recognize the benefits of ERP systems; government
agencies and organizations in the service sector began taking advantage
of the technology.

A New Era in Enterprise Resource Planning Systems

The 1990s was a time of explosive growth for the technology, particularly
with ERP software systems that were meant to integrate businesses
processes throughout every functional area. Purchase-to-pay and orderto-cash were being incorporated more and more regularly. New
developments and the number of options in both software and hardware
quickly grew, but by the early 2000s, the major software vendors began to
merge. This resulted in the end of many vendors, but Oracle and SAP were
the big software firms that weathered the storm. To satisfy the
environment of planning and initiating, accounting, HR and supply chain
business process software suites grew in functionality.

ERP Advantages
Advantages of choosing an ERP solution are wide ranging. In terms of
inventory, an enterprise resource planning system allows granular control

over materials and inventory so that you make more informed decisions
about product planning. IT infrastructure costs are often reduced by
switching to an ERP system because applications are aggregated in the
system. If you opt for a cloud-based ERP system, backup and maintenance
are performed by the provider, further freeing up IT staff time.
The system supports business growth and management by incorporating
advanced reporting and analytics for data-driven decisions. Data gathered
in the system can be used to improve decision making, generate resource
policies and best practices to streamline workflow, and identify areas
where staff need training to work at capacity. Additionally, systems
support linking to suppliers and allow e-commerce.
Finally, from an operations standpoint, switching to a fully automated ERP
solution reduces cost. Traditionally, businesses had one service or
software for each function, so that HR employees used one set of tools to
perform their job and marketers used another set of tools. With an ERP
system, both employee groups access the resources they need though the
ERP interface. Productivity, task time, and cycle time benefit because
business processes are automated. Collaboration and workflow also are
improved because the software makes it easier for coworkers to connect
and to hand off projects when a phase is completed.

Enterprise Resource Planning History

Enterprise resource planning arose from a need to account for and better
manage resources in a manufacturing setting. The field is an outgrowth of
Material Requirements Planning of the 1960s, which focused on
developing best practices for planning and controlling resources in the
manufacturing setting. While ERP originally was developed for
manufacturing, it can be successfully integrated into every type of
business. Module-based software allows businesses to use only the
management components they need, then add on additional modules as
business needs change or grow.
An enterprise resource system or ERP integrates management
components across a company. They typically aggregate accounting and
finance, manufacturing, customer service, human resources, sales, and
other departments. The benefits of ERP software include:
Easier management of connections to customers and clients
Closing the supply chain loop to balance supply and demand
Lower costs and inventories by producing at the level of demand
Improve information flow between different departments
Meets information system requirements for the organization
While features found in an enterprise resource system vary by system,
they generally include a database and management portal that allow for

flexible, in-depth reporting. Integrated search and document modules

allow employees to search for, edit, and create documents as needed.
Workflow or project management modules allow for project control and
oversight of working groups.

ERP Components

The typical ERP system is implemented as individual modules that

represent the functions found in each department. A complete ERP
package might include modules for:
Sales order processing
Financials
Warehouse management
Human resources

1. Accounting and finance - This module aggregates financial reports,

business accounts, accounts payable, accounts receivable, cash book, and
general ledgers. Financial reporting and business analytics capabilities
allow you to run reports and drill down to the level of granularity requires.
2. Manufacturing and or Distribution - This function streamlines inventory,
supply, and demand information to provide a quick snapshot of current
stock, future needs, and past trends. View details on labor, equipment,
existing orders, satisfied jobs, and shipments.
3. Customer service - This function lets employees track customer calls,
emails, and other service-oriented contact. Over time, this improves
customer service because employees have access to all customer
transactions, and management can analyze the qualitative data for
trends, making improvements in weak areas.
4. Human resources with Payroll - When HR functions are folded into an
ERP system; employees can access documents, paperwork, vacation
calendars, and other information through the ERP interface. This allows
human resources employees to manage the information quickly and
effectively, while giving employees easy access to job functions.
5. Sales and Inventory - Like manufacturing, the sales and inventory
module provide insight into the demand for products. View recent and
past sales data, see which orders are still outstanding, manage wait lists
for out-of-stock inventory, and analyze sales by client, product, and other
factors.

Tracking the Information

The way that information flows through a company is called its workflow
and is a major source of headaches for companies and customers. A
customer calls to get a status of their order. The call gets routed to several

people in different departments because no one person can tell where the
order is in the process. Everyone gets frustrated.
Companies still relying on a paper trail may physically pass the paper
order from department to department for entry into their respective
systems. The person who currently has the order on their desk to be
processed knows the status, but frequently, you cant tell which person
has the order.
Tracking information like this is a key benefit of an ERP system because
data flows from department to department while maintaining the status of
the information. As the information flows through the system, it is updated
to include where it has been and where it needs to go. For instance, a very
simple workflow through an ERP system may be:

Sales receives an order, enters the information and flags it ready for
the next step

Credit receives the order, processes it and flags it ready for the next
step

Warehouse receives the order, processes it and flags it ready for the
next step

Who Needs ERP Consulting

ERP consulting refers to a variety of advisory services that consultants,
vendors, or companies offer to a business in need of an ERP system.
Consulting happens at several different points in time. Clients of course
need help when they are choosing enterprise resource planning software
or services, but that's not the only point in time. Some clients purchase
bare bones ERP systems or ones with limited functionality, and then want
to add on modules over time, so consulting services help with that. Other
clients want help supporting the system, whether its troubleshooting,
rolling out new modules, or transferring data from existing software,
websites, and even print.

ERP Implementation Success Case Study: Del Monte with

Kenandy, the ERP system

The Del Monte Foods,Inc., or simply Del Monte Foods, was a North
American food production and distribution company headquartered in One
Maritime Plaza, San Francisco, California, USA. Del Monte Foods was one
of the countrys largest producers, distributors and marketers of branded

food for the U.S. retail market, generating approximately $1.8 billion of
annual sales. Its portfolio of brands includes Del Monte, S&W, Contadina,
College Inn, Fruit Burst. Nils Lommerin, is the current Chief Executive
Officer of the Del Monte Foods. Several Del Monte products hold the
number one or two market share position. The company also produces,
distributes and markets private label food.
Del Monte Foods products are found in eight out of ten U.S. households.
One of the countrys largest consumer food and pet products companies
with more than $3.8 billion in net sales in fiscal 2013the Del Monte
Foods portfolio includes such iconic brands as Del Monte, Contadina,
Milk-Bone, and Kibbles n Bits.
While having such a powerful and growing brand portfolio has enabled the
company to significantly expand its market share, the companys own onpremises corporate ERP was not only costly, it was increasingly difficult to
deploy to new lines of business, and was nearing the end of its support
life. Del Monte needed a new way forward in ERP; they found it in the
Kenandy ERP cloud.
The companys recent acquisition of Natural Balance Pet Foods, a leading
producer of premium pet foods, presented the perfect opportunity to
begin the rollout of Del Montes new Kenandy cloud ERP system.
We decided to put Natural Balance on our chosen ERP system
Kenandyfrom day one, so they would be up and running quickly,
using Del Montes enterprise standards, explains David McLain,
Senior Vice President, Chief Information Officer and Chief
Procurement Officer at Del Monte Foods. This also helps us quickly
assess potential future expansion within Del Monte.
Among the many reasons Del Monte chose Kenandy was its
flexibility. Unlike most other ERP systems that offer cookie-cutter
capabilities, Kenandy is extremely flexible, says Stuart Kowarsky,
Vice President of Operations at Del Montes newly acquired Natural
Balance Pet Foods. This flexibility allows us to keep our costs down
while providing excellent customer service. For example, we can
easily add capabilities, and adapt the system to our clients needs.
Inheriting the benefits of the Salesforce Platform on which it was built,
Kenandy ERP not only provides flexibility and extensibility, its also
extremely fast to deploy. Deployment is so fast, in fact, that Kenandy CEO
and Chairman Sandra Kurtzig made a commitment to Del Monte to go live
with Kenandy at Natural Balance just 90 minutes after the acquisition was
complete. The system was up and running even faster than that. And this

was for a complete ERP implementation, including order-to-cash, planning

and production, procure-to-pay, and global financials, says Kurtzig. Youll
never see this kind of speed with legacy software, which often takes
months, if not years, to deploy.
Natural Balances Kowarsky concurs, saying, This is probably the fifth or
sixth ERP implementation of my career, and it was the smoothest
transition Ive ever experienced. Not only did Kenandy accelerate our
integration with Del Monte in a number of areasincluding customer
service, logistics, and the entire supply chain networkwe were able to
see these synergies immediately. Kowarsky credits Kenandys
Professional Services team for enabling the successful transition. In my
estimation, Kenandy has the number one services team in the business,
he says.
Del Monte is realizing a number of benefits from its deployment of
Kenandy at Natural Balance, including better visibility through a single
source of truth and the elimination of many manual processes. Kenandy
also enhances productivity in production, quality management, shipping,
and receiving, while seamlessly integrating Del Montes best practicesan
all around win-win.
Were confident that Kenandy will live up to its promise of providing a
complete, enterprise-ready ERP solution that has quick time-to-value,
says Del Montes McLain. At Natural Balance and in our corporate
systems, were replacing a patchwork of applications with one unified,
extensible solution that will grow and scale with Del Montes needs. Were
optimistic that Kenandy will help provide us the visibility we need to
improve the business now, and into the future.

ERP Implementation Failure Case Study: Nike

NIKE, Inc. (NIKE), incorporated in 1968, is engaged in the design,
development and worldwide marketing of footwear, apparel,
equipment, and accessory products. NIKE sells athletic footwear
and athletic apparel. It sells its products to retail accounts, through
NIKE-owned retail, including stores and Internet sales, and through
a mix of independent distributors and licensees, in over 180
countries around the world. Its products include running, training,

basketball, soccer, sport-inspired urban shoes, and childrens

shoes. It also markets shoes designed for aquatic activities,
baseball, bicycling, cheerleading, football, golf, lacrosse, outdoor
activities, skateboarding, tennis, volleyball, walking, wrestling, and
other athletic and recreational uses. On March 3, 2008, the
company acquired Umbro Ltd., which designs, distributes, and
licenses athletic and casual footwear, apparel and equipment,
primarily for the sport of soccer, under the Umbro trademarks. On
April 17, 2008, it completed the sale of its Bauer Hockey subsidiary.
NIKEs athletic footwear products are designed primarily for specific
athletic use, although a large percentage of the products are worn
for casual or leisure purposes. The company sells sports apparel
and accessories covering most of it product categories, which
includes sports-inspired lifestyle apparel, as well as athletic bags
and accessory items. It markets footwear, apparel and accessories
in collections of similar design or for specific purposes. It also
markets apparel with licensed college and professional team, and
league logos.
It also markets shoes designed for aquatic activities, baseball,
bicycling, cheerleading, football, golf, lacrosse, outdoor activities,
skateboarding, tennis, volleyball, walking, wrestling, and other
athletic and recreational uses. On March 3, 2008, the company
acquired Umbro Ltd., which designs, distributes, and licenses
athletic and casual footwear, apparel and equipment, primarily for
the sport of soccer, under the Umbro trademarks. On April 17,
2008, it completed the sale of its Bauer Hockey subsidiary.
Virtually all of NIKEs products are manufactured by independent
contractors. Virtually all footwear and apparel products are
produced outside the United States, while equipment products are
produced both in the United States and abroad.

Nikes Erp Implementation Saga

Supply Chain Management Problems At Nike

In February 2001, Nike, the athletic shoe and clothing giant

had warned that its third-quarter footwear sales were not up
to the mark and as a result, its year-over-year sales for the
third quarter would be flat. Nikes stock price fell almost 20%
the day this announcement came while i2s stock plunged
nearly 22% (Nikes footwear division was powered by i2
Technologies.)
The problem Nikes new supply-and-demand software
planning systems from i2 Technologies had hiccups in June
2000. The software incorrectly output orders for thousands

more Air Garnett sneakers than the market had appetite for
and called for thousands fewer Air Jordans than were
needed. As a result, there were huge inventory problems and
overdue deliveries.

Nikes Supply Chain

In 1975, Nike introduced Future Program.

Supply Chain Management was inadequate.
1998, Nikes global operations were broadly divided into 5
geographic regions.
Nikes profit dropped by 50% from US$ 798 million to US$
399 million.
Launched NSC Project.
Initiative of Shelley Dewey, Vice President of Supply Chain
and Steele.
Implement its ERP, Supply Chain, & CRM Software onto a
single SAP Platform.

i2s Software Implementation

First part of supply chain strategy.

Cost of this project was US $40 million.
To match supply with demand.
To reduce the amount of raw material.
Used it as a legacy system rather than as a part of SAP ERP
project.

Solution
Strategic
Planning

Objectiv
e
Maximiz
e
profitabi
lity
by
optimall
y
allocatin
g
resource
s

Challen
ge
Unclear
parame
ters

Capability
Optimizat
ion

Demand
managem
ent

Anticipa
te and
influenc
e
demand

Supply
planning

Determi
ne what
to make
and
when
and how
to
profitabl
y
distribut
e supply
Determi
ne what
to
produce
and
when

Productio
n

Reasons For I2s Software Failure

Third party integrator.

Inexperience of i2.
Customization.
Trying to forecast too far out ahead.
Pilot test.
Problems in smooth integration.
Inadequate information.
Changing market conditions.
Complication of NSC project.
Review meetings.

I2 SCM Disaster

Accurat
e
deman
d
estimat
ion
is
difficult
Size
and
comple
xity of
proble
m

Demand
planning,
channel
collaborat
ion

Managi
ng
materia
l
&
capacit
y
tradeo
ffs
is
comple
x

Fast finite
material
&
capacity
planning
&
schedulin
g

Collabora
tion,
optimizati
on,
Speed

Roland Wolfram, NIKEs VP of global operations and technology,

called the i2 problem a software glitch that cost NIKE more than
$100 million in lost sales, depressed its stock price by 20 percent,
triggered a flurry of class-action lawsuits, and caused its chairman,
president and CEO, Phil Knight, to lament famously: This is what
you get for $400 million, huh? a speed bump. In the athletic
footwear business, only NIKE, with a 32 percent worldwide market
share (almost double Adidas, its nearest rival) and a $20 billion
market cap thats more than the rest of the manufacturers and
retailers in the industry combined, could afford to talk about $100
million like that.

By 1998, NIKE had 27 order management systems around the

globe, all highly customized and poorly linked to Beaverton. To gain
control over its nine-month manufacturing cycle, NIKE decided that
it needed systems as centralized as its planning processes. ERP
software, specifically SAPs R/3 software, would be the bedrock of
NIKEs strategy, with i2 supply, demand and collaboration planner
software applications and Siebels CRM software also knitted into
the overall system using middleware from STC. So what has $500
million done for NIKEs business? Wolfram claims that better
collaboration with Far East factories has reduced the amount of
pre-building of shoes from 30 percent of NIKEs total
manufacturing units to around 3 percent. The lead-time for shoes,
he asserts, has gone from nine months to six (in some periods of
high demand, seven).