Q.What is ERP?

Enterprise resource planning (ERP) is a category of business-management softwaretypically a

suite of integrated applicationsthat an organization can use to collect, store, manage and
interpret data from many business activities, including:

product planning, purchase

manufacturing or service delivery

marketing and sales

inventory management

shipping and payment

ERP provides an integrated view of core business processes, often in real-time, using
common databases maintained by a database management system. ERP systems track business
resourcescash, raw materials, production capacityand the status of business commitments:
orders, purchase orders, and payroll. The applications that make up the system share data across
various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the
data. ERP facilitates information flow between all business functions, and manages connections
to outside stakeholders.
Enterprise system software is a multibillion-dollar industry that produces components that
support a variety of business functions. IT investments have become the largest category of
capital expenditure in United States-based businesses over the past decade. Though early ERP
systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system is considered a vital organizational too because it integrates varied
organizational systems and facilitates error-free transactions and production. However,
developing an ERP system differs from traditional system development. ERP systems run on a
variety of computer hardware and network configurations, typically using adatabase as
an information repository.

An important goal oF ERP is to facilitate the flow of information so business decisions can
be data-driven. ERP software suites are built to collect and organize data from various levels of
an organization to provide management with insight into key performance indicators (KPIs)
in real time.
ERP software modules can help an organization's administrators monitor and manage supply
chain, procurement, inventory,finance, product lifecycle, projects, human resources and other
mission-critical components of a business through a series of interconnected executive
dashboards. In order for an ERP software deployment to be useful, however, it needs to be
integrated with other software systems the organization uses. For this reason, deployment of a
new ERP system in-house can involve considerable business process reengineering, employee
retraining and back-end information technology (IT) support for database integration, data
analytics and ad hoc reporting.
Legacy ERP systems tend to be architected as large, complex homogeneous systems which do
not lend themselves easily to a software-as-a-service (SaaS ERP) delivery model. As more
companys begin to store data in the cloud, however, ERP vendors are responding withcloudbased services to perform some functions of ERP -- particularly those relied upon
by mobile users. An ERP implementation that uses both on-premises ERP software and cloud
ERP services is called two-tiered ERP.

What are the tangible and intangible benefits of ERP?

ERP systems, or enterprise resource planning systems, refer to certain computer systems used by
businesses. These computer systems tie information together from various departments into one.
These systems commonly include data from the accounting department, human resources,
production or sales. Employees can access information from any department directly from their
computer rather than manually contacting other employees. ERP systems provide many tangible
and intangible benefits to businesses.
Tangible benefits are those measured in monetary terms and intangible benefits cannot be
measured in monetary terms but they do have a very significant business impact.

Tangible benefits:

Improves the productivity of process and personnel

Lowering the cost of products and services purchased

Paper and postage cost reductions

Inventory reduction

Lead time reduction

Reduced stock obsolescence

Faster product / service look-up and ordering saving time and money

Automated ordering and payment, lowering payment processing and paper costs

Intangible benefits:

Increases organizational transparency and responsibility

Accurate and faster access to data for timely decisions

Can reach more vendors, producing more competitive bids ;

Improved customer response

Saves enormous time and effort in data entry ;

More controls thereby lowering the risk of mis-utilization of resources

Facilitates strategic planning

Uniform reporting according to global standards

Reduced Operating Costs

One tangible benefit of using an ERP system involves the operating costs of the company.
With the easy access to information available using the system, an employee can gather
information by running a report. Employees working at companies without ERP systems need to
contact another employee to request the information. The other employee gathers the information
and forwards it. Without an ERP system, the company incurs labor costs for both employees to
gather the information. With an ERP system, the only cost involved represents a few minutes of
the first employee's time.
Real Time Information

Another tangible benefit of using an ERP system considers the timing of the information
received. Employees with access to an ERP system receive data immediately and use that
information in their work. Employees without access to an ERP system need to request
information from others and wait for a response. This response can take days or weeks to
receive. This benefit increases in value as the urgency of needing the information increases.
Employee Satisfaction
Employee satisfaction represents an intangible benefit of ERP systems. ERP systems make the
employee's job easier by providing her with information on how to perform her responsibilities.
She can use the system to access reports and current data which she incorporates into her own
analysis. The ease of acquiring the information creates less stress during the workday and a
greater sense of accomplishment. The company benefits because employees focus their energy
on higher level work rather than on acquiring the information.
Flexibility
Flexibility also offers an intangible benefit to companies who employ ERP systems. Most ERP
systems allow employees to access the data through the internet. Employees who travel or work
from home can access the system and fulfill their work obligations. The system eliminates the
requirement that employees need to work from the office. The company benefits because
employees away from the office lose no productivity time.

One of the greatest intangible benefits from ERP is a stair step increase in the amount, accuracy,
and timeliness of information. This does not apply to the standard information that came out of
legacy, like daily revenue reports, or the monthly income statement, but new things that were
always wished for but technically impossible. When business units begin to learn how to ask
ERP-intelligent business questions (What is each work centers contribution to our total
margin?), then rapid learning occurs, better business decisions are made, and benefits do, in
fact, become tangible.
Benefits of Standardization
Another intangible benefit from a successful ERP implementation is standardization.
Standardization brings the company culture together, it makes upgrades and changes more
efficient, and it ensures a global consistency in process and service. Standardization is not always
an easy sell as a benefit, for the paradoxical reason that everyone believes that they possess the
better process/system. So to your audience, standardization can be synonymous with
mediocrity. The gain is that everyone can leverage enhancements made after day one, and
improve together.
Still another intangible of ERP is making explicit the interdependency that jobs in an
organization have. When information is generated and remains within functional silos, it is very
easy for a job function to evolve into a role that could not be defined as a team player. If you
hear someone described as (or describe themselves as) a traffic cop, an enforcer, a fixer, or
the like, you should feel uneasy. ERP demonstrates forcefully is that everything interrelates, and
the only way to become highly effective at operating ERP is to become highly effective as a
team.
A final benefit is a general improvement in total financial controls, as indicated by outside
financial audits. Improved security, standard segregation of duties controls, and internal approval
rules all contribute to greater control. Closing the books globally with the same process, on the
same time sequence, reduces inconsistency between entities.

These are but a few examples of intangible benefits of ERP you will recognize many more. The
objective is for you to be able to articulate your intangible benefits in such a manner that when
you begin selling ERP internally an executive committee understands how life after ERP will be
better. Intangible benefits cannot replace tangible benefits in a financial analysis. They should
instead complement and enhance the monetary calculations, so that even though the financial
payback might be close to the point of indifference, the intangibles are so compelling that the
ERP decision is easy.

Q. Describe the evolution of ERP Software.

Enterprise resource planning (ERP) is an integral component of todays complex global
marketplace. ERP software helps companies streamline business processes, including:
Product planning, cost and development
Manufacturing or service delivery
Marketing and sales
Inventory management
Shipping and payment
The Evolution of Enterprise Resource Planning
The 1960s Growth of Enterprise Information Systems (EIS)
Early systems were based on automation for individual functions, like financial accounting or
inventory management.
The 1970s Shift to Material Requirements Planning (MRP)
MRP systems tapped into the master production schedule, allowing businesses to plan the parts
and product requirements.
The 1980s Manufacturing Resource Planning (MRP II) Introduced
MRP II software emphasized an optimized manufacturing process that coordinated materials and
production requirements, extending services to:
The shop floor
Finance
Human resources

 Engineering
Project management
Distribution management
The 1990s Birth of Enterprise Resource Planning
By the early 90s, MRP-II had been extended to include enterprise-wide functions and
integration.
Extended MRP II systems were renamed enterprise resource planning systems.
ERP uses a single database containing all the data that keeps the processes running smoothly,
ensuring visibility, accessibility, and consistency.
2000s and Beyond Extended Enterprise Resource Planning
Extended ERP systems include:
Customer relationship management
Supply chain management
Advanced planning and scheduling
Continuing ERP trends include capabilities for:
Cloud
Mobile
Analytics
Enterprise Resource Planning (ERP) systems have a long history that started the middle of the
last century. In that time there has been a lot of progress along with some bumps in the road.
From its early beginnings to the business processes software it is known for today, the goal of
such tools has always been to help businesses operate more efficiently.
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 firm's
internal use, and began including customers and suppliers. It wasn't 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.

During the 1970s, hardware and the first PCs were gaining ground. A shift towards business
processes and accounting capabilities began to emerge. In this time, companies such as Oracle,
JD Edwards and SAP formed, and it was Oracle that presented the original commercialized
structured query language (SQL). The 1980s saw the creation of closed-loop business processes
with MRP II, which was largely supplied by IBM.
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 "order-to-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.
Microsoft Dynamics GP, formerly known as Great Plains, is an extensive enterprise resource
planning system that is designed to help manage multiple aspects of business operations. Human
resource management, finance management, operations management and manufacturing are
among the features of the software. With this software, you are able to better analyze and control
what's happening in your business, ensuring a smoother operation and thus, increased revenue.
Some of the features of Great Plains:

Capacity to manage multiple aspects of your business' operations

Greater insight into how well your company is running, and where it could be improved

Flexible deployment options to get your business started quickly

Software that is easy to understand and use

Improved business decisions may lead to increased cash flow and margins

Q. State one success and one failure story of ERP implementation.

Success story Case Study:

LG implementation of HRMS
When the global giant - LG Electronics (LG) - having 114 subsidiaries, more than 82,000
employees across 40 countries - tried to harmonize its HR functions, the challenges were of a
similarly giant scale. High maintenance costs, local controls lacking transparency, inefficient
decision making, under-utilization of resources, manual processes, etc. made it difficult for LG to
operate as a global company, which then decided to take the ERP route.
The challenges for LG:

Location specific multiple systems leading to unclear top-level reporting, lack of

optimum resource utilization

Location specific processes lacking transparency and automation needs for a global
reporting

Disengaged employees, limited outlook, no room for information or best practices

sharing

Limited localized resources for employee learning & training

Challenges with decision making, with significant business impact

Selection criteria for ERP solutions:

LGs familiarity with Oracle technology due to earlier Oracle usage made it easier to finalize a
solution. It offered large data hosting, seamless migration of old data, easy scalability, multiple
modules addition as needed and centralized access and control. LG hired Oracle Consulting to
build a single centralized system which integrates available Oracle HR modules for uniform use
at global level, thereby replacing location specific system dependency.
Achieved benefits:

The ERP solution, which included a data mart, performance management system, staff portal,
and e-learning application, enabled the following benefits for LG:

Centrally managed a single system with minimal maintenance costs

Transparency in the recruitment and employee appraisal processes which enabled hiring,
engaging and rewarding performance based on the right competencies and proven
performance

Real time reporting for higher management and tracking of set goals and objectives

Informed decision making due to readily available real time reports

Centralized control over HR processes, with region level flexibility to implement

localized changes

Efficiency improvement for HR functions and processes

Cost savings due to not having to maintain multiple systems

Easy sharing of best practices across the various centers

Easy access self-service function made available for employee self-help

Easy learning facilitated for common tasks through document sharing and online
tutorials, resulting in time and cost savings

Increased employee morale, productivity and engagement

Timeframe:
Benefits surely look attractive, but it was not a cakewalk, given the large and distributed scale of
ERP system implementation. Spanned over 5 years (2002-2006) in five planned phases with
clearly set objective, the ERP solution enabled LG to mitigate the challenges posed by vastly

spread global centers, for its Human Resource Management System requirements. Today, LG
continues to benefit with the automated ERP solution, and continues to enhance it further as
needed.
Webhosted ERP solution for Fuze Energy Drinks:
Challenges: Fuze Energy Drinks, going through a rapid growth path, found its existing systems
obsolete to meet the growing business needs. Primary challenge areas identified were:

Management of rapidly growing stocks and inventory

Planning and managing production matched to demand and supply

Reporting needs for financial decision making

ERP solution selection criteria:

Fuze were looking for a cost effective, easy to maintain solution, without getting into the hassles
of computer maintenance. Their ERP vendor (Pyramid Consulting) offered Sage Accpac ERP
solution, which was completely web-hosted and was a proven system for the manufacturing
industry, with specific modules matching their needs. It offered automation for inventory
management, production lines and real-time financial reporting with no on-site maintenance,
allowing Fuze to concentrate on its core business instead of adding overhead for computer
system maintenance.
Achieved Benefits:

Automation modules for inventory ensured timely controls on products going out of
stock; combined with order management automation, this allowed full control on
production as per the demand

Being in the beverages space, automation ensured timely reporting and action planning
for stock that was past the expiry date or about to expire.

Reporting based on accounting entries ensured timely decision making based on real time
data

Production reporting resulted in full control on production lines, as per the demand and
supply status

Web hosted solution ensured no in-house computer hardware purchase, resulting in low
cost solution within expected budget

Web hosting also ensured easy and timely access to the system from variety of devices

Off site computer hosting ensured significantly low costs limited to annual maintenance
charges

Quick and easy setup without a lengthy setup period and no installation costs

Contract ensures vendor engagement and availability for any ad hoc training, as needed

The Bottom Line

ERP systems are usually big ticket projects with high costs and varying timeframes. Case studies
of successful ERP implementations allow for the careful selection of vendors, systems and
solutions; a clear understanding of existing gaps and objectives to be met; sufficient and
continuous engagement from the client with the vendor, as requirements keep changing
dynamically over the implementation phase. Simply leaving implementation to the vendor may
not be the best idea. Working with the vendor in a partnering role produces the best results.
ERP implementation failure Case Study:
Organization
Industry
Countries

:
:
:

Hewlett Packard, HP
Information Technology, Hardware
United States

HP announced that its revenues has gone down by 5% to $3.4bn for the 3 rd quarter ended
July 2004.

The reason proposed was due to the problem faced during the migration to the centralized
ERP system.

The total financial impact due to the failure was $160mn.

Questions were raised on failure of HP implementing ERP, as it was a consultant for SAP
ERP implementation.

HPs responsibility as a consultant was to prevent the execution problems faced by the
implementing Co. on which it itself failed.

While conducting an internal serve, HP revealed that there has been execution problem and
not the fault of SAP.

Technical glitches were small but contingencies planning wasn't addressed appropriately.

HP had a highly decentralized org. structure & every business operated independently.

HP redesigned its business strategy to venture into high volume low priced electronic
market.

Therefore HP planned to phase out its numerous legacy systems and replace it with SAP
R/3. Objectives:

1) Shorter lead & delivery time

2) Cost Saving

3) Global Distribution System

In 1993, HPs BCMO unit began with the implementation with several modules like- MM,
PP, FI, CO.

FI & CO modules were implemented on global basis & SD was implemented as part of
pilot project.

By 1998, major migration to SAP R/3 was completed. By 2000, HP was keen in making the
web-based activities more simple to capture the direct to customer market and had over 20
SAP R/3 implementations representing FI, PP, MM, SD, CO, BW, WM & APO.

HP used different version of SAP & had multiple SAP GUIs with around 10,000
users.

As HP was using SAP R/3, it considered using MySAP for its Internet
Enabled Technology Businesses to be a better fit.
ERP MIGRATION FAILURE
In Dec 2003 Gilles Bouchard, the CIO & EVP created a model to merge the Business and IT
group at regional & country level.

This operation along with the ISS was completed by on May 2004 & that led to
increased interdependencies between groups in the company.

This was 35th Migration and was a part of the Business Process Architecture. HP wanted to
reduce the 35 ERP systems implemented worldwide to four along with reduction in
application from 3500 to 1500.

 The following are the causes of the migration failure:

1. Project Team Constitution

2. Data Integration Problem

3. Demand Forecasting Problems

4. Poor Planning & Improper Testing

5. Inadequate Implementation Support/Training

Lessons learnt:
Implementation failure can impact overall business performance.

There is no standard approach to implement ERP, many times it involves a business

change in many departments. Therefore a detailed mapping is essential otherwise it
might miss out the objectives.

The success of implementation depends upon the planning, which considers the business
process along with the technical aspects. To implement ERP, the business processes must
be improved & corrected but HP failed in this.

The potential benefits to the supply chain are much bigger than the IT costs but the
potential risk to the supply chain is also much bigger.

 The success of ERP implementation depends upon the ability to align

IT along with the business management objectives, Program
Management Skills and a well defined process. Impossible for HP to
Envision all the configuration for Customized orders.

There should be a manual back-up as a contingency plan.

There should be no cross-functional barriers and should create effective processes and
teams to integrate the entire business at all levels.

Encourage employees.

Q . How do you think Purchase management can be streamlined using an

ERP system in garment manufacturing scenario?
This has been explained below with the help of a case study below.
CANIAS Solutions for Garment Industry.
Ready garments industry is thriving on changes and manufacturers engaged in the production of
ready garments should be equipped with cutting edge designs and solutions to ensure that their
products are fresh and trendy as per contemporary styles. This copping with changes require
solutions to effectively plan, execute and manage all the associated operations.
CANIAS ERPs advanced parameterization and flexibility ensures efficient undertaking of all the
planning, pricing, accounting, contract manufacturing monitoring and product monitoring
functions in the garment manufacturing industry irrespective of whether the material is in-house
manufactured,

or

directly

purchased,

or

is

manufactured

on

sub

contract

basis.

Garment manufacturing process could be initiated with raw thread purchases which could be
used for producing fabric and subsequently producing garment using these fabrics. Alternatively
fabric could be directly purchased and could undergo weaving or knitting operations to produce
garments. The above scenario varies depending on the type and quality of the product to be
produced. Therefore it is impossible to distinguish fabric manufacturing from garment
manufacturing.

Supply of fabrics to the firms engaged in ready garment manufacturing is undertaken in 3 ways.
1. Direct purchase,
2. Contract manufacturing
3. Internal manufacture
Those firms which do not possess fabric manufacturing facilities would source fabric either
through direct purchase or by way of contract manufacturing, whereas those with fabric
manufacturing facilities can either internally manufacture or procure through direct purchases or
by way of contract manufacturing. These decisions are arrived mainly based on the capacity
availability, the type of products to be manufactured and the ability of the machines to do the
manufacturing.
Ready garment manufacturers having fabric manufacturing facilities keep raw threads and
fabrics in their stocks. Required planning for these materials including maintaining of safety
stock, minimum purchasing or minimum production levels etc. could be efficiently managed
with

the

CANIAS

ERP

MRP

(Material

Requirements

Planning)

module.

The core processes to be pursued in CANIAS ERP within the Ready Garment Industry are as
follows:

Sales (Offer, Order, Dispatch List and Invoice Management)

Purchasing

Inventory and Warehouse Management

Production and Planning

Finite Capacity Planning,

Budget

Cost Analysis (Budget-Offer-Actual Comparison),

Finance / Accounting

Human Resources

Advanced

Reporting

Apart from the above core functions, the following industry specific adaptations helps to
efficiently
Material

manage
lot

the

production

traceability

and

operations
single

of

this
lot

industry.
production

Lot tracing is effectively used in this industry and this lot traceability is initiated from the
purchase of raw threads and is extended to the corresponding fabrics which are been produced.
Having the ability to identify the lot number of the threads been used in the fabric manufacture is
extremely useful especially in cases were retrospective analysis needs to be undertaken after the
production and delivery is undergone. Moreover, it is essential to produce the entire customer
order quantity from one lot of fabric as this will avoid fabric color differences. Thus, lot
traceability and single lot production are mandatory requirements for garment manufacturing
industry and CANIAS Single Lot Management function provides great deal of convenience for
this industry. Separate management tools can also be opted based on the material type.
Apart from the traceability and control aspects mentioned above, the following online production
order management and customer order monitoring provisions utilizing hand held terminals and
touch screen devices are been provided in CANIAS. In operations where manual labor is
required, hand terminals could be deployed instead of online production management touch
screens.

Online monitoring of the production site

Operational monitoring of customer orders and instantaneous response to the customer

Performance monitoring (for labor) and machinery use ratios

Efficiency analysis

Measurement of standard operations time

Efficient data collection for actual or estimated costs

Online stock monitoring (product receipts and raw material consumptions along with
production operation confirmations)
The advantage of variant functionality is that it enables users to manage both fabrics and
garments with minimum stock codes, minimum product tree structure and minimum routing
definitions (operational data). Though it is subject to change based on the actual requirements of
companies, the generally identified variants for fabrics are width, weight in grams, irreversibility,
color, pattern etc. Similarly color, size, quality etc. are the most prominent variants for ready
garments.
With the use of variants, system is able to identify the fabric consumption (could be color wise if
the color variant is chosen) and the required operations depending on the variant selection of the
fabric. Here, consumption quantity and the routing operation to be performed are the variables
which are dependent on the selected variants of the product. CANIAS ERP variant configurator
also ensures that the red thread and red dye could only be issued for consumption in red fabric
production.

Customer

specific

stock

management

based

on

orders

placed

Customer specific stock management is very essential for this industry and all the stock item is
managed in association with customer order number in order to ensure it is reserved against the
same customer. Fabrics and accessories received in stock are entered into the system against their

respective lot numbers provided by the supplier. Predefined rules which could be established in
CANIAS ERP ensure that such stocks material can only be used against the production of
relevant customer orders. Raw material stocks which are not reserved for any customer. These
are kept in the stock along with their supplier lot numbers. If lot numbers are not provided by
supplier, they are assigned with lot numbers by the system when their receipts are performed
thereby ensuring retrospective traceability.
Raw material stocks which are reserved for customers and are kept for consumption.
Ready garment products which are in stock pending delivery.
Reduction

in

byproducts

and

idle

time

through

efficient

Capacity

Planning;

One of the commonly experienced constraints in the garment manufacturing industry is the band
balancing and this is primarily due to lack of sufficient data which could be used in band
balancing. In CANIAS, standard operation times can be determined through online production
order confirmations and these can be used as data in band balancing. Decisions pertaining to
band

balancing

are

performed

by

CANIAS

Capacity

Planning

Module.

In the process of executing garment production operations, the routing operations and the
sequential order of these operations could vary a great deal. In such scenarios it is very essential
to control the by- products and the idle time which could happen between the production
operations. In order to accomplish such controls, the operations identified in the routes or the
work centers could be revised based on capacity availability prior to the initiation of a production
order. These revisions could include adding a new operation, or further splitting a current
operation (internal production in parts + contract manufacturing, contract manufacturing +
contract manufacturing + n etc.). Thus all operations revisions could be easily managed through
production

order

revision

functionality

with

CANIAS

ERP.

The most ideal plans could be established by CANIAS ERPs capacity planning and advanced
scheduling functions (machine or workers), taking into account the capacity constraints and other
parameters such as looms or groups of looms, boilers, principles of priority, dynamic stocks etc.

In case of readymade garments, deficiencies should be entered into the system particularly along
with the cutting operation and their stock records should be kept even if such records reflect only
approximate figures. If the deficiencies in the product are pertaining to pipe cutting and stitching
operations, then they can be utilized in that operation. Thus appropriate deficiency rates could be
achieved. The sales involving deficiencies can also be managed directly through the system.
As in the case of fabric, quality management is one of the important requirements for readymade
garments. Quality control applications in CANIAS ERP are conducted in the following two
areas.
The quality control processes are conducted in accordance with the established criteria in goods
receipt and production operation arenas. The criteria and sample plans set by purchasing and
manufacturing operations are made applicable in their respective areas and based on the quality
checks,

decisions

regarding

returns,

re-works

etc.

are

established.

Estimated and realized production cost monitoring

o

Production costing is one among the most prominent end results expected from ERP
systems and production costing has two varied dimensions in CANIAS ERP.

Standard cost (preliminary cost analysis prior to production)

Actual cost (actual realized cost after production)

In standard cost, the approximate cost prior to the execution of production is estimated
based on product tree structure and production operations unit activity costs. Standard
Cost is mostly used during the price offer preparation stage.

On the other hand, actual cost is the realized cost established through real material
consumption and other overheads.

Comparison between standard cost and actual cost is reported by CANIAS ERP by the
end of

Comparison between standard cost and actual cost can be produced from CANIAS ERP,
and the possible deviations can be identified. This constitutes a significant data source
aiding the decision making pertaining to whether the products have to be produced inhouse or procured from contract manufacturing sources.

Efficient

means

to

undertake

monitoring

and

control

of

contract

manufacturing

Due to the intensity of contract manufacturing in the garments industry, monitoring and control
of contract manufacturing is of prime importance. Contract manufacturing operations can be
gathered under two headings. These are;
o Utilizing of contract manufacturing services (Purchase)
o Undertaking of contract manufacturing services (Sales)
Materials such as raw fabric, dyed fabric and accessories are in the lower most level of product
tree hierarchy and therefore actual stock monitoring could be made possible by maintaining
separate material codes, stock cards etc. However, creation of separate material records on the
system for each intermediate level formed during the production process is not regarded as an
advisable practice. Contract manufacturing management functions in CANIAS ERP efficiently
addresses this requirement without having to initiate stock codes for each intermediate level.
Moreover, it is possible to monitor how many quantities of which type of materials each
subcontractor is supplying against each customer order. Besides, subcontracting costs can be
evaluated in more detail by correlating the subcontractor service invoices against their relevant
customer sales orders.
In case of undertaking of contract manufacturing services (Sales), most of the operational
processes can be effectively monitored by utilizing the standard sales, production, purchasing
and stock functionalities in CANIAS ERP. Unlike normal production, some of the product tree
materials could be received from the customer free of cost and they have to be included in the
production

process

as

free

of

cost

material

only monitoring

their

quantities.

Detailed,Sample,Monitoring-Control
Sample production operations can be considered as a small replica of the normal production
functionalities. While samples might turn out to be just models to be added to the firms
collection, more often they could also be the basis for the orders received from customers.
The material main records in CANIAS ERP also consist of different material files rather than

only handling elementary details pertaining to material management such as unit, price,
warehouse etc. These file, within each material main record contain the following details that
will

provide

all

additional

information

Sample versions

Designer

Graphic designer

Season

Collection

Artwork

Sample product receipt and route

Images

Variants to be used (color, size, etc.)

pertaining

to

its

samples

management.

In addition to the above, all internal details pertaining to the sample such as cutting artist, sewing
artist etc. could be maintained. Because of the enhanced reports and analysis tools made
available in CANIAS ERP, it is also possible to conduct evaluation of sample department
employees performance.