Thursday, June 30, 2011

Vacation and Review

Sorry for those who have waited for my blog this week. I had tight schedules and my internet connection had some problems. So could not post this week's blog. However Next week we shall resume the journey of SO ERP

Tuesday, June 21, 2011

ERP Functions: Journey So Far

We have started ERP journey with understanding it as an important tool for business process improvement in any organization. This tool aids top management of industries to get better and overall top view of business for decision making. Along with that it makes departments (functions) of organisation to adhere to business standard procedures that will help them perform more efficiently and effectively.

Then we started our journey of ERP functionality understanding with the root department of the organisation i.e. Sales/Marketing. We discussed on the flow of information and decisions. In brief
Once the Customer PO is accepted execution Production Planning is done. There are two Stages of planning.
1. Capacity Planning : For the Production Requirement for next month, Considering Previous month's back log productions and Work in Progress Production  Process and Production Qty  is arrived. Based on the Arrived Processes and Production Qty of product the Date and Time and Qty to be produced are arrived.

2. Material Requirement Planning: For the arrived Capacity planning Process and Production qty, based on Bill of Material of the product the Material wise qty requirement is to be arrived

With these background work we then moved onto execution of MRP. And this done by the Supply Chain Management) SCM.

Purchase Functions are briefly to procure the required material for various functions of organisation. It also got a procedure which is in below Image. We also see that this is just reverse process of Sales/Marketing Functions.

Stores: Once the Material is procured and arrives inside the factory the storing of material and distribution to the required department comes under stores. Along with that Subcontracting works managing and maintaining stocks of some of critical items are also responsibility of stores.

Logistics: There are two basic functions

1. Receiving of Materials/Items inside factory and maintaining documents.
2. Sending of Materials/Items outside factory and maintaining documents.
This is the journey so far. I hope I am able to provide some knowledge light on ERP to whoever is following the blog and viewers of blog. I am thankful to all of you. 
Further we will go in deep of Production, Quality, Human Resource, Finance, Plant Maintenance functions.
Keep Watching the space... 

Monday, June 13, 2011

ERP Functions: Supply Chain Management 7

Till now we discussed functions of Purchase, Stores in detail. Continuing the long chain of Supply Chain in this blog let us discuss functions of Logistics in an industry.

Logistics, some times called as Shipping Department is the crucial department which is actually connecting suppliers, customers to the industry. It is gateway between outside and inside of factory

There are two basic functions
1. Receiving of Materials/Items inside factory
2. Sending of Materials/Items outside factory

1. Receiving of Materials/Items inside factory: The materials from suppliers and subcontractors are received by the logistics department. Once the required documents are received then the material is routed to Stores Department. Important documents are LR Copy, Invoice/Delivery Challan and import related documents. Some times in emergency need cases logistics department also arranges vehicles for receiving Items from the supplier.

2. Sending of Materials/Items outside factory: Sales/Marketing Department provides the despatch plan to the logistic department. Once the Product is manufactured completely then the logistic department will arrange the vehicles, load the items. It will also prepare a document for sending the Product i.e. invoice. In case the Item sending is for subcontractor separate type document is prepared which is called as Delivery Challan.In case of export, related documents are also to be prepared to be sent with the Item.

So logistics department closely works with Stores and Sales department. In other way it is the joining point of receiving and sending points of the industry. Efficient logistic department is key for better relationship with suppliers and customers.

By this we complete the Supply Chain Management (SCM). Further we will have a brief about the progress so far in coming week then we will move ahead.

Keep watching this space

Monday, June 6, 2011

ERP Functions: Supply Chain Management 6

Mansoon had arrived and we all hope this year to get good and proper timed rains leading to good production of agriculture items. Till last week in the journey of Supply Chain Management (SCM) we studied the material movement in Stores. In this blog we shall study how the stores also manages to provide services to the company.

There are mainly two type of services.

1. Service with Material Going out of factory and returning back.
2. Service inside the factory with Material and Man.

The business term for the entity which provides services is called as Subcontractor or simply Contractors.
We shall look into them one by one.

1. Service with Material Going out of factory and returning back: In this the items/materials are provided to the Subcontractor to carry out work. After finishing of the work the Items are returned back to the company. In this also there are two types depending the Item which is sent outside.

i. Products:  Many industries subcontract (Outsource) some of their production processes. In this case the Item is the intermediate stage product which is sent outside and the process is done in the subcontractor factory and returned back after the process. There are certain legal documents required to send outside and get it back related to excise. Since this is continuous and predefined process there will be agreement with Subcontractors mostly yearly contracts and as soon as production department provides the intermediate stage products the stores will send them to the Subcontractor decided by the PPC department.

ii. Materials: One of the typical examples to this type is motor winding, printing cartage filling etc. In this case the items are usually used by various departments, hence it is obvious that stores will not be knowing when to send the Item for service. So the owning department has to request for service for the item to the stores same as Store Requisition. Here also in some of the cases yearly contract will be present between subcontractor and the company. However in special cases purchase requisition is to be raised to the purchase department to create purchase order for the subcontractor. The material is sent to the subcontractor decided mutually by the user department and purchase.

2. Service inside the factory with Material and Man: For some of the big machines or buildings and other establishment the services needed for them is to be done inside factory premises. The procedure of requisition and further contracts are similar to one explained above. The workmen from Subcontractor will come inside the factory and does the work. Same conditions also works for software implementations or training programs etc and getting manpower on contract basis from a Subcontractor. Even though these are taken care by IT and Administration department involvement of stores is also present.

These are the typical functions of Stores department. Further we shall move onto Logistic department in coming week's blog. Keep watching this space..