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Lesson#44
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ERP and E-commerce
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ERP & E-commerce
Organizations do accept that when we talk of E-commerce in real
terms, not just having a
website for online information but actually to be able to
execute transactions, there has to be an
integrated software up and running. Especially when Consumerism
is the prime focus, being
integrated and online will help in better implementation of CRM.
Text in the clips
This is known as the business to business B2B and business to
consumer B2C.They have
become buzz words but they are very real. What most ERP’s are
heading towards are internet
portals. The front end becomes the internet portal and the other
businesses and customers can
come in through that.
Gist of the clips
Now consumers and business use the gateway of internet to walk
into the business and make
transactions. So Websites with online buying options have become
the virtual selling locations
for the business.
44.1 ERP & CRM
Customer has become of critical importance in the modern day
business. Early on,
organizations used to focus more on how much has been sold what
has been produced. But
now the focus is quite different. Focus has been placed on the
requirements of the customer,
providing quality service and quickness of response to customer
queries. Analysis of the
customer data from their personal habits to spending one’s have
become a crucial element of
doing a successful business. ERP has this unique potential to
improve the quality of customer
handling.
Text in the clips
Our larger customers who drive most of our business, they
conduct budgeting activity for most
of their products, for which they need semi finished or raw
materials from us. These
requirements are incorporated in our system even before a
purchase order is received from our
customer. So we know well ahead of time what the requirements of
our customer will be on a
periodic basis. This gives us time to plan what kinds of raw
materials and production capacities
we would require in a given period keeping other orders in view.
This makes us well equipped in
our supply chain, the materials to be imported, the delivery
times being built into the system for
reordering.
Text in the clips
Thus inventory management becomes more efficient and production
bottlenecks are preempted.
But as coming back to the customer and starting from the sales
forecast, when we
move on the purchase order which is first converted by the
system into the sales order. As soon
as the process starts the production planning department can
have a look at it and plan a
production order based on that that information is available to
the sales people as well. So
whatever process that job has gone through can be accessed by
the sales person, whether the
stock is available or not.
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Text in the clips
We all want to know what is receivable from all the customers.
Initially we had a system of
having receivables report and analysis of all the customers
every ten days. Now with the ERP
system the moment you make any entry in the ERP system, every
thing instantaneously gets
updated. Hence sales officer has relevant information available
at any point of time. The all
other information about the purchases, supply chain, inventory
levels, production process,
delivery times, status of dispatch, etc is available up to date
as soon as the data is input. Hence
our current lag time is approximately 3 hours which is much
better than the earlier of four
weeks.
Gist of above clips
Customer is of supreme importance. Every thing for a business
and starts, revolves around and
ends at the customer. The business processes, the production,
the inventory, the after sales
service all should be built and monitored in accordance with the
requirements of the customer.
In the modern day world the ERP system helps us to achieve this
object the most optimizing
way and eliminates time lags to a substantial level.
44.2 Change management
Change management means to plan, initiate, realize, control, and
finally stabilize change
processes on both, corporate and personal level. Implementation
of ERP or any other
integration software needs commitment and proper management.
Managing change in
implementation projects has become a serious concern for the
management.
Types of Change
• Organizational Development: This
is the more gradual and evolutionary approach to
change. It bases on the assumption that it is possible to align
corporate objectives with the
individual employees’ objectives. In practice, however, this
will rarely be possible.
• Reengineering: This is known as
corporate transformation or business transformation. It
is the more radical form of change management, since it
challenges all elements of
processes or structures that have evolved over time.
Gist of the clips
Recruitment of specialized personnel is a very important
element. Skills of people should
complement in a way to remove deficiencies of each other and to
become a fruitful
combination
Is a change inevitable?
A further classification of change can be seen as internal to
organization, and external to
organization. Since implementation of ERP is an organization
wide activity both in terms of
processes and skill levels required, it can be seen as an
Internal Change. Of course external
development like market demands, up-gradation of technology and
other similar matters also
necessitates change.
Change has to be planned, monitored and managed before we can
get successful and fruitful
results. Where management is deciding to bring in change, it has
to ask itself certain questions
and consider issues emerging from the change.
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Factor to consider:
Following factors should be considered in order for change to be
successful:
• Have we got the right leadership
and "buy-in" support for the proposed change?
• Is the proposed change aligned
with the strategic plan?
• What current/future
issues/concerns will performance measurement / management
address?
• What are the implications and
barriers to successful implementation?
• What are the inherent risks/costs
of not embracing the change?
• Who should we target as the key
drivers for the "new way we are going to do things round
here?"
• What processes will we need to
change/introduce?
• How will success be measured and
what value will success have for the business and
individual?
• How do we change people's
behavior?
• Who will feel threatened by the
change?
44.3 Phases of Change Management
Change management should not be seen as a one off event. Rather
it is a process which is
spread over a period of time and divided into various phases.
Various management models
define and segregate change management into various set of
phases. However the phases which
we will discuss below shall give a general understanding of what
happens in a change
management process. The terms and phases may vary according to
management models and
various studies conducted.
• Shock and Surprise –
Confrontation with unexpected situation mostly
1. by accident e.g. loss in a business unit or
2. planned e.g. workshops for personal development
• Denial & Refusal – people express
their conviction that change is not necessary
• Rational Understanding – People
realize tha need for change and find short term solutions
• Emotional Acceptance – if
management succeeds in creating willingness for change,
people change their beliefs and behaviour, otherwise change
process stops or slows down.
• Exercising & Learning – People
start to try new behaviours and processes, as a result will
experience success and failures. Change managers should create
easier tasks at start to
create early wins
• Realization – the knowledge
gained in previous phase has feed-back effect.
• Integration – LAST PHASE: total
link-up is created between newly acquired patterns of
thinking and acting. New behaviors become routine.
Another view of phases
Change management phases can be classified in an alternative
way:
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• Unfreezing -- Preparing a
situation for change by disconfirming existing attitudes and
behaviors.
• Changing -- Taking action to
modify a situation by altering the targets of change.
• Refreezing -- Maintaining and
eventually institutionalizing the change.
Why people resist change?
There are various reasons why people feel afraid of the change.
The change may act as a favorable
agent for many at the organization. However it is merely the
fear of the unknown that in most
cases creates hurdle.
• Fear of the unknown—mostly the
reaction is “God knows what’s going to happen!”.
• Lack of good information –
involvement from the lower levels is not taken by the
management and they are not fully aware of the future
happenings.
• Fear for loss of security –
Mostly changes lead to down sizing which is termed mostly by
organizations as right sizing.
• No reason to change – no reason
sounds convincing to people to accept a change.
• Fear for the loss of power –
Mostly changes make organizational structures more
horizontal, flexible resulting into delegation of authority and
handing over powers to
lower levels.
• Lack of resources
• Bad timing – Employees sometimes
are approached with a proposal of change when they
are already feeling.
• Habit – people with closed mind
are not innovative to learn new things and this may
prove to be a major hurdle in bringing in change.
What can be done about resistance to change?
• Education and communication –
Changes bring new things for learning. The employees
should be informed of these and given an opportunity to learn to
enhance awareness.
• Participation and involvement –
in every step of bringing change, those affected should be
involved and their concerns and views should be given value.
• Facilitation and support – As
minds start getting adjusted, those affected should be
facilitated and given time to properly assimilate the newly
emerging aspects.
• Negotiation and agreement – in
case where resistance is high, terms of agreement may be
settled with dialogue.
• Manipulation and cooptation –
Twisting and distorting facts for the sake of seeking
acceptance is becoming a normal practice. If corporate
management threatens to close
down a particular manufacturing plant if that plant's employees
fail to accept an acrossthe-
board pay cut, and if the threat is actually untrue, management
is using manipulation.
• Explicit and implicit coercion –
As a last resort, the application of direct threats or force
upon the resisters. Examples of coercion are threats of
transfer, loss of promotions,
negative performance evaluations, and a poor letter of
recommendation.
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44.4 Change agents
Successful changes and their management are backed by presence
of a change agent. A person or a
team who leads a change project or business-wide initiative by
defining, researching, planning,
building business support and carefully selecting volunteers to
be part of a change team. Change
Agents must have the conviction to state the facts based on
data, even if the consequences are
associated with unpleasantness. Change Agent consciously
challenges the status quo, is
comfortable with leading change initiatives with uncertain
outcomes and systematically considers
new and better ways of doing things. ERP is such a large scale
project that sponsorship from the
senior management is an immediate must. Unless the project
itself and the consequential change is
sponsored from the senior level, the chances of success are
quite bleak.
44.5 ERP– Ownership and sponsor ship:
Implementation need the right mix of people – both from the
business and from the IT side.
Those who think that it’s a pure computerization of organization
which can be taken solely by the
IT people are wrong. Nor is it a project to be handled solely by
the business people. Hence a
balanced mixture of people from IT and business background is
required for a successful
implementation. |
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