Erp Definition

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Proposal for the introduction of an ERP System in
Joshua Arkwright & Sons
Classical bicycle manufacturer

Report Submission Data:
11th May 2010

Reported by:

09BSP046 Enterprise Resource Planning Module
Group Assignment

Table of Contents

Section Page 1. Executive Summary
2. Company Situation Analysis
2.1 Company background
2.2 Company situation
2.2.1. Financial Condition
2.2.2. Market Condition
2.2.3. System
2.2.4. Human Recourse
2.3. About SAP R/3
3. Overall project goals
4. Priorities for computerisation
5. Evaluation of commercial feasibility: benefits
6. Project Plan


At a glance
1. Executive summary
This report aims at investigating the possibility of introducing SAP R/3 package to Joshua Arkwright & Sons (JAS), a medium sized, family run manufacturing company. It includes a detailed analysis of the strategic position, operational situation and current challenges of JAS, as well as the potential benefit that may rise from the implementation of SAP R/3 package, and other information relating to the implementing requirements and costs. To clarify the internal and external business environment faced by JAS, this report begins with a comprehensive description of the business situation and challenges, giving a account of production, financial, market, system and human resource management situations, and key issues resulting in the poor performance of JAS will be addressed and analysed. Based on the situation analysis, this report then goes on to clearly indentify the computerised processes required to establish a fully integrated enterprise resources planning system, where the Production Planning and Control (PP), Accounting Information System (AIS), Sales and Operations Planning (S&OP) will be given the highest priorities for integration. This report also measures the commercial and operational feasibility of implementing SAP R/3 package. Main benefits stemming from the prior implementation are summarised, for instance, productivity enhancement, cost reduction and intensive collaboration. Along with an overall implementing plan recommended in the final part, this report makes a critical appraisal of the prospective influences on the business operations and the whole organisation, concerning both potential organisational change and issues caused by the implementation of SAP system, with the support of project management and change management techniques.

2. Company Situation Analysis
2.1 Company background
Since Joshua Arkwright found his small factory to manufacture high quality bicycle in 1977, Joshua Arkwright & Sons (JAS) has become a medium-sized bicycle manufacturer providing fine bicycles in the domestic market. By 2009, the plant in Derby managed by John Arkwright, has employed 250 qualified workers in total and achieved turnover of £10 million in the fiscal year. Compared with the initial period, the product range has remarkably expanded these years. Now 50 kinds of bicycle with 24 colours made by JAS, containing 6 series of road bike and 4 series of mountain bike designed for children, youths and adults with different sizes can be found in the UK market. 2.2 Company situation

2.2.1 Finance
Although there was a sales of £10m in 2009, JAS was experiencing a loss in profit, dramatically dropping from £10m turnover to negative in 2009. Apart from the impact of the recession, the financial difficulties can be attributable to several reasons. Profitability: Relatively high costs may arise from poor inventory management and less-controlled administration fees. Firstly, having too many inventory results in expensive warehouse managing costs to JAS (e.g. building, running costs and supervisory fee). Moreover, lack of adequate material as a result of miscommunication between functions causes some delays of delivery and loss of sales opportunity....
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