Proposal To Implement Erp

Project Proposal Sheet

1.0 Idea

HANA KIMI CO. would like to adopt an online Supply Chain Management System (SCM) whereby the customers may buy company's products online via company's website and able to track the status of the order including the availability of the stocks by integrating the Online Sales System with the company's Inventory, Manufacturing and Production System.

2.0 Type of Project

√ Revenue Generating

√ Cost Savings

3.0 Type of System

Horizontal:

The implementation of the online SCM will involve the operational level only

Vertical:

The following functions will be integrated:

 Manufacturing and Production System

 Sales and Marketing System

 Inventory System

4.0 Business Imperative

To perfectly match the supply side activities of procurement, production planning, distribution planning, production allocation, warehouse planning, inventory planning and so forth with the demand side activities of incoming orders and forecasts so that all demands are met with the least cost and most convenience, and as the initial step for the implementation of Enterprise Resource System (ERP).

5.0 Benefits

The online SCM system and ERP support various business strategies for competitive advantage over other companies, among others: Support business strategy, and provide E-Business benefits.

5.1 Support Business Strategy

At the business level, this system helps the company to:

* Reduce operating costs

The system attempts to integrate business processes across departments onto a single enterprise-wide information system. The major benefits are improved coordination across functional departments and increased efficiencies of doing business. The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.

* Differentiate products and services

The company may stand different from other companies which do not offer the same products and services.

* Serve new markets

By going online, the company would attract new market segments who are the frequent users of the internet or those who prefer online shopping.

* Lock in customers and suppliers

By using efficient customer response and supply chain application.

At the firm level, the system can be used to:

* Achieve new efficiencies.

* Enhance services by tying together the operations of separate business units.

* Promote sharing of knowledge across business units.

At the industry level, this system will:

* Promote competitive advantage by facilitating cooperation with other firms.

* Creating avenue for sharing information, exchanging transactions or coordinating activities.

6.0 Justifications

Sustainable Competitive Advantage through e-Commerce can be supported by the Porter's Five Forces Analysis and Value Chain Analysis.

6.1 Porter's Five Forces Analysis

As described by Porter's Competitive Forces Model, there are five important forces that determine competitive power in a situation. These are:

Supplier Power

Here, we assess how easy it is for suppliers to affect prices or in other words, to drive up the price. The power over prices normally driven by the number of suppliers that we have, the quality and uniqueness level of their products or services, their strength and control over the business and the cost of switching from one to another. The lesser the supplier numbers we have means the more suppliers' help we need, therefore the more powerful they will be over the business. Hence, it is rather important to keep up suitable suppliers and to maintain a good relationship with each one of them.

Buyer Power

As contradict to suppliers, here is where we assess how easy it is for our buyers to drive down the prices. Again, this is driven by the number of buyers, the importance of each buyer to the business, the cost to them for switching from our products and services to those of someone else, and so on so forth. If we are dealing with few yet powerful buyers, they are often able to dictate terms and consecutively to have bigger impact on the business. Under this condition, there are the one who sets the price.

To uphold a good relationship with them is the answer to minimise the risk. Thus, offering them the new integrated online system which will ease and simplify their deal, will be very advantageous.

Competitive Rivalry

What is important here is the number and capability of the competitors - if there are many competitors, and they offer equally attractive products and services, then the business is most likely to have a better power in the situation. If suppliers and buyers don't get a good deal from us, they' will walk off elsewhere. Alternatively, if no-one else can do what we do, then we can often have tremendous strength.

We might not be able to totally differentiate the products but we can surely offer better services to them. One of the ways is to implement the interactive online SCM that integrate the Sales System, the Stock Control System as well as the Production System. In this case, we are able to cater both suppliers and customers better and faster.