Literature Review
Levis Strauss & Co. is a privately owned company that was set up in 1853 in San Francisco. It started with as a manufacturing firm of Blue Jeans and is now a leading garment manufacturing unit with global presence. The company earned total revenue of $4.553 Billion in 2016 and is currently operating in over 100 countries. Enterprise Resource Planning (ERP) is business process management software that provides the organization with the ability to manage the business functions and operations at the back end. The report covers the ERP implementation process and details for Levis.
Literature Review
ERP Systems
Enterprise Resource Planning is a packaged software solution that allows a business organization to integrate and automate its business processes at the back end. The software guarantees the use and involvement of a single database and an integrated application for the entire enterprise.
The concept of ERP came in 1960s and was earlier known as Material Requirements Planning (MRP) and was used in the process of material handling and preparing. The resources involved in the process were looking for a solution to streamline the entire set of operations. The initiation of MRP began with the approach which led to the second stage as closed-loop MRP. The method was used to make sure that the requirements were always considered even in the continually changing environment.
There were changes that were certain to occur in the projects and the solution to handle such random changes was being looked out for. Priority planning refers to the process of handling the requirements and requests on the basis of the due dates and synchronization of the same (Azevedo, Romao & Rebelo, 2012). The third stage of the evolution of ERP began with the rise of Manufacturing Resource Planning (MRP II). It focussed on the features as planning of sales, operations, and finances along with the integration of these elements. It assisted in effective planning for the organization. The results of MRP II were cooperated with the financial plans and reports along with the inventory and shipping details of the enterprise.
All of these processes and stages led to the development of Enterprise Resource Planning (ERP). The integrated package forecasts and balances the demand and supply chain for an enterprise. The package also includes a lot many other business functions and operations for the automation of the business units. These include inventory, logistics, operations, sales, and many others.
Reasons to Choose ERP
There is a lot of competition in the industries in the current times. It is essential that the business enterprises are aware of the strategy that they shall follow to maintain a competitive edge in the market. ERP is one of the mechanisms that allow the business firms to improve their performance and have competitive advantage as well. The integration of the business processes and activities will streamline all of the business functions and will make sure that the desired business output is also achieved (Mukwasi & Seymour, 2012).
The primary reason to choose ERP is to make sure that all the enterprise and business areas are included in a single unit. ERP involves all the business aspects which ensure that the decision making processes are effective and unified. Collaboration and coordination are the two essential requirements for an enterprise to flourish (Yilmaz and Ozcan, 2011). Both of these requirements are included and targeted with the implementation of the ERP system in an organization. The goals of the business organizations can be accomplished as an outcome.
Reasons to Choose ERP
Successful ERP Implementation: Factors to Consider
ERP package can provide the business organizations with a lot many benefits, such as competitive edge in the market, increased profits and revenues, and likewise. However, it may do more harm than good if not implemented correctly. There are a majority of business officials that have stated that ERP packages can harm the business operations because of the associated execution and implementation issues (Mann & Kumar, 2017). Therefore, it is necessary that the management is aware of the factors that shall be considered for successful ERP implementation. Some of the critical factors that are involved are:
- The organizations must have the strategic goals and objectives defined and the ERP goals must strategically align with the organization goals.
- Top management must have the skills and commitment to make the implementation successful.
- Project management methodology for implementing the ERP solution shall be selected on the basis of project and enterprise factors (Johansson, 2012).
- Change management process and plan shall be in place in advance.
- The implementation team must have the pro-active approach and must be involved in the process of implementation.
- The data sources shall be adequately identified and accurate & relevant data sets must be gathered.
- There must be training provided to the resources on the ERP implementation process.
- Performance tracking and measurement must be ensured in the process of implementation.
ERP Development History
The history of ERP goes back to 1940s that included the era of the development of calculating machines. 1960s saw the rise of Material Requirements Planning (MRP) that showed the rise of ERP. The initial solutions that were developed very extremely expensive and required mainframe computing platforms to run. SAP was launched in 1972 by five engineers with an aim to integrate the business processes and solutions. Jack Thompson along with two other researchers found JD Edwards in 1977 and Larry Ellison developed Oracle Corporation around the same time. The Baan Corporation was set up in 1978 to provide consulting services to the business professionals and users.
The company made use of UNIX as the primary operating system and came up with the first software in 1982. In 1984, the company shifted its focus on the manufacturing activities. PeopleSoft came up with Human Resource Management System in the year 1988. Baan, PeopleSoft, and JD Edwards saw rise in the number of customers in late 1980s and 1990s. With the rise of the Internet, the ERP packages started to be developed to enable the web usage in early 2000. Service Oriented Architecture (SOA) was coupled with the ERP systems in 2004 followed by the inclusion of cloud-based ERPs (Babu & Bezawada, 2012).
Research Problems
There are a lot many companies that make use of ERP systems and solutions due to the advantages that are provided by the system. However, there are several companies that do not adapt to the technology because of the loopholes and drawbacks that are associated with the same. ERP system is an integration of technology and management that combines the two and makes use of automated decision support systems and tools for easier decision making processes. It is new-age integrated software package that includes a lot many business functions and operations in a single unit.
The use of ERP has allowed the traditional enterprises to move out of the box and has provided the modern enterprises with the ability to handle the market demands and meet the customer expectations. However, the start-up units and beginners may face certain issues of flexibility and management of the changes during the implementation of the ERP package. There are several changes that come up with the implementation and inclusion of an ERP package in a business enterprise. These changes are required to be handled carefully and the inability to do so may result in the incorrect implementation. There may also be lack of reality management that may be witnessed and it may act as an issue in the implementation process.
Successful ERP Implementation: Factors to Consider
There are also issues of migration of the legacy data sets and services that may also be a problem in some cases. There may be issues of information security threats and attacks that may come up. Also, adherence to the basic flow of information will be necessary to be maintained (Pavel & Evelyn, 2017). Accuracy of the data sets along with the ability to make sure that the relevant data sources are used may also come up as an execution and implementation issue for the business firms.
Description of the Business Process
The following diagram shows the business process flow of Levis Company. The company begins its process by contacting the buyer and obtains the orders as a result. Costing tasks and activities are performed followed by the negotiations with the supplier. Inventory checks are made to ascertain that the available material is available. The order for the fabric required to fulfil the assignments is made and the fabric is received in bulk from the supplier. There are samples shared with the production unit and the preparatory work begins as a result. The quality checks, verification and validation are carried out followed by assembly. The packaging of the units is done followed by the shipment (Kharakoz, 2015).
Contacting the buyer: The company would begin by contacting the buyer for the order being placed on their portal. This order can be of 1 quantity or can be of multiple quantities depending upon the requirement. Also, the order can be placed in one category for 1 order or can even be placed in multiple categories or each one or more orders within that category. The buyer places the order accordingly and receives a confirmation regarding the same that the order has been placed successfully.
Obtaining order: As soon as the buyer has placed the order. As mentioned previously, the order can be either a single quantity or even multiple quantities. Moreover, the order can be across several categories as well. Once the order is received by the company, the order details are formatted accordingly so further processes can be done easily.
Costing: The next process in this line is about the costing. Costing involves preparation and understanding of costing requirements for the product. Since the order has already been obtained and the order details have already been formatted, it becomes simple to do order costing. The costing process involves preparation of the costing chart, performing calculations and then coming to a final cost summary that appropriate lays down all of the costing requirements of the order.
Negotiations with the supplier: The next process in this line of business process involves negotiating with the supplier. Negotiations with the supplier are nothing but coming to terms about the pricing and availability of the materials needed to prepare the order. Negotiations may involve negotiating on pricing, delivery method, date of shipping and other delivery terms. Once both the party has come to an agreement, the negotiations are concluded and the deal is sealed.
Send Sample to Production Unit: The next process in line immediately after negotiating process is about receiving samples from the supplier for the order that has to be made. Once the negotiation deal is sealed the supplier sends the sample to the company. The company then proceeds to send this sample to the production unit. The sample is then inspected for it’s quality and appropriateness. If everything goes well, the production unit department will provide a green signal for the supplier wherein the order can be proceeded to the next step.
ERP Development History
Receiving order of Fabric in Bulk: As soon as the production department green signals the sample batch, the supplier will begin preparation of the material in bulk. The fabric or the material is then shipped at the end of the supplier to the company. The order is sent according to the corresponding details as mentioned in the original order summary.
Checking for inventory: Once the order has been received it has to be inspected and verified for various factors. To begin with, it needs to be verified for quality, then also the quantity. Furthermore, the order needs to be verified in terms of design, patterns, and colours among other things. This has to match from the order placed earlier. Once everything is correct and in order, the process will continue to the next step.
Preparatory: The next line in this process is the preparatory stage. In this stage, the order is prepared and segregated accordingly for future use. This allows for a faster processing in the future processes in the line. Once this has been done, it can continue to the next step.
Quality check: The quality check involves quality verification and validation of the received order. The order needs to be of good quality otherwise it can be rejected by the buyer. A series of inspection, verification and validation tasks are performed in this process. It is only when assured that the quality of the order is appropriate, then the order continues to the next step.
Assembly: Assembly involves the bulk of the creation and preparation of the order as needed by the buyer. It is the largest process in the line and would take a long time as compared to other processes in the line. The order enters assembly stage only if the material has been quality checked and prepared for. Once the assembly has been done, it can continue for the next step.
Packaging: The packaging is the second to last step in this process. It is followed right after assembly. The packaging involves nothing but packing the order assembled in appropriate materials. It may have several sub-processes as packing the products may require multi-level of groupings of the order, first in terms of category and then in terms of delivery terms. Only after packaging, the process shall continue towards the last step.
Shipment: Once the order has been packaged processed it can continue to the last step. This step is last in the line and it involves shipping of the order prepared for the customer. The order is shipped based on the shipping terms and details as specified by the buyer. For this, the original order summary has to be referred to. The shipment process will conclude this entire business process and there shall be no more processes post this.
ERP Framework
The framework will allow the designing of a separate systematic plan to allow Levis to effectively implement the ERP package. There will be different departments that will be engaged in the ERP plan and package. The integration of the departments and processes with each other will ensure that the implementation activities are streamlined (Orougi, 2015). The departments that will be involved in the ERP framework will be finance department, inventory management, sales, manufacturing, and quality management.
Research Problems
Method of Data Collection
It will be necessary to ensure that the data collection methods and processes are effective to make the implementation process successful. There are different methods that may be used for collecting the data sets. These methods can be classified as primary and secondary methods of data collection. The primary sources will be the ones in which the data sets will be directly collected from the source. The primary methods will include the conduction of the techniques, such as interviews, brainstorming sessions, and group discussions with the employees of Levis Company.
There may also be domain analysis and observation carried out to collect the data sets. There are also several journals and research articles that have been published and may be used as the secondary sources of data. These will be the secondary sources as the data sets will be gathered indirectly from these sources. There are also several case studies that have been published on the implementation of ERP. There may be cases wherein the implementation may have been successful while it may not have been successful in certain cases. The reference to the case studies may also be done as method of data collection.
ERP system
Navigation screen
The system has 5 main modules – Human Resource Module, Finance Module, Inventory Module, Manufacturing Module and Sales Module.
Human resource module – This modules has employee module, vacancy module, supplier module and customer module. In employee module, details of existing employees can be checked and a new employee can be added. In vacancy module, new job vacancy can be created and details of each job vacancy can be checked. In supplier module, new supplier can be inserted in the system for new or new components. Similarly, new customers can be added using customer module.
In this module, user can create/delete a supplier. This module also has 6 buttons to perform different functions: Add new supplier, delete a supplier, traverse through existing records through – Go to first, previous, next and last records. It also shows the components supplied by respective supplier.
Customer form
In this page, user can register details of new customer which included basic information such as company, full name, email ID, phone numbers and fax. There are buttons for adding and deleting customers. Also for traversing the customer’s records, next, previous, last and first buttons are present.
Finance module
This module allows users to conduct analysis of income and payable account summary.
Amount payables
It includes details of orders placed by the customers with the amount paid by them.
Amount payable
It shows the income account module which includes detailed information about the salary and employees i.e. employee number, employee name, employee email, bonus and salary.
Sales module
Customer Orders
This module provides list of all the orders placed by a single customer with details like customer name, order number, date on which order is placed, status of the order, date of shipment and payment date.
Conclusion
Levis Strauss & Co is a leading garment manufacturing company and the implementation of ERP packages in the company will make sure that the company receives the competitive edge in the market and also earns better profits and revenues. The implementation of ERP solution in the organization shall be done with a phased approach to ensure that the successful results are achieved.
References
Azevedo, P., Romao, M., & Rebelo, E. (2012). Advantages, Limitations and Solutions in the Use of ERP Systems (Enterprise Resource Planning) – A Case Study in the Hospitality Industry. Procedia Technology, 5, 264-272. doi: 10.1016/j.protcy.2012.09.029
Babu, K., & Bezawada, M. (2012). Enterprise Resource Planning. SSRN Electronic Journal. doi: 10.2139/ssrn.2142346
Coles, S., & Rowley, J. (1996). Access 2: basic skills (1st ed., pp. 12-14). London: Letts Educational Ltd.
Haag, S., & Perry, J. (2002). MS Access 2002 (2nd ed., pp. 23-26). London: McGraw-Hill.
Johansson, B. (2012). Exploring how open source ERP systems development impact ERP systems diffusion. International Journal Of Business And Systems Research, 6(4), 361. doi: 10.1504/ijbsr.2012.049468
Kharakoz, Y. (2015). Features of application of erp-systems in management accounting. Auditor, 1(3), 71-76. doi: 10.12737/12769
Mann, H., & Kumar, V. (2017). Providing custom enterprise resource planning solutions: benefits and challenges. International Journal Of Information Technology And Management, 16(2), 147. doi: 10.1504/ijitm.2017.083865
Mukwasi, C., & Seymour, L. (2012). Enterprise Resource Planning Business Case Considerations: A Review for Small and Medium-Sized Enterprises. Journal Of Innovation Management In Small And Medium Enterprise, 1-15. doi: 10.5171/2012.752328
Orougi, S. (2015). Recent advances in enterprise resource planning. Accounting, 37-42. doi: 10.5267/j.ac.2015.11.004
Pavel, J., & Evelyn, T. (2017). An Illustrative Case Study of the Integration of Enterprise Resource Planning System. Journal Of Enterprise Resource Planning Studies, 1-9. doi: 10.5171/2017.176215
Siegel, C. (1999). Teach yourself MS Access 2000 (1st ed., pp. 12-14). Foster City, Calif.: IDG.
Yilmaz, Y., & Ozcan, G. (2011). Implementing ERP-systems with accelerated ERP more efficient and quickly – a best practice. Journal Of Systems Integration, 2, 28-37. doi: 10.20470/jsi.v2i3.97
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