Friday, November 17, 2017

Why should Use ERP in Textile and Apparel Industry

Main topic of this article is that why we use ERP in textile and garment manufacturing industries? Really it is common question for those who are not concern about ERP. But before going to details we should know about ERP. Such as, definition of erp, its revaluation, how it works I mean working procedure and then last benefits of erp in textile and garment industry.

What is ERP?
Abbreviation of ERP is Enterprise Resource Planning. ERP is a software application that encompasses all the data related to a company and aids the company in providing information at the right time. It is a method of effective planning of all the resources in an organization. ERP covers the techniques and concepts employed for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of an enterprise. ERP software is designed to model and automate many of the basic processes of a company, from finance to the production floor.

ERP gathers information of all the activities in a company. Like these:
  1. ERP is an integrated application that has access to and stores information on all the departments and business processes in a company
  2. ERP is a customizable application software
  3. ERP encompasses many modules, and these modules are specific and applicable to various departments and capture their activities
  4. ERP captures all the transactions that take place in a company
  5. ERP helps optimize the business
  6. ERP can be used in real time for taking business decisions
  7. ERP helps in planning and controlling the business
  8. ERP supports all the activities and business processes of a company
  9. ERP contains a common database which captures and stores all the data
Based on the above details, it can be seen that ERP is a software application that helps in running a business by capturing, storing, and providing information to all the stakeholders of the company. In other words, it supports the company run its business.

A common misconception that many industries have about ERP is that it will manage the business on its own. However, it is a totally wrong understanding of ERP and its functional capabilities; for example, there is a quality analysis report of a product obtained from a machine that shows deviations from the quality standards and specifications set for the product and the report makes it clear that deviations are a result of the error caused by the machine operator. In such cases, some of the managers expect ERP to take action against the machinist for not performing with the expected accuracy. However, there is nothing that ERP can do in this case. It is only a supporting tool for the manager. It will give information to the manager that a mistake has occurred and corrective action has to be taken by the concerned manager. It is imperative to state here that ERP is not a robot and it only aids the business activities of a company. It will perform the functions based on how it is programmed, such as highlighting deviations, running analysis reports, and giving reasons for mistakes/deviations. Thus, ERP is actually an information and analysis tool rather than a control tool. The control always remains with the manager.



You can also see: Application of ERP Software in Textile and Apparel Manufacturing Company
 
The textile and apparel industry has changed continuously in the last few years. It looks at carrying out their business in systematic way. For this reason ERP can be used and it plays an important role. As we know ERP stands for enterprise resource planning. Therefore the major goal is plan out the resources used and keeping a proper data in software.

So we can define ERP, it is an information system that integrates all facets of business like R&D, sales and marketing, manufacturing, logistics, human resources, logistics, financials, and so on.

Evolution of ERP:
Even though the concept of ERP dates back to 1960s, the term ERP was coined by Gartner in 1990. In pre-ERP times, textile and apparel industry, HR team had to use a different software application. So they having different individual software applications catering only to specific departments and such applications not necessarily operating simultaneously did make it difficult for the management to obtain information needed on time to help with decision-making. ERP has replaced all these legacy systems by absorbing all of them into its scope, thereby aiding the business immensely.

The evolution of ERP has been a tremendous breakthrough in the integration of information technology with all other allied disciplines. The various systems that were later integrated with the advent of ERP include the following: management information system (MIS), integrated information system (IIS), executive information system (EIS), corporate information system (CIS), enterprise-wide system (EWS), material requirement planning (MRP), manufacturing resource planning (MRP II), decision support systems (DSS), capacity requirement planning (CRP), distribution requirement planning (DRP), and transaction support systems (TSS). Now ERP software is also used my smart phone.

In their individual capacity, all the above systems had some shortcomings; for example, they did not cater to all kinds of industries, there was no integration between the departments, and there were separate systems for separate functions. All these demerits were overcome by the then-new concept of ERP.

How ERP works?
In the ERP system, all the activities of the company are entered, and, based on the details fed, various reports are obtained for analysis.

ERP system consists of various modules that are nothing but departments such as sales, production, inventory, and procurement. All the activities of a particular department are entered in the respective modules, and based on the data entered, various information, research, and analytical reports can be obtained.

Materials requirements planning inputs and outputs
Fig: Materials requirements planning inputs and outputs
For example, once a quotation is approved by a customer, customer sends a purchase order, and based on it, a sales order is made and sent to the customer confirming that the order has been received. The sales order is created using ERP. All the required data for making sales order are entered in the ERP system by the sales or marketing person. After entering all the relevant data such as quantity, quality, cost, delivery details, and customer details, the sales order is submitted, and then a copy of it can be printed out for the concerned manager’s signature and approval. The benefits of creating a sales order on ERP are immense. The sales order created can be viewed on-line by the manager, senior management, and also the customer if required. All the other departments of the company will get a message through the ERP system that a sales order has been created. Based on the delivery date, the planning team will start creating the production order and purchase team will initiate purchase of required items and the process continues. So the information is known to everyone concerned, that an order has been received, and subsequent processes are carried out without any delay. Basically ERP is an information-providing tool that helps in decision making for the managers.

Needs and benefits of ERP software:
If you are looking forward to reducing your costs to a great extent, an apparel ERP software can help you the most. Apparel specific ERP software will help you cut costs significantly through online quality monitoring. Implementation of the right ERP software can also help you manage cut major costs in processing.

The need for ERP is given below. The list provided is not exhaustive since ERP is required for so many reasons:
  • To integrate all the activities of the company: As discussed earlier, having islands of software in each department will lead to delayed information sharing among all stakeholders. So, having an integrated system eliminates all delays and information can be obtained any time by all concerned.
  • To get real-time information: Integrating machine output with ERP will lead to getting the production details in real time as it happens rather than waiting for a day to know yesterday’s production. It helps to take decisions in real time. Real-time corrections can be made rather than doing damage control after things go wrong.
  • To increase customer satisfaction: Accurate response, quick response, efficient consumer responses are few of the customer service techniques. All these techniques can be incorporated in ERP to provide better customer service. On-time delivery with best quality can be achieved using ERP and, thus, increasing customer satisfaction.
  • To increase visibility in the organization by enabling stakeholders’ to access the required details immediately: The visibility in the organization will increase, thereby helping faster dissemination of information and detailed reports of various analysis to all concerned. A person in dispatch department will know when a particular order is to be shipped and what is the status of that order in production. He would know immediately if there is any delay and need not wait till the moment dispatch becomes due and can know beforehand that the material is not ready for dispatch.
  • To approve or reject any company activity online with immediate action: A purchase order can be approved in real time by the owner sitting in any part of the world and need not wait for physical presence for each and every activity of the company.
  • To have better control over organizational resources, including men and material: Maintaining control over men and material is difficult; ERP would be very much required because it will help in managing men and material. Detailed analysis reports focusing on workers’ efficiency, their output, and comparative analysis between workers’ efficiency will give management a better chance to exercise control over workers. Sufficient data will be available to question the workforce if there is an issue. Similarly material availability can be checked immediately using ERP inventory module and also purchase detail can be tracked instantly, which will help with avoiding delays in production due to material shortage.
  • To increase productivity and achieve higher efficiency levels: It is essential for increasing productivity and efficiency. Strict monitoring using ERP will lead to increased efficiency and thus increased productivity. Employee monitoring can be done periodically based on the reports obtained from ERP. A detailed analysis done on reports obtained will help a company identify the reasons for low productivity and efficiency. Thus, corrective actions can be taken immediately to increase productivity and efficiency.
  • To know the deviations in quality of a product: If there is a chance of products not meeting standards, then ERP would be very much needed. In ERP quality module, standards can be set for each and every test that is carried out. So with automatic data transfer, once a test is carried out, the results are checked by the ERP system to see whether there is any deviation from the standards set. If there is any deviation then the same can be highlighted and conveyed via email or message to the concerned official for taking immediate action, thereby addressing and arresting quality deviations.
  • To avoid or reduce wastage in processes: If processes involve lot of wastage, then by using ERP, various ways and means can be developed to identify and remove chinks in the process that lead to wastage. Reports can be generated that show details of waste generated every day, including in relation to machine, employee, and material, to enable corrective and/or preventive action.
  • To follow best-practice procedures: Many companies might not follow the best practices in the industry and most often because workers resist change and are wary of new technologies. ERP vendors ensure that processes followed using ERP are the best in the industry. So those best practices will be taught to industries during ERP implementation and will lead to industries following state-of-the-art business procedures and processes.
  • To manage and control costs: Effective finance controlling can be done using ERP by setting limits of expenditure per person and by assigning appropriate approval authorities. It helps in calculating depreciation and financial ratios accurately, thereby enabling good control over expenditure. It would be very effective when company operates in multiple locations.
  • To maintain accurate records: Manual errors and errors due to incorrect bookkeeping can be avoided as data once entered will be securely stored and any changes can be made only by authorized personnel, which will enhance accuracy of records created.
  • To forecast demand proactively: By using demand-forecasting techniques, ERP system can forecast demand correctly. There will be no need for a separate demand-forecasting tool or software if ERP with demand-forecasting functionality is implemented.
  • To get detailed analysis reports: If a company requires detailed analysis reports on its functioning, then ERP is the need of the hour for them. It provides a comprehensive package of various reports of analysis, including analysis reports for overall business growth, payroll, operations, finance, and so on. All this will aid in increasing the effectiveness in the overall functionality and efficiency of the company.
  • To get reduced lead times: As each and every stage of work in progress (WIP) is monitored, it makes the job easy for all the concerned personnel and reduces the lead times by making men, material, and machine readily available whenever they are needed.
  • To reduce labor work: By use of ERP systems, labor work is considerably reduced as there is no need for reporting separately and keeping records in files, ledgers, stock books, and so on, as all the data are fed into the system and are available when needed. Even the number of monitoring staff can be reduced as ERP system will automatically report any deviations to those concerned. 
  • To optimize production schedules: Optimized planning is possible by using ERP, which leads to optimized production schedules, and delays are avoided. Comprehensive planners are available to plan machine allocation in real time.
  • To meet delivery deadlines: With better monitoring and information availability, meeting delivery deadlines becomes easier when ERP is used and customer satisfaction can be sustained.
Overall, it can be concluded that ERP can be useful for organization of any size, ranging from large-scale companies to small and medium enterprises to make their business grow more visibly and increase profits. Based on the needs and benefits explained here, deducing the benefits of using ERP is very easy. Some benefits of using ERP are listed as follows; this list is not exhaustive, as ERP development work is an on-going activity and time and again new features are added to ERP systems.
  1. Increased organizational transparency and responsibility
  2. Accurate and faster access to data for timely decisions
  3. Optimized asset/resource utilization
  4. Improved customer response
  5. Facilitating strategic planning
  6. Production reports can be obtained immediately
  7. Uniform reporting according to global standards
  8. Increased operational efficiency made possible because of the availability of accurate data
  9. Real-time communication
  10. Cost of quality can be measured
  11. Performance analysis
  12. Identification of production costs
  13. “Detailed analytics report can be obtained using ERP
  14. Calculating WIP values are quick and easy
  15. Quality of a product can be checked immediately if entered in ERP system
  16. Maintaining stock is easy”
  17. Transferring stock across multiple units becomes easier
  18. Preparing quotations and sales orders is easy particularly for repeat orders
  19. Easy management of workflow in all processes
  20. Approval of any activity can be obtained quickly and easily
  21. Employee efficiency and machine utilization can be calculated easily
  22. Payroll analytics, compensation analytics, and performance based incentive systems can all be incorporated using analysis reports obtained from ERP
  23. Preparation of financial reports at the year end is easier
As indicated previously, benefits to using ERP are manifold and can grow further when users experience good results with using ERP. Actually ERP is a revolutionary concept in the contemporary world. All the information of an enterprise under one roof for assisting planning & implementing decisions having complete visibility-that is the main object of ERP .

References:
  1. http://textilelearner.blogspot.com/2013/03/erp-enterprise-resource-planning.html
  2. http://www.fibre2fashion.com
  3. http://www.instylesoft.com
  4. ERP for Textiles and Apparel Industry by R. Surjit, R. Rathinamoorthy and K. J. Vishnu Vardhini
  5. Garment Manufacturing Technology, Edited by Rajkishore Nayak and Rajiv Padhye