(ERP) Implementation in Pakistan

Enterprise Resource Planning (ERP) Implementation in Pakistan: A Case Study on Leading Textile Industry Samreen Hassan1, Kanwal Jahan2, Muhammad Asad Ghafoor3 1 A supply chain enthusiast working as Supply chain coordinator at a leading Telecommunication Multinational Company 2 A Procurement Specialist working at a leading Textile company 3 A supply chain specialist working at a leading Textile firm

Key Words Enterprise Resource Planning (ERP) Challenges. Success Factors Implementation. Pakistan Textile industry

Abstract

ERP systems are the backbone of worldwide supply chain, while their success what's more, failure determines the fate of the business. With enormous competition and ever increasing challenges in boundless exchanging and customization. There are many researches on the implementation success factors and challenges in a wide range of associations all through the world however limited literature can be found in research specific to Pakistan especially in textile sector. This Study points out the basic factors that drive an ERP failure in Pakistani textile companies and furthermore discusses the entanglements to be avoided in order to prevent this disaster. Through this investigation, the basic factors for success and the primary challenges for implementation of ERP in Pakistani Textile Industry have been recognized.

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1. Introduction ERP is an extension of the manufacturing resource-planning (MRP) software, which automates the process of manufacturing line by supplying with required materials to meet incoming orders. ERP is a packaged software of applications including finance, manufacturing/Processing, human resources, supply chain and other modules, that together automate the back-office business functions of an enterprise/Company. Leading ERP vendors include SAP, Oracle, People soft and JD Edwards etc. Enterprise Resource Planning refers to the integration and extension of a company’s operational IT systems, with the goals of making information flow in and out of a company more immediate and dynamic i.e. in real time; increasing the shelf life of useful information; eliminating errors and automating all processes in return making information system components more flexible. Departmental boundaries generally become closer, accessibility of agreed data is increased for partner companies, vendors and customers, and the company's ability to respond to the demands and market changes is generally enhanced. That makes Enterprise Resource Planning (ERP) a Software must for running a business. Enterprise Resource Planning is the latest information technology has lent high-end solution to business application. The ERP solutions streamlines and integrates operation processes and information flows in the whole enterprise to link the resources of an organization the four M’s i.e. men, material, money and machine through real time information. In the start implementation of an ERP package was only possible for large MultiNational Companies and Infrastructure Companies due to high cost involved. Today many companies in Pakistan have gone in for implementation of ERP and in the near future it is expected that 60% of the companies will be going for implementing one or the other ERP packages since this is becoming a must for gaining competitive advantage.

Implementation of ERP surely requires changes in existing business processes. Poor understanding of current and future process changes before starting the implementation is a main reason for implementation failure. The difficulties could be anywhere i.e. Related to the system, business process, management, infrastructure, training, change resistance or lack of motivation.

1.1. Definition ERP (Enterprise resource planning) can be defined as a packaged software solution that addresses the business needs by looking at the process view of the organization, to meet the organizations goals and objectives by tightly integrating all functions of the .ERP facilitates by integrating company-wide and also across the companies information systems.

2. Problem Definition The main focus of this study is to discover the main challenges faced by leading Pakistani textile based industries during ERP implementation. Critical success factors were and challenges pointed as those specific areas makes a company’s implementation successful. There are many Individual research on several industries but a comprehensive model for the Pakistani textile environment is required as limited research has been pursued in this regard. The success factors and challenges will help any industry to frame out their condition and circumstances suitability regarding implementation of ERP system. The objective of this case study is to explore the ERP implementation process in Pakistani Textile Company.

3. Literature Review 3.1. ERP Implementation in Thai Textile Industry: A Case Study: This paper introduces the case about utilized proof from a few Thai textile organizations which are pilot firms to implement ERP frameworks. After ERP implementation, the outcomes were blended. A few organizations have accomplished huge improvements in stock and operation process duration, upgrades in unwavering quality and adaptability because of

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enhanced data streams over all units. Then again, a few organizations have not. The discoveries are advantageous to all enterprises as far as conveying enterprise frameworks over their esteem chain. They require to re-design business forms, as well as to produce new business arrangements while conveying enterprise frameworks keeping in mind the end goal to make an incentive out of IT venture.

3.2. ERP Implementation: ERP implementation has been a difficulty from the very first moment. From top administration to bring down administration, nobody has prevailing with regards to characterizing one brilliant thumb rule to have an ideal implementation of the framework. ERP has its own particular advantages and disadvantages, however in general, it affects leadership, power, organizational, inter organizational, and systems perspectives, control, frameworks points of view

3.3. Enterprise Resource Planning (ERP) Implementation in Pakistani Enterprises: Critical Success Factors and Challenges: This study was done to find the factors and boundaries to ERP implementation introduce in local environment. The point of this examination was to locate the basic issues that have been looked by the Pakistani ventures in implementing ERP frameworks. In addition, deciding the basic achievement factors that can guarantee the fruitful implementation was likewise the objective of research. This has been refined with the profitable commitment from specialists, advisers, and supervisors from a few Pakistani enterprises overseeing ERP frameworks. The discoveries demonstrate the Pakistan centered issues cover diverse angles as contrast with the worldwide field. Understanding How Consultants Mediate Conflicts during Post Implementation ERP Change Process: A Dialectic Perspective: This Research investigates the part of ERP experts in intervening conflicts of post implementation ERP change process. The logic point of view is utilized as a part of this examination as a hypothetical focal point to clarify the parts advisers play to mediate conflicts during/after ERP change process. Looking at the part of experts in ERP change process from a logic viewpoint will possibly give important and

rich bits of knowledge into comprehension the more extensive ERP change processes.

3.4. ERP Implementation in Thai Industries: In this study five Thai garment companies were selected to case study the ERP implementation, after two years of ERP implementation and development, only two of them succeeded. The research findings were that ERP implementation was influenced by several critical factors, such as vision and state of mind of management, hierarchical and process availability, ERP choice, implementing group and process, and authoritative duty and so forth. The real challenges were user change management and the many-sided quality of the working framework.

3.5. Enterprise Resource Planning Systems for the Textiles and Clothing Industry: This paper was intended to examine the utilization of ERP frameworks and investigate the particular empowering advancements in the TC supply chains by means of concentrate different genuine organization cases and assessing some genuine ERP arrangements. Likewise, the fundamental challenges of implementing the ERP frameworks in the TC business are recognized. Different basic achievement factors for the implementation of ERP frameworks are talked about.

3.6. A critical success factors model for enterprise resource planning implementation: In this paper, the scale and key significance of ERP frameworks is distinguished and the issue of ERP implementation is characterized. Five organization illustrations are studied by utilizing a Critical Success Factors (CSFs) hypothetical system. The paper offers a system for directors which gives the basics to building up an ERP implementation procedure. The case investigation distinguishes distinctive ways to deal with ERP implementation, features the basic part of legacy system in impacting the implementation procedure, and recognizes the significance of business process change and programming configuration also factors such as top administration support and communication.

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4. Case Methodology In this case open ended questionnaire case study technique was used for data collection and to gain insights into the topic of ERP implementation. Interviews and observations were the main sources for data collection. Following the contact with key informants in the company, More than one appointment was needed to finish interviewing for all answers. Follow-up phone calls were also made for further information. All data taken from the sources were summarized and linked together to create a full picture of the entire process and outcome of the implementation. In an attempt to analyze the data further several secondary case studies of textile organizations were chosen from the literature and analyzed for the success and challenging elements of their ERP implementation efforts.

5. Analysis The analysis from the responses received from the textile industry practitioner and experts is discussed below against each question item that was part of the survey.

5.1. Business Processes before ERP Implementation The textile industry is characterized by the variety of processes include in the production of various products. The highly intensive processes, flow of information and transaction of one of the largest textile industry of Pakistan required extensive data management. Previous to ERP implementation the organization was using legacy software along with the Microsoft excel to help support the data integration. However legacy software and excel was not enough to support the vast production operations of the textile industry and due to the limitations of legacy software organization was unable to achieve accuracy, complete data integration, traceability and accountability.

5.2. ERP Life-Cycle Frame Work The distinctive phases that an ERP system experiences within the business represent the life cycle of ERP. The framework is structured in phases and dimensions. Phases are the diverse stages of an ERP system life-cycle within a firm and dimensions are the distinctive perspectives by which the phases could be evaluated.

ERP life cycle framework comprises of Adoption Decision, Acquisition, Implementation, Use and Maintenance, Evolution and Retirement phase. In adoption decision, the primary phase of ERP life cycle, a watchful examination of the business needs of a firm is done before choosing to implement organization wide ERP framework. Acquisition phase allows to select the ERP provider/supplier and right ERP bundle to meet business prerequisites. Implementation phase includes customization of ERP software and testing information and also the procedures and methodology to guarantee rightness of ERP framework. Use and maintenance phase manages the amendments of any glitches that may happen in the working of the ERP framework. It likewise includes preparing the endusers to guarantee the powerful use of ERP frameworks. Evolution phase is about performing up gradations in ERP systems. The retirement phase is concerned to monitor the new technological advancement and insufficiency of the existing ERP system and the need to replace the existing ERP system with the other information system. The dimensional vision of the framework presents a set of change management that an organization needs to undergo when opting to implement ERP system. The change management dimension embodies people, processes and product. When organizations undertake ERP transformation it experience cultural issues, organizational structures, roles and skills, management of strategic change and business process reengineering.

5.3. FIRST IMPLEMENTATION: It was an established notion that the ERP system cannot be implemented in the textile sector because of its complex processes but the need was analyzed and initiative was taken to launch the first ever ERP implementation in the textile industry of Pakistan. The organization decided to implement centralized ERP system in an attempt to gain strategic position by focusing on business processes and bridging the silos that inhibits effective and efficient communication.

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The largest textile industry on Pakistan opted to implement two products together named AS400 and GTEX and became the pioneer to bring ERP in textile industry. However the first ERP implementation at the largest textile mills was not successful as the organization was running two different ERP packages simultaneously which resulted in poor data management, less or no integration among the business processes and no accuracy in the flow of information. Further to this there was improper employee involvement, lack of training and inconsistent management support for change management which resulted in the ERP implementation failure. The established framework is used to further analyze the issues in the system and at phase.

5.4. Issues Within The Framework & Failure Of First ERP Implementation 5.4.1. Adoption Decision Phase Issues In the adoption phase the organization analyzed the need or requirement of the new ERP system that helped in addressing the critical business challenges and helped to enhance the operations strategy of the business. The decision phase outlined the goals and benefits of the proposed ERP system an executive steering committee of the organization along with consultants and information technology (IT) department, decided to implement an ERP system. The new system was capable of handling company growth, communicating between departments, and producing customizable, robust reports. It took almost 6 months to take the decision to implement ERP first time in any textile company as there was a norm that ERP can’t be implemented on textile industry. The goal of implementation was set to attain centralize data management systems.

5.4.2. Acquisition Phase Issues During the acquisition phase the organization opted for the product and consultant selection that best fits the requirements of the organization. The companies choose two products AS400 and GTEX to fulfill its requirement of ERP system along with the consulting company named PORINI. Critical factor related to ERP implementation such as price,

training and maintenance services were analyzed and, the contractual agreement was defined. Throughout the acquisition phase no formal system requirement specification (SRS) was made everything was decided through verbal meetings, although several demos were conducted in Italy and a generic ERP system was chosen with the consultant company

5.4.3. Implantation Phase Issues This is one of the most critical phases of the ERP life cycle scheme. Implementation phase deals with the project preparation and completion. Time period required for implementation and project team are the critical factors associated with this phase. The project team and consultants provide implementation methodologies and training and are responsible for customization and adaptation of the ERP package acquired according to the needs of the organization. Implementing an ERP system requires resources to install software and hardware, modeling business processes, train users, connect to legacy systems and convert data from other systems. The implementation strategy at the largest textile company was phased because this ERP was implemented for the first time in textile industry of Pakistan, the AS-IS processes were made during the implementation and IT was dealing with everything including change management. The implementation took 2 years in which the organization faced many problems like there was no delete option in purchase order and the store had too many article codes etc.

5.4.4. Use & Maintenance Phase Issues This stage comprises of the utilization of the product in a way that profits expected advantages and limits disturbance. Amid this stage, one must know about the perspectives identified with functionality, usability and adequacy to the organizational and business processes. Once a framework is implemented, it must be maintained, in light of the fact that glitches must be adjusted, extraordinary enhancement demands must be met, and general frameworks changes must be made. The organization implemented two parallel systems AS-400 and GTEX for which it required consultant services and mandatory support for almost 3 years and the maintenance support was done by IT, were the users and the management were not satisfied at all.

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5.4.5. Evolution Phase Issues This stage encourages the integration of advance capabilities into the ERP system, providing the organization new benefits of advanced planning and scheduling, supply-chain management, customer relationship management, supplier relationship management, workflow management, and building collaborative relationship with strategic partners. No ERP solution after core ERP [For example Business Intelligence, Customer Relationship management, Supplier Relationship management] was extended

5.4.6. Retirement Phase Issues In the retirement phase new business needs are analyzed. The presence of new technological advancement or the inadequacy of the ERP framework helps organization to build consensus to substitute the ERP software with other information system approach more align with the changing organizational requirements. A new product named EBS (E Business Suit) with consulting company Ferguson son was selected that solved the problems of the pervious product also the change management was not required as the people already got used to it because of the previous version and a backup DR site for data was introduced.

6. Results 6.1. Main Areas Problems in Implementation           

Limited skills of employees. Lack of knowledge of business processes, Lack of interest of top management. Lack of IT policy Network and IT Platforms. Several parallel Application and data software. Lack of flexibility in current applications Lack of support to some required business functionalities Limited integration of application and systems New package in the market First implementation in textile sector Two parallel products namely AS-400 & GTEX

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No AS –IS process defined No involvement of stake-holders in the implementation team No proper change management

6.2. Factors influencing ERP failure Before ERP implementation, the companies should examine the following things  Risks benefits and challenges of ERP implementation.  The readiness of implementation.  The expenses and budgets, human resources needed  Organizational structure and culture  Company’s infrastructure and IT resources  Business processes. ERP system is very difficult to implement when there is complexity and uncertainty of the current and future business processes Attitude and commitment of the Top management affects organizational development that is why ERP implementation cannot succeed without the sufficient support from the Top management.

7. CONCLUSION The benefits of ERP system are well documented, and so were the theories on performance improving and integrating by ERP. In this study we interviewed textile industry professionals and. Our research findings suggested that ERP implementation was influenced by factors, such as attitude of top management, organizational readiness, ERP product selection, implementing team and business process, and organizational commitment. The major obstacles are the misunderstanding and resistance from the users i.e. Change Management and the complexity of the working system. The findings can be useful to all enterprises in terms of implementing enterprise systems across their value chain. For further study, more empirical study of ERP implementation and selection in Pakistani textile industry should be made.

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