Project Report FN-11

A Report of

A Study on IMPACT OF RETURN ON INVESTMENT BY IMPLEMENTING AN

ERP PACKAGE IN MANUFACTURING INDUSTRIES WITH RESPECT TO E•CHAIN

for

CHAIN SYS INDIA PVT LTD, CHENNAI

Submitted to the

Department of Management Studies

in partial fulfillment of the Post Graduate Diploma In Management

Under the Guidance of

PROF.B.UNNIKRISHNAN

by

AJITH ANTONY

BATCH 17-D Roll no: FN-11

School of Communication & Management Studies SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN

October 2009

S C M SS C M SS C M S

DECLARATION

I, the undersigned, hereby declare that this project report entitled

“IMPACT OF RETURN ON INVESTMENT BY IMPLEMENTING

AN ERP PACKAGE IN MANUFACTURING INDUSTRIES WITH

RESPECT TO E•CHAIN” has been written and submitted under the

guidance of PROF.B.UNNIKRISHNAN and is my original work.

I understand that detection of any copying is liable to be punished

in any way the school deems fit.

05-10-09 AJITH ANTONY

SCMS – COCHIN SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN

October 2009

CERTIFICATE

This is to certify that the project work entitled 'IMPACT OF

RETURN ON INVESTMENT BY IMPLEMENTING AN ERP

PACKAGE IN MANUFACTURING INDUSTRIES WITH

RESPECT TO E•CHAIN’ has been carried out under my guidance

by AJITH ANTONY in partial fulfillment of his Post Graduate

Diploma in Management during the academic year 2008 - 2010. 05-10-09 PROF.B.UNNIKRISHNAN


SCMS – COCHIN SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN

October 2009

CERTIFICATE

This is to certify that the project work entitled 'IMPACT OF

RRTURN ON INVESTMENT BY IMPLEMENTING AN ERP

PACKAGE IN MANUFACTURING COMPANIES WITH

RESPECT TO E•CHAIN' has been carried out by AJITH

ANTONY in partial fulfillment of his Post Graduate Diploma in

Management. 05-10-09 DIRECTOR


A Report of

ACKNOWLEDGEMENT

I wish to express my indebtedness and gratitude to the management and

staff of the School of Communication and Management Studies for providing me

an opportunity to gain practical knowledge by including this project as part of my

PGDM curriculum.

I would like to thank the Dean, Prof K.J PAULOSE, for always giving in

the maximum effort to guide the students of the college, without whom this would

not have been a fruitful effort.

I am very happy to express my gratefulness to the faculty guide,

Prof.B.Unnikrishnan of School of Communication and Management Studies,

Cochin for his valuable suggestions and constructive reviews on the topic of this

study.

I express my gratitude to Mr. Raj Kumar (CEO, Chain Sys India Pvt Ltd),

Mr. Saravana Babu (Practice Director E•Chain, Chain Sys India Pvt Ltd) Mr.

Sreekumar Sasikumar (Project Manager, Chain Sys India Pvt Ltd) and the staffs

of Chain Sys India Pvt Ltd, Chennai in their sincere support and encouragement

given to me during the project period in the organization.

I am grateful to The Lord Almighty, for the abundance of grace of his,

which enabled me to complete the assigned work in time, and with maximum

perfection.

05-10-09 Ajith Antony

Table of Contents

Sl.No Title Page no.

1.

Executive Summary

1

2

Chapter 1

Introduction

Theoretical Background

4

6

3 Chapter 2

Objectives and Research Methodology

8

4

Chapter 3

Industry Profile

Company Profile

Product Profile

13

15

17

5 Chapter 4

Analysis and interpretation of data

18

6

Chapter 5

Findings

Conclusion

30

32

7 Chapter 6

Suggestions and Recommendations

34

8 Chapter 7

Bibliography

36

9 Chapter 8

Appendix

38

LIST OF TABLES

TABLE NO: TOPIC PAGE NO:

1

Frequency table of Clients

20

2

Model Summary- Regression Analysis

23

3

Coefficient Table- Regression Analysis

23

4

Total Variance Explained- Factor Analysis

25

5

Rotated Component Matrix

26

6

Paired Sample Correlations

27

LIST OF FIGURES

FIGURE NO: TOPIC PAGE NO:

1

ERP Market Share

13

2

Percentage Change of Factors

19

3

Quality of Service offered by E•Chain

21

4

Increase in Profit percentage

22

EXECUTIVE SUMMARY

An ERP system can be defined as a software solution that addresses the enterprise

needs taking the process view of the organization, to meet the organizational goals

tightly integrating all functions of an enterprise. Implementation of ERP packages

in an organization helps to make calculated decisions more quickly and with less

effort, increasing profits and delivering a competitive advantage.

This project was carried out to find the impact of an ERP package E•Chain in

manufacturing industries. The main objective of the study was to analyze, the

change in return on investment in an organization by implementing this ERP

package. The study has certain specific objectives like identifying the factors

which lead to return on investment and also finding out as to how the client

business is streamlined after the implementation of E•Chain. The project also

analyzes the control over operation flow in an organization after E•Chain

implementation.

The study was based on primary data collection. Data from 31 clients of Chain Sys

India Pvt Ltd, Chennai who implemented E•Chain in their organization was

collected. It was found that the implementation of the ERP Package E•Chain can

increase the return on investments in manufacturing companies. The primary

factors which lead to the increase in return on investments were cash management,

cost control, accuracy in project implementation, customization of the product,

reduction in expenses and reduction in lead time. It was found that the business

operation of clients have become streamlined to a certain extend after the

implementation of E•Chain. Yet, another finding was that 80% of their clients

believe that the package was not user-friendly during the initial implementation

phase.

A few solutions to the above mentioned problems were suggested.

Initially, adequate training to all the employees in the organization where this

package is being implemented could be provided.

Creating a help desk exclusively for problem resolving to fix the user related

problems, can reduce bottle necks to a great extent.

This will help the company to position their core product E•Chain in a better

manner in today’s emerging competitive market.

Chapter -1

INTRODUCTION AND THEORETICAL

BACKGROUND

INTRODUCTION

ERP software stands to change the business process for the better, making it more

efficient. Furthermore, by providing better insights into an enterprise’s

functioning, it can expose further areas for optimization, in both cost and time. By

opting for ERP software, there can be further savings in cost. ERP market in

manufacturing sector of India steadily growing for the last few years. Majority of

Indian manufacturers are small by global standards, requiring easy-to-use ERP

solutions to meet their specific process requirements, including localization needs

to address the continually evolving tax and statutory requirements. Small and

medium enterprises across industry verticals and micro verticals, such as

automotive, pharmaceuticals, and textiles, are leveraging ERP solutions to gain

sustainable competitive advantages as well as more return on investment. It is the

technique and concept for integrated management of business as a whole from the

view point of the effective use of management resources to improve the efficiency

of the enterprise management. ERP helps to integrate all departments and

functions of in an organization onto a single computer system that can serve all

those different department particular needs. Integration is what ERP’s all about.

Software for accomplishing the individual functions are always there, but the

reason ERP’s are preferred are mainly coz they offer an integrated solution.

Besides the fact that ERPS’ offer an integrated solution for an organizations many

domains of functionality, they have little identity of their own. The main aim of an

ERP is to consolidate all the data, and services into one integrated workflow.

Before the introduction of ERP the organizations were facing many problems like

delays, lost orders, Error in loading etc. The organizations had number of process

like sales, productions, logistics, and billing .In each stage the data and

information has to be entered into different system. The introduction of ERP

package would help the organizations to integrate the process into a common

platform. It’s a fact that the implementation of ERP will cost high. ERP can

improve a company’s performance if it could two main problems like

fragmentation of information and cost associated with the maintaining integration

of systems. The benefits of ERP are operational benefits and financial benefits.

One of the main facts about ERP packages was that the implementation of them

can bring the company into better figures in terms financial percept.

THEORETICAL BACKGROUND

The Proposed study was to learn the impact of return on investment by

implementing ERP package in manufacturing industries with respect to E•Chain.

Return on investment is a performance measure used to evaluate the efficiency of

an investment or to compare the efficiency of a number of different investments.

Return on investment is a very popular metric because of its versatility and

simplicity. That is, if an investment does not have a positive ROI, or if there are

other opportunities with a higher ROI, then the investment should not be

undertaken. ROI works well in situations where both the gains and the costs of an

investment are easily known and where they clearly result from the action. Other

things being equal, the investment with the higher ROI is the better investment.

The return on investment metric itself, however, says nothing about the magnitude

of returns or risks in the investment.

Chapter -2

OBJECTIVE AND RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

Main Objective

To study the change in the return on investment of an organization by

implementing ERP package.

Specific Objectives

Identify the factors which lead to return on investment while implementing

ERP package E-chain.

To analyze how well the client business is streamlined by implementing E-

chain.

To study how the companies get control over the operation flow and clear

visibility of the business flow

OPERATIONALISATION OF KEY VARIABLES

Return on Investment (ROI) analysis is one of several approaches to building a

financial business case. The term means that decision makers evaluate the

investment by comparing the magnitude and timing of expected gains to the

investment costs. Decision makers will also look for ways to improve ROI by

reducing costs, increasing profits etc. The formula to find out the return on

investment is following.

Net Income-Cost of investment

Cost of investment

Accuracy in project means the systematic way of implementing an ERP project,

which ensures that there is only minimum amount of errors and finishing the

implementation process at a reasonable time.

Cash Management will be the strategy by which the company administers

Invest cash. Cash management can be for short term on a daily basis and for long

term for investment purpose.

Lead time is the period of time between the initiation of any process of production

and the completion of that process. It’s the amount of time between placing an

order and the receipt of goods we ordered.

Inventory is the raw materials, work-in-process goods and completely finished

goods that are considered to be the portion of a business's assets that are ready or

will be ready for sale. Inventory represents one of the most important assets

that most businesses possess.

Cost will be the total amount of money that spent for goods and services in the

organizations.

Rationale of the Project The purpose of the project was to identify the impact of ERP package E• Chain in

generating the return on investment in manufacturing companies. This project

would help Chain Sys India Pvt Ltd to understand the position of E•Chain among

their clients. The project also helps in getting a feedback from clients of Chain Sys

India Pvt Ltd.

Scope of the project The geographic area of study was limited to the existing clients of Chain Sys India

Pvt Ltd. The time taken for the research included sixty working days (June 15th -

September 5th 2009). The various concepts used for the study was return on

investment and enterprise resource planning.

LIMITATION OF THE STUDY

The study was conducted only for Chain Sys India Pvt Ltd located in Chennai.

Research methodology 1. Type of research

The research was based on Primary data. Also secondary data from internet was

used in order to support the study.

2. Sampling Plan

The sampling plan used was Simple random Sampling. The existing clients of the

product E•Chain are taken as sample.

31 respondents were taken for the proposed study.

3. Data collection

E•Chain Health Check Program were used to collect data from the manufacturing

companies of Chain Sys India Pvt Ltd. Apart from the questionnaires, a direct

interview was conducted with 5 major clients of Chain Sys India Pvt Ltd.

4. Data Analysis

The data analysis was done with the help of data collected through questionnaire.

Descriptive statistical analysis and hypothesis testing was carried out to analyze

and interpret the data.

5. Hypothesis

Different hypothesis were formed to test the objectives and to find out the impact

of E•Chain. Regression analysis, Factor analysis and paired t test were used to

analyze the data.

6. Statistical Software used

Statistical software used for data analysis was SPSS and MS- Excel

Data collection

Primary data

The proposed topic was to find the impact of return on investment after the

implementation of ERP package E•Chain in manufacturing companies. The

company provided the details of the companies who have implemented E•Chain in

their organization. The population of the study was restricted to the existing client

list of E•Chain in Chain Sys India Pvt Ltd. The sample size is 31, which includes

different manufacturing companies in different parts of the world.

The tool used for collecting the primary data was structured

questionnaire and direct interview with 5 major clients. The data was collected by

filing the questionnaire from all the existing clients of E•Chain in Chain India Pvt

Ltd. This is selected using simple random sampling technique.

Tools for analysis

The analysis of the data was carried out with the use of the following tools as

provided by the SPSS software.

They are:-

1. Regression analysis to find out the relation between dependent variable and

the independent variables.

2. Factor analysis to find which of the independent variables contribute

towards return on investment.

3. Paired T Test to find the implementation effect of the ERP package E-

chain.

4. Tables and Figures created using MS- Excel 2003.

5. Simple ROI analysis.

Chapter -3

INDUSTRY PROFILE AND COMPANY PROFILE

ERP INDUSTRY IN INDIA

The Indian scenario all the small and medium sized business is the major force

that pushes the growth. Customers are moving from a ‘best of breed’ to ‘best for

business’ approach in the case of ERP .ERP market in India is steadily growing.

The main reason for the growth is industry best practices, easy and faster

implementations and good cost predictions. India is expected to be an important

market place for ERP suppliers as manufacturing companies are heavily investing

in technology solutions to improve their manufacturing operations. By using of

ERP solutions companies will get benefits include resource planning, management

control, and operational control. ERP could bring core competencies to

organizations. There is also a trend to replace customized system with standard

application packages, like an ERP system. The major players in ERP market are

Oracle, SAP, Microsoft Business Solutions, Sage Group and BAAN etc.

Figure no:- 1

0%5%

10%15%20%25%30%35%40%45%

MARKET SHARE

SAP GEAC

ERP COMPANIES

ERP Market ShareSAP

ORACLE

SAGE GROUP

MICROSOFT BUSINESSSOLUTIONSSA GLOBAL

GEAC

INTENTIA

INFOR GLOBALSOLUTIONSLAWSON

OTHERS

(Source: AMR Research & Forrester Research)

The ERP companies like ORACLE concentrating only in the large enterprises

while the companies like Chain sys concentrating their market in small- medium

enterprises. There is trend in SME sector is that each of the ERP package has got

different modules, so the organizations used to select the modules to the areas in

which sector/ department they feel difficulty to manage. Because of this they get

certain advantages like less investment, greater implementation time and greater

return on investment. In the total ERP market segment the clients wanted to shift

from generic ERP to specified and concentrated ERP i.e. an industry specific ERP.

CHAIN SYS INDIA PRIVATE Ltd

Chain•Sys was started by top of class technology and domain knowledge experts

in 1998, to serve the IT needs of their customers. Chain•Sys is a fast growing

consulting/product development company. The E-Chain suite has been

implemented in diverse industry segments such as Automobile, Chemical,

Discrete, Engineering, Electrical, Multi-Level marketing, Garments, Leather,

Process, Textiles etc. They offer Fast-Forward™ Implementation services to

understand their customers business and efficiently apply e•Chain

modules/solutions to drive their business processes. Chain-Sys is associating with

Oracle. They are the certified partners of Oracle in India. Chain-Sys was started by

IT and Manufacturing Industry experts. Chain-Sys proudly celebrates 10 years of

providing excellent services in Oracle EBS, developing and marketing state of the

art productivity tools for Oracle EBS and e-Chain ERP/SCM suite for SME. The

customers of our productivity tools are some of the highly demanding top power

users of Oracle EBS and they are the industry leaders in their spheres of operations

and manufacturing.

E-Chain Power release is used by more than fifty SME customers and the verticals

served include Engineering, Textiles, Chemicals, Glass, High Tech and Discrete

Manufacturing. Chain-Sys has successfully undertaken EBS turnkey

implementations including R12. We excel in Project Mgmt. Techniques and

ensure Project Control. Our consultants are the movers behind several prestigious

EBS implementations worldwide. The numeric strength of our consultants is more

than three hundred. We provide post implementation and DBA support. Chain-Sys

has strong Java/J2EE and .NET development capabilities.

Most of the clients of E•Chain are from SME sector. They are A- Bond Strands

Pvt ltd, Cetex petrochemicals, Data patterns, Ugra Precisions, Faaber Paints,

Precise Hydrodynamics, Hwashin Automotive Pvt Ltd, George Oakes Limited,

Diamond Group, Shanthi process and packaging, IHD industries Pvt Ltd, GEM

telergon switchgears Pvt Ltd, Power Economy, OHM energy Systems, Uniglass

Industries, Dhanus technologies, Liners India, Venus Home Appliances, Sejal

Glass, Chansuba Pumps, SP Tex Fab, Hydro Prokav Pumps Pvt Ltd, Drapes

Avenue, Sunfab Industries, Hydro Control, Geodesic techniques Pvt Ltd, Pradeep

Stainless, Switzer Instruments, Uniflow.

E•CHAIN

Chain•Sys Corporation’s flagship product E•Chain is a fully integrated web based

end to end supply chain management/enterprise resource planning package for

small and medium industry segments. As of today, it comprises 50 modules of

affordable quality in 7 business tracks. Major Modules of E•Chain are Inventory

Management, Point of Sale, Procurement, Supply Chain Management, Shop Floor

Management, Financials, e-Store, e-Sourcing. Chain Sys also dealt with ORACLE

products since they are the certified partner of them in India.

E•Chain has got supplementary products like App LOAD, App EXTRACT, App

INTERFACE and App MIGRATE which are part of the Business Process

Automation suite of products from Chain•Sys Corporation who are the proud

makers of e•Chain SCM/ERP Suite.

Chapter -4

DATA ANALYSIS AND INTERPRETATION

FREQUENCY ANALYSIS

Analysis of the data collected from the existing clients of E•Chain is shown below.

The sample size used is 31 (total clients of E•Chain of Chain Sys India Pvt Ltd)

From the total of 31 samples collected from E•Chain, the response from the clients

was categorized in to five. They are No change, below 10%, between 11-15%,

between 16-20% and above 20%.

FIGURE NO: - 2

02468

10121416

Number of clients

No change 11-15Percentage

Above 20Percentage

Percentage Level Changes

Percentage Change in Factors

Return on Investment

Cost Reduction

Reduction in lead time

Efficiency in Management ofassests

(Source: - Primary Data)

The frequency table of the above FIGURE is given below.

TABLE NO: - 1

Number/ Frequency of clients responded

Return on Investment Cost Reduction

Reduction in lead time

Efficiency in Mgt of assets

No change 12 11 10 10

Below 10 % 16 7 11 5

11-15 % 3 12 7 8

16-20 % 0 1 1 6

Above 20 % 0 0 2 2


From the bar chart it has been found that 31 samples have been taken from the

client list of E• Chain for the study. The main factors were return on investment.

Cost reduction, reduction in lead time, efficiency in management of assets. In the

case of Return on investment 39% of clients says that there is no change in ROI

even after the implementation of E•Chain, but 51% agrees that there is a positive

change and in the case of cost reduction around 23% says that there is a 10%

reduction and 39% says that there is a change of more than 11-15 % in the

reduction of cost and 3% agrees that implementation ERP package E•Chain has

brought a sufficient reduction in total cost of the operations in the organization.

Considering the factor reduction in lead time, 32% of the clients says that there no

reduction in lead time and 36% of the clients agrees that there is 10% reduction in

lead time.23 % of the clients says that there is reduction of % of between 11-15

and 3% says that there is a change of 16-20% and 6% agrees that there is a change

of above 20% after the implementation E•Chain in their organization. In the case

of efficiency in management of assets, 10 clients says that there is no change even

after the ERP implementation, 5 clients agrees that there is 10% change and 8

clients says that there is 11-15% change . 6 clients agree the fact that around 16-

20% change have been attained, 2 clients says that implementation of ERP

package E•Chain has brought a change more than 20% in the case of management

of assets.

Quality of Services offered by E•Chain to clients

The clients were asked to rate the services offered by E•Chain in a five scale. The

services were classified as Excellent, Very Good, Good, Average and Below

Average. Following is the figure representation of the client response.

Figure no:-3

0

5

10

15

20

25

Number of clients

Excellent Good BelowAverage

Ratings given by the Clients

Quality of Services Offered by E.Chain

Excellent

Very Good

Good

Average

Below Average


Most of the clients believe that the services offered by E• Chain is well

appreciated in terms of Quality. Out of the 31 clients 24 clients agree to fact that

the quality of services offered by E• Chain is good and the rest 7 clients says that

the quality is very good.

The following FIGURE depicts the change in profit percentage after the

implementation of ERP package E•Chain. The Clients were asked to mark their

response in the scale of No change, above 10%, between 11-15%, between 16-

20% and above 20%.

FIGURE NO: - 4

Increse in Profit Percentage after the implementation E.Chain

33%

57%

10%

0%

0%

No change Below 10 Percentage 11-15 Percentage

16-20 Percentage Above 20 Percentage


Around 33% of the clients says that there is no change in the profit percentage

even after the implementation of E•Chain. 57% of clients agree to fact that there is

an increase of below 10% in their profit percentage after the E•Chain

implementation and 10% clients say that this particular ERP implementation has

brought a significant increase of between 16-20% increase in their profit

percentage.

REGRESSION ANALYSIS

TABLE NO:-2

.813a .662 .539 .2887Model1

R R SquareAdjustedR Square

Std. Errorof the

Estimate

Model Summary

Predictors: (Constant), Reduction in inventory, CostControl, Cash Management, Reduction in lead time,Quality of Serivces, Reduction in Expense, Accuracy inproject implementation, Customisation of the product

a.


In this table, value of R2 is .662,which means dependent variable(Return on

investment) has got a fairly good positive relationship with independent variables.

TABLE NO:-3

.212 .841 .253 .803

.139 .107 .190 1.304 .206

.457 .121 .496 3.770 .001

.181 .161 .159 1.122 .274

8.707E-02 .081 .158 1.076 .293

.236 .110 .312 2.143 .043

.106 .069 .218 1.527 .141

-.174 .118 -.205 -1.479 .153

-7.54E-02 .139 -.079 -.544 .592

(Constant)Accuracy inprojectimplementationCashManagementCost ControlCustomisationof the productReduction inExpenseReduction inlead timeQuality ofSerivcesReduction ininventory

Model1

B Std. Error

UnstandardizedCoefficients

Beta

Standardized

Coefficients

t Sig.

Coefficientsa

Dependent Variable: Return On Investmenta.


From the analysis, it can be interpreted that the return on investment mainly

depends on (has a strong dependency on) factors like accuracy in project

implementation, cash management, cost control, customization of the product,

reduction in expense, reduction in lead-time

Reduction in inventory and Quality of services were considered only as secondary

factors

The regression equation can be derived as

Return on investment = .212+ .139(Accuracy in project implementation) +.457

(Cash management) +.181(Cost control) +.087 (Customization of the product)

+.236(Reduction in expense) +.106 (Reduction in lead time) + -.174 (Quality of

services) + -.075 (Reduction in inventory)

FACTOR ANALYSIS An E•Chain health Check program was conducted on 31 clients of Chain sys, to

indicate on a 5 point scale (Poor-1, Average-2, Good-3, Very Good-4, Excellent-5)

Following are the Factors which determine the return on investment for the clients

of Chain Sys India Pvt Ltd

1. Accuracy in project implementation

2. Cash management

3. Cost control

4. Customization of the product

5. Reduction in expense

6. Reduction in lead time

7. Quality of services

8. Reduction in inventory

TABLE NO: - 4

2.217 27.717 27.717 2.217 27.717 27.717 2.179 27.234 27.2341.616 20.199 47.917 1.616 20.199 47.917 1.403 17.537 44.7711.093 13.667 61.584 1.093 13.667 61.584 1.345 16.813 61.584.830 10.377 71.960.707 8.837 80.797.590 7.377 88.175.506 6.324 94.499.440 5.501 100.000

Component12345678

Total% of

VarianceCumulative

% Total% of

VarianceCumulative

% Total% of

VarianceCumulative

%

Initial Eigenvalues Extraction Sums of Squared LoadingsRotation Sums of Squared Loadings

Total Variance Explained

Extraction Method: Principal Component Analysis.

(Source:-Primary Data)

TABLE NO: - 5

.633 -.173 -.486

-8.87E-03 5.089E-02 .806

.166 -.822 -9.87E-02

.753 -4.14E-02 6.680E-02

.514 3.577E-02 .616

.673 3.694E-02 -3.48E-02

.188 .826 1.332E-02

.656 9.423E-02 .251

Accuracy inprojectimplementationCashManagementCost ControlCustomisationof the productReduction inExpenseReduction inlead timeQuality ofSerivcesReduction ininventory

1 2 3Component

Rotated Component Matrixa

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Rotation converged in 5 iterations.a.


From the total variance explained table, it’s proved that 2 components extracted

together retained 61.58% of the total variance. So we can reduce the number of

variables into 2 underlying variables out of the 8 factors. The 1st component nearly

covers 2 variables and 2nd and 3rd cover 1 variable each.

From the rotated component matrix table, customization of the product, reduction

in lead time has loadings of .753 and .673 on factor 1. This suggests that factor 1 is

a combination of all these variables. This factor can be addressed as customization

of the product and reduction in lead time. Now factor 2, we can see the quality of

services has a loading of .826 which indicates that the factor can be known as

quality of services. In this case of factor 3, the cash management which has a

loading of .806 addressed as cash management itself.

PAIRED T TEST ANALYSIS

H0 – Null hypothesis

H1 – Alternate Hypothesis

Null Hypothesis – There is no change for return on investment after the

implementation of E• Chain in manufacturing organizations which are the clients

of Chain Sys India Pvt Ltd.

Alternate Hypothesis - There is change for return on investment after the

implementation of E• Chain in manufacturing organizations which are the clients

of Chain Sys India Pvt Ltd.

TABLE NO: -6


In the paired samples correlation table we see the significance level is .045 which

is less than .05, hence we have to reject the null hypothesis and accept the alternate

hypothesis. Hence it’s proved that there is change for return on investment after

the implementation of E• Chain in manufacturing organizations which are the

clients of Chain Sys India Pvt Ltd.

SIMPLE RETURN ON INVESTMENT ANALYSIS

Out of the 31 users of E• Chain a direct interview has been conducted with 5 major

clients of Chain Sys India Pvt Ltd. Based on the financial figures available from

the we can analyse whether the company has got increase in return on investment.

Company 1 has got around 15% increase in return on investment






NB: - All the 5 companies above mentioned have been associating with chain sys

less than 3 years. With in these short period most of the clients out 31 clients of

Chain Sys India Pvt has attained significant growth with in three years.

Chapter- 5

FINDINGS & CONCLUSION

FINDINGS:-

51 % of Chain Sys clients who implemented the E•Chain package has got a

significant and positive increase in their return on investment

The main factors that lead to an increase in the return on investment after

implementing the ERP package were accuracy in project implementation,

Cash management, Cost control, Customization of the product, Reduction

in expense, Reduction in lead time, Quality of services offered by E•Chain,

and Reduction in inventory.

The implementation of E•Chain has streamlined the business functions of

all the clients because it creates a common platform which integrates all the

functions of a manufacturing organization.

The companies have got a control over the flow of operations and a clear

visibility of the business flow because the ERP package E•Chain, comprises

of different modules which are interlinked with each other and also

maintains a track record of the operations in each department.

The study has found that there will be a significant growth rate in the

number of clients for the next 5 Years. The main reason for this growth is,

it has taken the advantage of the untapped small medium enterprise market

segment which requires flexible, integrated, real time decision support

systems.

Out of the 31 clients of E•Chain, 24 clients has agreed to the fact that the

implementation of ERP package has increased the quality of services they

provide to their customers.

39% of the E•Chain users has claimed, they have got a cost reduction of

less than 10% after the implementation of this ERP package.

E•Chain implementation has lead to an increase of not more than 10% in

the profit margin of organizations.

It was observed form the Regression analysis that return on investment

mainly depends on (strongly depends on) factors like accuracy in project

implementation, cash management, cost control, customization of the

product, reduction in expense, reduction in lead-time.

Factor analysis has showed that the most important factors in the case of

return on investment are “customization of the product” and “reduction in

lead time”.

The Paired Sample t test proved that that there was significant change to

return on investment after the implementation E•Chain in the clients of

Chain Sys India Pvt Ltd.

The simple return on investment analysis also proveed that there was

considerable change in the return on investment after the implementation of

ERP package in manufacturing organizations with respect to E•Chain.

Several advantages like business integration, Flexibility, Better analysis and

planning capabilities and use of latest technology was found after the ERP

implementation.

Another finding was that an ERP package could be a failure in the

organization if there was a lack of support from the top management,

proper planning, accurate ERP tool, proper training and flexible work

culture in the organization.

80% said they have encountered user-related problems and 20% claimed of

a software problem during the implementation of E•Chain.

CONCLUSION

The implementation of E•Chain has brought significant impact in terms of return

on investment in the manufacturing clients of Chain Sys India Pvt Ltd. Even

though the implementation cost is high the organization wants this kind of ERP

package like E•Chain, since they believe that this will help them to get a

streamlined business. It can also reduce the lead time and inventory to a great

extent. If the Chain sys tries to sort out the user problems which is prevail in the

ERP implementation part with some of the clients, E•Chain would be a very

important part of the client organization.

Chapter- 6

SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS

The 80% user problems can be rectified by giving adequate training to the

employees in the implementing companies.

The resistance of the employees of the organization in which the ERP is

implemented can be removed if those employees are aware about the

benefits that the organization can attain through the implementation of

ERP.

The Implementation team and the business development team may find it

difficult to provide timely and quality of service to the customers so if

Chain Sys India Pvt Ltd can create a help- desk of all the problems they

have occurred in the past and how they were fixed, then the technical

support team will be able to answer the customer queries quickly, if there

has been a previous instance of such a problem.

If the help desk is kept up to date by adding new problems and their

solutions over a period of time, the efficiency of the implementation and

development team will increase.

The ERP team should conduct periodic audits to ensure the manual and

automatic activities are performed correctly. This will increase the goodwill

of Chain Sys India Pvt Ltd among their clients as well as it leads to a

position of offering better quality services.

Assign two or three employees in the implementation team exclusively for

resolving compliance on time.

Chapter- 7

BIBLIOGRAPHY

Books and journals

Leon, Alexis. Enterprise Resource Planning. Second edition, New

Delhi:Tata Mc Graw Hill, 2008

Grag, Vinod Kumar., and N.K.Venkitakrishnan. ERP-Concepts & Practice.

Second edition. New Delhi: Prentice Hall of India, 2004.

Nargundkar, Rajendra Marketing Research, 2nd Ed, New Delhi: Tata

McGraw-hill, 2003, Page No: 89.

Brady, Joseph. A. et al. Concepts in ERP. Bangalore: Eastern Press,2003

Altekar, Rahul.V. Enterprise Resource Planning –Theory & Practice. New

Delhi: Prentice Hall of India, 2004.

Sharma, B.C. and Ajay Kumar Gupta. “Gaining Vlalue form Enterprise

Resource Planning.” The Icfain Journal of Management Research 5,

no.6(2006): 170-174.

Prasad,P.S.S.. “Collabrative ERP For Small and Medium Industries.” The

Icfain Journal of Management Research 5,no.11(2006): 42-50

WEBSITES

www.chain-sys.com (29th June, 2009)

www.investopedia.com (12th August, 2009)

www.technologyevaluation.com (13th August, 2009)

www.networkcomputing.com (2nd September,2009)

Chapter- 8

APPENDIX

E-ChainHealthCheckProgramme2009

This questionnaire includes objective questions. We request your co operation

for the success of this program. We assure you the best service.

Name of the Organization

Address

1. How long have you been associating with Chain Sys India Pvt Ltd? In

years (If it is more than 6 months take it as one year)

Less than One year

Below 5 years

5 - 10 years

10 - 15 years

Above 15 years

2. What is increase in the total sales of the company in terms of percentage

compared to before the implementation of E-chain?

No change

Below 10%

11 - 15%

15 - 20%

Above 20%

3. What is the reduction in payback period after the implementation of

E•Chain?

4. What is the increase in the percentage of profit after implementing E-

chain? In percentage

No change

Below 10%

11 - 15%

15 - 20%

Above 20%

5. What has been the impact on your ROI on the organization after the

implementation of E-Chain? Tick the following options. Multiple

selections are allowed

Decrease in Expense

Decrease in Cost

Increase in Profit

Increase in Sales

All the above

6. What is the change in percentage of ROI after the implementation of E-

Chain? ROI is return on investment. ROI = Net income in one year/

Total investment in one year

No change

Below 10%

11 - 15%

16 - 20%

Above 20%

7. How much percentage of lead time was reduced after the

implementation of E -chain?

No change

Below 10%

11- 15%

15 - 20%

Above 20%

8. How much percentage of efficiency is increased in the management of

assets?

No change

Below 10%

11 - 15%

15 - 20%

Above 20%

9. How much percentage of productivity has been increased in employees

after the implementation of E-chain?

No change

Below 10%

11 - 15%

15 - 20%

Above 20%

10. How much percentage of total cost reduction in your company as whole

after implementation of E-chain?

No change

Below 10%

11 - 15%

15 - 20%

Above 20%

11. How do you rate the quality in the services offered by E-chain in your

transactions?

Excellent

Very Good

Good

Average

Below Average

12. After the implementation of E-chain in your company, are you able to

offer better services to your customers? How do you support this

statement?

I Strongly Agree

I Agree

Neither Agree nor Disagree

I disagree

I Strongly Disagree

13. The implementation of E-chain helped this organization to do better

cash management. How do you support this statement?

I Strongly Agree

I Agree

Neither Agree nor Disagree

I disagree

I Strongly Disagree

14. Please Rate E•Chain in terms of increase in return on investment

Excellent

Very Good

Good

Average

Poor

If any other comments please specify______________________

Prepared By

Ajith Antony. E-Chain Health Check Program, Chain Sys India Pvt Ltd,

Mob: - 9176545989

Project Report FN-11

Documents

Transcript of Project Report FN-11