The Importance Of ERP Systems Commerce Essay


Todays global economic environment is becoming more and more driven by information technology. Hence it is vital for the textile industry to promote and facilitate the adoption of information technology in the business processes of their trade so that they can maintain their edge in the highly competitive global market. Over the last decade, a small number of the textile units have started to implement and use IT in various fields in their businesses such as the accounting, payroll, inventory and purchases etc. Slowly, from this initial usage, the industries have started implementing IT solutions to other major fields like in data management systems, online data monitoring system, production fields etc. A lot of the units in the textile industry are implementing information technology based solutions to replace their traditional and outdated business process, for example, in the case of cotton industry the manufacturers are relying up on software's to buy cotton from the fields as per specific requirements and specifications, plan the manufacturing of various products as per schedule, maintain the quality of output products and finally also aid in selling the manufactured and processed goods online using the internet.

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For any industry, it is vital to maintain an efficient production management as it is the only way to increase the overall profitability of the business. A typical production manager would have things such as production output, quality of the manufactured goods and overall expenses involved in the manufacturing process all under his/her control. In the current era of manufacturing, it is always considered better if all the information was available since it will help in improving the performance of the industry. In order to help the manufacturers to make good business decisions, computer systems and software's are increasingly being used in the production planning and control over various sectors that are all involved in the manufacturing processes either directly or indirectly. However, in India even today the overall number of textile manufacturing units that make use of such a system is still very low. Therefore this paper aims to show that potential advantages of implementing such a system in the garment manufacturing industry.

One of the solutions that the information technology provided for the manufacturing sector is the enterprise resource planning software (Leon, 1999). ERP is primarily used to run a business. The term ERP was coined as an extension of the concept of manufacturing resource planning software (MRP). The main function of MRP software was to automate the entire process of maintaining a check on the raw materials needed to keep the production line running continuously and efficiently. The basic ERP software consists of applications that can be used to take care of the various functions that are involved in the manufacturing process like expenses and accounting of the financial transactions, human resources records and automation of all back office business administrative functions (Sadagopan, 1999). Oracle, JD Edwards, SAP and People Soft are some of the vendors who deal with enterprise resource planning software's. These software's primarily look towards extending and integrating the various business process models that are currently being used by the industry with IT systems. This aids in creating a highly dynamic flow of information that is used for better communication purposes both inside and outside the industry. The end result will lead to an increase in the shelf life and usefulness of the information by removing redundancy and automating the daily processes. ERP also helps in increasing the accessibility of the information by the customers and partners and also helps in enhancing the ability of the firm to respond and adapt to the changes and demands in the market place (Millman, 2004).

ERP is the latest business application that looks to integrate and streamline the different operational processes and information flows within the unit (Sharma, 2000). In the beginning an ERP solution could only be used in large scale manufacturing units due to their high costs of implementation. However, nowadays, a lot of the small scale industries are also looking at implementing an ERP package within their business operations. The primary reason for this is that the costs involved in implementing an ERP solution has drastically come down in the past decade and also the industries have ample evidence to show the improvements that have been made possible by implementing ERP. Moreover, globalization has resulted in an extremely competitive market place and the traders and businesses cannot keep relying on traditional methods anymore (Olinger, 2006).

1.1 Background of the Study

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The Indian weaving and knitting industry is a very old and traditional industry that is also greatly fragmented. Most of them are in the form of a small scale and are labor intensive in nature. The Indian textile knitting industry can be classified into three different sectors, which are the mill sector, power loom sector and the handloom sector. There are around 3.9 million handlooms, 100,000 looms and about 1.8 million power looms in the Textile industry in India. Around 95% of the overall cloth production comes from the decentralized power loom sector and about 18% of the total fabric production (P. Ganesan, 2008).

A lot of the cloth production in the textile industry is carried out by small scale fabricators in India. A significant amount of the total amount of apparels comes from the various garment manufacturing units and from the domestic small scale units. Although most of the industry is traditional in nature, the current economic climate has forced them to increase their quality and efficiency and therefore there has been a shift towards more technological solutions. The Indian textile industry is constantly evolving and adapting.

Policy efforts at different levels by the Government of India have had their impact on the market and have boosted investor confidence. It's little wonder that Tamil Nadu, multicultural state in South India is fast emerging as the 'Blue Chip' state for various investments. Tamil Nadu has done exceedingly well in attracting FDI inflows - ranking fourth among the states in terms of value of FDI investments and second in terms of the number of projects in the pipelines. Notably, Tamil Nadu has emerged as a leading state in South India in the area of attracting FDIs.

Tirupur popularly known as "Knit City" of the South India is located 60 kms away from Coimbatore city. It has come a long way from a small cotton-marketing centre with a few ginning factories to become a prominent cluster of small and medium manufacturing enterprises gainfully engaged in the production and export of a range of knitted apparels. Tirupur cluster comprises of around 5000 units which are involved in one or the other activities of Textile value chain. There are no precise data available as to the exact number of units in the different areas of value chain. However the growth of the Garment industry as a whole can be traced to the specialization of different activities up to the stage of garmenting in Tirupur. Such specialization has given the required cost advantage to compete in the international market.

1.2 Need of ERP in Textile Industry

Enterprise resource planning provides solutions and concepts that can be used by businesses to manage their resources as a whole. The main objective of ERP would be to improve the efficiency of a company. ERP tries to automate all the different processes of an organization that ranges from maintaining accounts from the shop floor to compiling data from across the organization and getting rid of expensive links between different computer systems. Once all processes are integrated, the company's efficiency will vastly improve and this will lead to more profits for the organization and better products and service from the firm to the customers.

The textile industry in India currently lags behind all other sectors in implementing information technology to improve their operations. This trend is slowly changing. In order for them to compete domestically and internationally, they have to keep improving themselves. This could be done by switching over to ERP to improve their operations.

1.3 Aims and Objectives of the Study

The aim of this research is to understand the importance of ERP systems and its significant role in knit garments manufacturing industries' supply chain. It also aims at developing strategies and techniques to develop Adams Hosieries, Tirupur into a lean and agile manufacturing unit.


To identify the role of ERP system in knit garments manufacturing industry

To evaluate and implement ERP system in a developing company based in Tirupur, India.

To critically analyze the literature available for ERP systems.

To study and review various case studies where ERP systems have been implemented

To assess the benefits the company will reap by implementing ERP systems.

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To make the company lean and agile by improving its supply chain management.

To eradicate any issues within the company and between its suppliers and buyers.