ERP: Enterprise Resource Planning In Pakistan State Oil
ERP:
Enterprise Resource Planning
Enterprise
Resource Planning is a term originally derived from manufacturing
resource planning (MRP II)
that followed material requirements planning (MRP). MRP evolved into
ERP when "routings" became major part of the software
architecture and a company's capacity planning activity also became a
part of the standard software activity
Enterprise
Resource Planning systems (ERPs) integrate (or attempt to integrate)
all data and processes of an organization into a unified system. A
typical ERP system will use multiple components of computer software
and hardware to achieve the integration. A key ingredient of most ERP
systems is the use of a unified database to store data for the
various system modules.
The term ERP originally referred to how a large
organization planned to use organizational wide resources. In the
past, ERP systems were used in larger more industrial types of
companies. However, the use of ERP has changed and is extremely
comprehensive, today the term can refer to any type of company, no
matter what industry it falls in. In fact, ERP systems are used in
almost any type of organization - large or small.
In order for a software system to be considered ERP, it
must provide an organization with functionality for two or more
systems. While some ERP packages exist that only cover two functions
for an organization (QuickBooks: Payroll & Accounting), most ERP
systems cover several functions.
Today's ERP systems can cover a wide range of functions
and integrate them into one unified database. For instance, functions
such as Human Resources, Supply Chain Management, Customer Relations
Management, Financials, Manufacturing functions and Warehouse
Management functions were all once stand alone software applications,
usually housed with their own database and network, today, they can
all fit under one umbrella-the ERP System.
Although the ideal
configuration would be one ERP system for an entire organization,
many larger organizations usually create and ERP system and then
build upon the system and external interface for other stand alone
systems which might be more powerful and perform better in fulfilling
an organizations needs. Usually this type of configuration can be
time consuming and does require lots of labor hours.
THE IDEAL ERP SYSTEM:
An
ideal ERP system is when a single database is utilized and contains
all data for various software modules. These software modules can
include:
Manufacturing:
Some of the functions include; engineering, capacity, workflow
management, quality control, bills of material, manufacturing
process, etc.
Financials:
Accounts payable, accounts receivable, fixed assets, general ledger
and cash management, etc.
Human
Resources:
Benefits, training, payroll, time and attendance, etc
Supply
Chain Management:
Inventory, supply
chain planning, supplier scheduling, claim processing, order entry,
purchasing, etc.
Projects:
Costing, billing, activity management, time and expense, etc.
Customer
Relationship Management:
sales and marketing,
service, commissions, customer contact, calls center support, etc.
Data
Warehouse:
Usually this is a
module that can be accessed by an organizations customers, suppliers
and employees.
ERP IMPROVES PRODUCITIVITY:
Before ERP systems,
each department in an organization would most likely have their own
computer system, data and database. Unfortunately, many of these
systems would not be able to communicate with one another or need to
store or rewrite data to make it possible for cross computer system
communication. For instance, the financials of a company were on a
separate computer system than the HR system, making it more intensive
and complicated to process certain functions.
Once an ERP system is
in place, usually all aspects of an organization can work in harmony
instead of every single system needing to be compatible with each
other. For large organizations, increased productivity and less types
of software are a result.
FIGURE:
ERP Working Areas:
ERPs
are cross-functional and enterprise wide. All functional departments
that are involved in operations or production are integrated in one
system. In addition to manufacturing, warehousing, logistics, and
Information Technology, this would include
- Product Management
- Customer Relationship Management (CRM)
- Supply Chain Management (SCM)
- Supplier Management
- Manufacturing Management
- Financial Management
- Business Intelligence
- Collaboration & Integration
FIGURE:
Implementing of an ERP System:
Implementing
an ERP system is not an easy task to achieve, in fact it takes lots
of planning, consulting and in most cases 3 months to 1 year +. ERP
systems are extraordinary wide in scope and for many larger
organizations can be extremely complex. Implementing an ERP system
will ultimately require significant changes on staff and work
practices. While it may seem reasonable for an in house IT staff to
head the project, it is widely advised that ERP implementation
consultants be used, due to the fact that consultants are usually
more cost effective and are specifically trained in implementing
these types of systems.
One
of the most important traits that an organization should have when
implementing an ERP system is ownership of the project. Because so
many changes take place and its broad effect on almost every
individual in the organization, it is important to make sure that
everyone is on board and will help make the project and using the new
ERP system a success.
Usually
organizations use ERP vendors or consulting companies to implement
their customized ERP system. There are three types of professional
services that are provided when implementing an ERP system, they are
Consulting, Customization and Support.
Consulting
Services - usually consulting services are responsible for the
initial stages of ERP implementation, they help an organization go
live with their new system, with product training, workflow, improve
ERP's use in the specific organization, etc.
Customization
Services - Customization services work by extending the use of the
new ERP system or changing its use by creating customized interfaces
and/or underlying application code. While ERP systems are made for
many core routines, there are still some needs that need to be built
or customized for an organization.
Support
Services- Support services include both support and maintenance of
ERP systems. For instance, trouble shooting and assistance with ERP
issues.
Figure:
Advantages:
In the absence of an ERP
system, a large manufacturer may find itself with many software
applications that do not talk to each other and do not effectively
interface. Tasks that need to interface with one another may involve:
- Design engineering (how to best make the product)
- Order tracking from acceptance through fulfillment
- The revenue cycle from invoice through cash receipt
- Managing interdependencies of complex Bill of Materials
- Tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced)
- The Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level
Disadvantages:
- Personnel turnover; companies can employ new managers lacking education in the company's ERP system, proposing changes in business practices that are out of synchronization with the best utilization of the company's selected ERP
- Customization of the ERP software is limited. Some customization may involve changing of the ERP software structure which is usually not allowed.
- Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.
- ERP systems can be very expensive to install often ranging from 30,000 to 500,000,000 for multinational companies
- ERP vendors can charge sums of money for annual license renewal that is unrelated to the size of the company using the ERP or its profitability.
- Technical support personnel often give replies to callers that are inappropriate for the caller's corporate structure. Computer security concerns arise, for example when telling a non-programmer how to change a database on the fly, at a company that requires an audit trail of changes so as to meet some regulatory standards.
The Evolution of ERP
ERP
has grown over the years to become part of the entire enterprise.
From its beginning as a tool for materials planning, it has extended
to warehousing, distribution and order entry. With its next
evolution, ERP expands to the front-office. Now administrative,
sales, marketing, and human resources staff can share a tool that is
truly “enterprise-wide”.
ERP is
not just about manufacturing, distribution, and accounting. Projects,
workflow, sales, documentation, and employees play an important role
in the enterprise and its day-to-day operations.
This
diagram shows how ERP has grown since the 1990’s to accommodate the
needs of the entire organization.
ERP
MODULES v.4.6
•SAP
BC (BASIS Components) accessed through SAPGUI
SAP
BASIS addresses all security issues by incorporating an authorization
module. With increased potential for security breaches in the
computer systems around the world, BASIS consultants face a tough
task of maintaining the integrity and administering the security of
SAP systems. In SAP, security is administered for objects (profiles
and authorizations). Users are only authorized to see or change the
parts of the system required by their respective job
responsibilities.
•SAP
FI (Financial Accounting)
The SAP FI (Financial
Accounting) Module has the competence of meeting all the accounting
and financial needs of an organization. Along with other managers,
Financial Managers within your business and same module can review
the financial position of the company in real time as contrasted to
legacy systems which necessitate overnight updates before financial
statements frequently and can be generated for management review. The
real-time functionality of the SAP modules allows for better decision
making and strategic planning. The FI Module incorporates with other
SAP Modules such as MM (Materials Management), PP (Production
Planning), SD (Sales and Distribution), PM (Plant Maintenance), and
PS (Project Systems). The FI Module also assimilates with HR (Human
Resources) that includes PM (Personnel Management), Time Management,
Travel Management, Payroll. Document transactions occurring within
the precise modules generate account postings by means of account
determination tables.
•SAP
CO (Controlling)
The SAP CO (Controlling) Module provides supporting
information to Management for the purpose of planning, reporting, as
well as monitoring the operations of their business. Management
decision-making can be achieved with the level of information
provided by this module. Some of the components of the
CO(Controlling) Module are as follows:
· Cost
Element Accounting
· Cost
Center Accounting
·
Internal Orders
·
Activity-Based Costing (ABC)
·
Product Cost Controlling
·
Profitability Analysis
·
Profit Center Accounting
•SAP
HR/HCM (Human Resource/Human Capital Management)
SAP
Human Capital Management (SAP HCM) is a global Human Resources
management system solution, with personal administration,
organization management, personnel development, recruitment,
benefits, and payroll and time management capabilities including
standard language, currency and regulatory requirements for more than
30 countries. This SAP HCM training course not only prepares you for
the SAP HCM certification exam, but it also equips you with core
configuration skills and sound functional knowledge, to perform
an impressive work at job.
•SAP
AM (Asset Management) / EAM (Enterprise Asset Management)
Enterprise
asset management (EAM) means the whole life optimal management of the
physical assets of an organization to maximize value. It covers such
things as the design, construction, commissioning, operations,
maintenance and decommissioning/replacement of plant, equipment and
facilities. "Enterprise" refers to the management of the
assets across departments, locations, facilities and, in some cases,
business units. By managing assets across the facility, organizations
can improve utilization and performance, reduce capital costs, reduce
asset-related operating costs, extend asset life and subsequently
improve ROA (return on assets).
•SAP
MM (Material Management), MRP (Materials Requirement Planning),
Material Ledger)
SAP
MM is the materials management module of the SAP ERP software package
from SAP AG that is used for Procurement Handling and Inventory
Management. Materials management is integrated with other modules
such as SD, PP and QM. Materials management is used for procurement
and inventory management.
The
module has two important master data - material and vendor. Broadly,
the various levels that can be defined for a SAP MM implementation
are: Client, Company Code, Plant, Storage Location and Purchase
Organization.
SAP
Materials management covers all tasks within the supply chain,
including consumption-based planning, planning, vendor evaluation and
invoice verification. It also includes inventory and warehouse
management to manage stock until usage dictates the cycle should
begin again. Electronic Kanab/Just-in-Time delivery is supported.
It
can be divided into five major components. There are: materials
management, plant maintenance, quality management, production
planning and control, and a project management system. Each is
divided into number of subcomponents.
SAP
MM is all about managing the materials i.e the resources of an
organization. These resources include man, manpower and materials.
The main functionality within MM includes purchasing, Inventory
management, valuation and assignment, batch management and
classification.
•SAP
SD (Sales & Distribution)
SAP
SD handles sales activities and distribution, also called shipping.
The main activities are the sales order handling, and the
distribution of shipments to customers. Also the billing process,
customer invoice, delivery, and risk management is handled from the
SD module.
•SAP
PP/DS (Production Planning and Detailed Scheduling)
Manufacturing
in any company has at its disposal various resources. The nature and
the constraints of these resources are determined by some strategic
decisions. The day-to-day running of manufacturing rests with
Production Planning and Control (PP&C) The purpose of PP&C is
to ensure that manufacturing runs effectively and efficiently and
produces products as required by customers. SAP R/3 has a highly
integrated Production Planning System. The PP module is divided into
two Sub-modules, 'PP-PI' and 'Production General'. PP-PI sub-module
is designed for process industries like Oil and Gas.
•SAP
PM (Plant Maintenance)
The
SAP Plant Maintenance comprises of the following activities such as
inspection, to measures and establishes the actual condition of a
technical system, preventive maintenance to measures and maintains
the ideal condition of a technical system, repair to measures and
restores the ideal condition of a technical system and other measures
that need to be taken using the maintenance organization. SAP PM is
closely integrated with other modules (for example, Materials
Management, Production, Sales and Distribution, Personnel Management,
and Controlling) the data is always kept current and processes that
are necessary for Plant Maintenance and Customer Service are
automatically triggered in other areas (for example, a purchase
requisition for non-stock material in the Materials
Management/Purchasing area).
•SAP
QM (Quality Management)
The
SAP QM module supports tasks associated with quality planning,
quality inspection and quality control throughout an enterprise. It
sets the specifications for quality and standard testing procedures,
controls the creation of quality certificates and manages
notifications related to quality. It also stores the quality data for
raw materials, goods-in-process and finished goods.
•SAP
PLM (Product Lifecycle Management)
SAP
Product Lifecycle Management (PLM) is the integrated SAP solution
that focuses on all product-related information needed for efficient
product development and manufacturing from start to end. It supports
exchanging essential information with business partners and provides
access via Web technology.
•SAP
PS (Project System)
Projects
are generally part of the internal processes of a company. To be able
to control all tasks in project execution, you need an organizational
form that is specific to the project and which is shared by all
departments involved. Before you can carry out a project in its
entirety, the project goals must be precisely described and the
project activities to be carried out must be structured. A clear,
unambiguous project structure is the basis for successful project
planning, monitoring, and control.
•SAP
DMS (Document Management System)
SAP
DMS are for storing documents such as CAD drawings, Materials
pictures etc. with the document management system, users will be able
to view the documents with ease within their SAP systems.
•SAP
BW (Business Warehouse) BIW (Business Intelligence & Data
Warehousing)
In
the fiercely increasing competition amongst corporations it has
become mandatory to make quick and sound crucial business decisions
based on analysis of business critical data. This is the point where
data warehouses come into play. Although many companies are relying
on data warehouses, they are still struggling to achieve positive
results due to fragmented and inconsistent data. For them SAP’s
Business Information Warehouse (BW) provides a complete information
factory solution. BW is the central component in the SAP suite of
applications with an added advantage of being a software package that
can be used in both SAP and non-SAP environments.
SAP
Business Information Warehouse (SAP BW) is the name of the Business
Intelligence, analytical, reporting and Data Warehousing (DW)
solution which is one of the major enterprise software applications
produced by SAP AG. It was originally named SAP BIW, (Business
Information Warehouse), but is now known as "SAP Net Weaver BI".
ERP
6.0 (2005) with ECC 6
•SAP
CRM (Customer Relationship Management)
Customer relationship
management (CRM) is a broadly used term that covers concepts used by
organizations to manage their relationships with customers and
stakeholders to reduce costs and increase profitability by
solidifying customer loyalty. CRM brings together information from
all sources within and outside an organization to give one, holistic
view of each customer in real time. Customers can benefit from their
data being utilized within a CRM system. For instance, an increase in
unsolicited telemarketing calls is generally resented by customers
while a small number of relevant offers is generally appreciated by
customers. CRM software can enhance the collection and analysis of
customer behavior leading to more relevant communications with
customer.
Figure:
•SAP
SCM (Supply Chain Management)
Supply
chain management (SCM) is the oversight of materials, information,
and finances as they move in a process from supplier to manufacturer
to wholesaler to retailer to consumer. Supply chain management
involves coordinating and integrating these flows both within and
among companies. It is said that the ultimate goal of any effective
supply chain management system is to reduce inventory (with the
assumption that products are available when needed). As a solution
for successful supply chain management, sophisticated software
systems with Web interfaces are competing with Web-based application
service providers (ASP) who promise to provide part or all of the SCM
service for companies who rent their service. Supply chain
management’s three main flows: The Product Flow, the Information
Flow, and the Finance Flow.
The
product flow includes the movement of goods from a supplier to a
customer, as well as any customer returns or service needs. The
information flow involves transmitting orders and updating the status
of delivery. The financial flow consists of credit terms, payment
schedules, and consignment and title ownership arrangements.
The
SAP® Supply Chain Management (SAP SCM) application offers companies
not only planning and execution solutions to manage operations but
also helps boost visibility and collaboration to extend their
operations beyond corporate boundaries. SAP SCM empowers companies to
adapt their supply chain processes to an ever-changing competitive
environment, transforming traditional supply chains from linear,
sequential processes into an adaptive supply chain network in which
communities of customer-centric, demand-driven companies share
knowledge, intelligently adapt to market changes and proactively
respond to shorter, less predictable life cycles.
Figure:
•SAP
SRM (Supplier Relationship Management)
Supplier
relationship management is a comprehensive approach to managing an
enterprise's interactions with the organizations that supply the
goods and services it uses. The goal of supplier relationship
management (SRM) is to streamline and make more effective the
processes between an enterprise and its suppliers just as customer
relationship management (CRM) is intended to streamline and make more
effective the processes between an enterprise and its customers. SRM
includes both business practices and software and is part of the
information flow component of supply chain management (SCM). SRM
practices create a common frame of reference to enable effective
communication between an enterprise and suppliers who may use quite
different business practices and terminology. As a result, SRM
increases the efficiency of processes associated with acquiring goods
and services, managing inventory, and processing materials.
According
to proponents, the use of SRM software can lead to lower production
costs and a higher quality, but lower priced end product. SRM
products are available from a number of vendors, including 12
Technologies, Manugistics, PeopleSoft, and SAP.
SAP
SRM simplifies and automates procurement. The SAP SRM process
integrates supplier qualification, negotiation, and contract
management more tightly and cost-effectively with other enterprise
functions and their suppliers’ processes – through a single
framework with support for multichannel suppliers.
The
SAP SRM application is designed as a long-term foundation to secure
the cost and quality advantages of center-led purchasing and
broadened supplier involvement for enduring value and long-term
results.
Figure:
•Master
Data Management (MDM 5.5 SP04)
There
is a wish for consistent master data, but its realization is made
difficult by increasingly scattered storage of data in different
systems, the global use of master data and employment of one and the
same set of data in various contexts. Managing an object’s partial
attributes in different systems, caused by system-spanning processes,
is becoming more complicated. Approaches aimed at integrating systems
are only partially capable of solving the problems of scattered data
because integration scenarios are built on correct master data that
is often not available. Without consistent master data, however, the
complexity of business information processes cannot be reduced. In
addition, incorrect or insufficient master data management will
result in significantly restricted data quality in the medium to long
term. This will lead to increased efforts being required for ongoing
maintenance and migration, increased cost, and, in the worst case, a
loss of business partners or competitiveness. SAP Master Data
Management provides users with a tool to optimally master any
challenges with respect to central master data management and
maintenance.
BENEFITS:
Companies that manage their business processes based on
consistent data across system boundaries will derive significant
benefits from master data management, such as:
- Companywide consistent data
- Data consistency across systems and the company within the business network
- Improved collaboration with business partners
- Optimized business processes
- High-quality data
- Cleaned-up inconsistent or outdated master data
- Lower cost for data management, data distribution and correction of erroneous data
- Improved competitiveness
FIGURE:
•SAP
CPM (Corporate Performance Management)
SAP-systems consulting services to help companies get fit for
Business Intelligence and Corporate Performance Management and gives
support to cover all questions and matters concerning strategy,
conceptual design and corporate-wide implementation of SAP BI &
CPM software components.
- Introduce key performance indicator systems
- Set up control loops for operative process improvements
- Set up and optimize corporate-wide information systems and data warehouses
- Set up solutions for integrated planning, simulation, and forecasting
- Introduce integrated control solutions and management cockpits
Figure
•SAP
SEM (Strategic Enterprise Management)
SAP Strategic Enterprise Management (SAP SEM) delivers
end-to-end ERP software capabilities to support the entire
performance management life cycle, including:
- Consolidated financial reporting – With SAP SEM, you can generate consolidated financial and managerial reports for a globally distributed business or entity. The application can aggregate financial data from SAP and non-SAP systems into a single analytical reporting environment, enabling you to monitor the financial performance of individual subunits.
- Planning, budgeting, and forecasting – SAP SEM helps enables you to model various planning options and use preconfigured planning software to get a quick start on operational planning tasks such as cost center planning and sales planning. The application supports traditional budgeting and rolling forecasts as well as collaborative planning.
- Corporate performance management and scorecards – With SAP SEM, you can develop KPIs that support a number of popular scorecard methodologies, including balanced scorecard, economic value-added and activity-based costing methods. You can link operational and strategic plans and develop scorecards and performance measures based on financial and nonfinancial data.
- Risk management – SAP SEM helps you identify, quantify, and analyze business risks within individual business units and manage risk-reducing activities.
Scope of ERP in Pakistan
- Integrate Financial Information
- Integrate Customer Order Information and Store Customer History
- Streamline the manufacturing process
- Standardizing HR Information
- Store and Analyze productivity information for employees and facilities
- Allow inter-departmental process monitoring and reporting
- Reports with data from across the organization
- Allow Marketing and Management to monitor and analyze all stages required to provide
- the clients with the client with products and services
- Allow users limited and monitored access to data across the organization according to needs.
Companies with ERP implemented
Progress
of ERP in Pakistan
SAP looks to increase its presence in Pakistan…
SAP
seems to once again making a push further into Pakistan. It is
looking for people to hire, and for business partners (resellers and
system integrators). It’s been all over the informal newswire and
SAP has been giving out large ads in the papers going “we’re
hiring!!” If you’re a lowly paid or out of work SAP consultant in
the US, time to move back here…
Pakistan,
India, China and the ME region are a hot market for ERPs, and
possibly the last “real, large” market for enterprise ERP
systems.
SAP
currently is installed at over 20 of the largest companies in
Pakistan, with the customer list including the likes of PSO, Indus
Motors, etc
Oracle
isn’t sitting on the sidelines either; they have closed quite a few
projects through several system integrators in the country in the
last 8 months. With their acquisition of iFLEX, a core banking suite
they are also now wading into the banking sector in Pakistan, much to
the annoyance of IBM+Misys.
All
this while Microsoft’s Dynamics (Their ERP suite: GP, Solomon, etc)
initiatives look as cold as an uncooked kettle of fish, as usual. I
guess the regular licensing and ISV sales are more than making up for
it.
SYSTEM, APPLICATION, PRODUCTS (SAP):
SAP
the company was founded in Germany in 1972 by five ex-IBM
engineers.SAP stands for
Systeme,
Andwendungen, Produkte in der Datenverarbeitung
which - translated to English - means Systems,
Applications, Products
in Data Processing.
Being incorporated in Germany, the full name of the parent company is
SAP AG. It is located in Walldorf, Germany which is close to the
beautiful town of Heidelberg.
SAP
R/3 is delivered to a customer with selected standard process turned
on, and many other optional processes and features turned off. At the
heart of SAP R/3 are about 10,000 tables which control the way the
processes are executed. Configuration is the process of adjusting the
settings of these tables to get SAP to run the way you want it to.
SAP functionality included is truly enterprise wide including:
Financial Accounting (e.g. general ledger, accounts receivable etc),
Management Accounting (e.g. cost centers, profitability analysis
etc), Sales, Distribution, Manufacturing, Production Planning,
Purchasing, Human Resources, Payroll etc For a full description of
the modules included in SAP. All of these modules are tightly
integrated which is a huge blessing.
Benefits of SAP
SAP
ERP delivers a set of proven, robust solutions. With their extended
cross-enterprise functionality, you can manage corporate assets and
critical business processes better. By giving you access to data
locked away in legacy and non-SAP software systems, they protect your
IT investment. SAP ERP provides the tools to leverage the skills and
training of your staff. As new business scenarios and technologies
emerge, you will find SAP ERP has already positioned your
organization for accelerated change.
SAP ERP delivers a comprehensive set of integrated,
cross-functional business processes. With SAP ERP, you can gain the
following benefits:
Improve
Financial Management
Enhance your financial management skills with integrated
business analytics. Gain insight into your organization’s key
performance indicators. Take actions that improve overall performance
and profitability. Employ comprehensive analytics and reporting
functionality to ensure regulatory compliance.
Manage
Your Most Valuable Asset – Your People – Well
Support
your employees through every phase of their employment, from
recruitment and training to development and promotion. Empower your
global workforce with a host of easy-to-use self-services. Provide a
single point of contact for all HR service requests through an
employee interaction centre. Track costs and the ROI associated with
your HR projects.
Respond
Faster
Empower
the people in your organization by providing the information they
need to react promptly and respond proactively to market changes and
competitive challenges.
Reach
Further
Extend
the reach of your business processes beyond your enterprise. Promote
collaboration by providing easy access to a consolidated and
consistent view of your business processes. Enable partners,
suppliers, and customers to engage with you in real time.
Sharpen
Business Insight
Master
analytics and performance management to proactively identify
opportunities and align strategy across your business. Profit from
direct access to enterprise information. Operate effectively by using
streamlined dashboards to inform your strategic and operational
decisions.
Improve
Extensibility
Extend your business processes to include just the right
mix of customer relationship management, supply chain management,
product life-cycle management, and other functionality as business
needs evolve. Augment functionality and business processes by
implementing the SAP xApps™ family of composite applications,
high-quality software from SAP and its expanding ecosystem of
software partners.
Curb
Integration Costs
Position your business to adapt to business requirements
as you discover them. Significantly reduce total cost of ownership.
Deploy only the components you need at the time your business needs
require them.
INTRODUCTION TO THE COMPANY
Pakistan
State Oil is the oil market leader in Pakistan’s energy sector. The
company has the largest network of retail outlets of over 3,800
outlets, representing 80% participation in total industry network, to
serve the automotive sector and is the major fuel supplier to
aviation, railways, power projects, armed forces and agriculture
sector. PSO takes pride in continuing the tradition of excellence and
is fully committed to meet the energy needs of today and rising
challenges of tomorrow.
Pakistan
State Oil, the largest oil marketing company in the country, is
currently engaged in storage, distribution and marketing of various
POL products. The company’s current value of Rs. 75 billion, its
82.1% share in the black oil market and 61.2% share in the white oil
market, alone speak volumes about its success.
PSO
has the widest strategic oil distribution network. This network
comprises of 29 storage depots and 9 installations, 860,000 MTs of
capacity i.e. almost 81% of total national storage, numerous pipe
lines network and equity partnership in White Oil Pipeline Project
(WOPP) from Karachi to Mehmood Kot.
The
fact that PSO serves 2.8 million retail customers on daily basis,
along with 2000 industrial units and business houses, is indicative
of its vast customer base. The company has also been meeting the fuel
needs of various government entities, armed forces, railways,
agriculture sector, IPPs and industrial units. PSO also provides Jet
Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel
at 3 ports.
PSO
is considered as one of the most successful mergers in the history of
Pakistan. The company has been the winner of Karachi Stock Exchange
Top Companies Award for many years and because of its astounding
growth in terms of sales and turnover, combined with its status of
being the first Pakistani Public Sector Company to become a member of
the World Economic Forum (WEF) had made PSO a notable company world
over.
PSO OVER THE YEARS:
COMPANY PROFILE
As the largest oil marketing company of Pakistan, PSO is engaged in storage, import, distribution marketing of petroleum products petrochemicals aviation and bunker fuels LPG and CNG dominates the country’s fuel and energy need. The company has largest retail network in the country and the most extensive terminal and depot network. PSO has listed in Asia’s largest 1000 companies by Asia Week.
Since its inception in
1976, the company has been meeting more than 70% of country’s fuel
needs. PSO’s 3805 outlets all across the country markets more than
12 million tons of fuel products annually.
VISION:
“To excel in delivering
value to customers as an innovative and dynamic energy company that
gets to the future first.”
MISSION:
“We are committed to
leadership in energy market through competitive advantage in
providing the highest quality petroleum products and services to our
customers, based on:
- Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development
- Lowest cost operations and assured access to long-term and cost effective supply sources.
- Sustained growth in earnings in real terms
- Highly ethical, safe environment friendly and socially responsible business practices”
SAP
MODULES LIVE AT PSO
- Financial Accounting (FI)
- Controlling (CO)
- Material Management (MM)
- Sales & Distribution (SD)
- Project System (PS)
- Quality Management (QM)
- Production Planning (PP)
- Plant Maintenance (PM)
- Human Resource & Salaries (HRS)
- Oil & Gas Solutions (OGS)
- Basis Application Module (BC)
Detail of Modules Implemented:
Financial Accounting (FI)
- Designed for automated management and external reporting of general ledger, accounts receivable, accounts payable and other sub-ledger accounts with user-defined charts of accounts.
- Key Elements:
- General Ledger
- Accounts Payable
- Accounts Receivable
- Consolidation
- Treasury Management
Controlling (CO)
- Represents the company’s flow of cost and revenue. A management instrument for organizational decisions.
- Key Elements:
- Overhead Cost Controlling
- Cost Center Accounting
- Activity Based Costing
- Internal Orders
- Profit Center Accounting
Material Management (MM)
SCM (Supply Chain Management) is being
handled through this module. Process comprises of Purchasing,
Inventory Management and Vendor Payment. Strong MIS ensures
the timely availability of reports ranging from the middle management
to higher management.
- Key Element:
- Purchasing
- Inventory Management
- Warehouse Management
- Invoice Verification
- Corporate planning
- Finance (General Accounts, Treasury, Insurance)
- Vendor Material Valuation
- Logistic Info System
- Operations with all depots and terminal
- Procurement & Services
- Retail with all divisional offices
- Security & Services
- Supply
- T & OD
Sales & Distribution (SD)
- Designed to support all the tasks and activities needed to carry out customer sales, order entry, shipping, delivery and billing.
- Key Element:
- Pre-Sales Support
- Sales
- Shipping and Transportation
- Billing
- Credit and Risk Management
- Returns and Repair Processing
Production Planning (PP)
- To plan and control the manufacturing activities of a company.
- Key Elements:
- Bills of Materials, Routings and Work Center
- Capacity Planning
- Material Requirement Planning
- Sales and Operational Planning
- Demand Management
Plant Maintenance (PM)
- To maintain your equipment (e.g. a machine, an oil rig, an aircraft etc).
- Key Elements:
- Preventative Maintenance
- Maintenance Order Management
- Maintenance Planning
- Equipment and Technical Objects
Project System (PS)
Project
System is an Integrated Project Management Tool. The primary
functions of Project System are to plan, execute and monitor the
Costs and Progress of the Project. The business process starts from
Budget Proposal phase to Capitalization of the cost into Assets.
- Key Elements:
- Budget Proposals
- Operational Structure
- Project Planning
- Budget Approval
- Information System
- Project Execution and Integration
- Work Breakdown Structure
Quality Management (QM)
- To maintain inspection, specification, record inspection results and to perform evaluation.
- Key Element:
- Quality Inspection
- Quality Control
- Quality Notification
- Test Equipment Management
- QM-IS
Human Resources (HR)
- Complete integrated system for supporting the planning and control of personnel activities and information.
- Key Element:
- PA Recruitment
- Personnel Administration
- Benefits
- Personnel Development
- Compensation Management
- Personnel Cost
- Time Management
- Shift Planning
- Incentives Wages
- Time Sheet
- Travel Management
- Travel Planning
- Travel Expenses Human Resources Information System
Basis Application Module (BC)
- Systems Administration, security and connectivity functions.
- Client / Server Architecture.
- Presentation Layer.
- Application Layer.
- Database.
- Application Architecture
- Application can run on different hardware and software platforms.
SAP Terminologies
- Company Code:
- Means an independent unit producing its own balance sheet.
- Plant:
- An organizational unit within logistics that subdivides an enterprise from the view point of production, procurement and material planning.
- A plant may represents a variety of entities like:
- Production facility
- Distribution center
- Regional office
- Corporate headquarters
- Maintenance location
- Masters:
- Master data are records that remain in the database for a long period of time.
- It is created and maintained centrally.
- A centralized database prevents data redundancy.
- Transaction:
- Graphical screen view of a logical process/document.
SAP Benefits
- SAP offers Best Practices for all Industries.
- Standardized business processes and approach across companies.
- Long term strategy for business system.
- Global system environment: multi-currency, multi-language and country specific support for government reporting and taxation.
- Integration of application, processes and data.
- Dramatic increase in business information.
PERCENTAGES OF MODULE
SAP is very huge software its all modules in full percentage cannot be implemented in all the places. Pakistan State Oil (PSO) also has implemented only 11 modules and only 70%-80% of these modules are working in present stage in PSO. Percentage wise these modules are represented below:LIST OF BUSINESS PROCESS
Following is list of
Business Processes of Sales and Distribution Module implemented in
PSO.
This file contains
evaluation, development and scope of ERP in Pakistan and in what
major companies it is implemented recently. Implementation details of
ERP module in PSO. Business processes and Percentage wise their
representation in a chart.
INTERVIEW
We had
an interview of Naveed Anjum Zaidi
(DGM of NBD, PSO Petroleum)
and
SHAEBH
AMAN (DGM of SAP, PSO Petroleum)
Q1. What is ERP?
Ans.
Software Interrogated solution to run the business.
Q2. Which ERP software using?
Ans.
We are using SAP software.
Q3. When it was installed?
Ans.
Negotiation was made in March 2003 and start implementing it.
Q4. Who is your vendor?
Ans.
We purchase this software from German company Siemens. It is the 1st
largest company who is selling integrated software SAP.
Q5. Time required for
implementing ERP?
Ans.
Decided to be installed in 9th
months but due to company personal problems. It was complete
implemented in December 2004 and went live in July 2005. First HR
module was installed in July 2004 and in January 2005 testing was
being started.
Q6. How many modules are
installed?
Ans.
we have installed 10 modules:
- Financial Accounting (FI)
- Controlling (CO)
- Material Management (MM)
- Silo Management (SILO)
- Sale & Distribution (SD)
- Transportation & Distribution (TD)
- Project System (PS)
- Quality Management (QM)
- Production Planning (PP)
- Plant Maintenance (PM)
- Human Resource & Salaries (HRS)
Q7.
What complications were faced while implementing?
Ans. People were not
accepting this new software they took some time to adjust and learn
how to work in this software.
Q8. Effect on number of
employees?
Ans. There was no such effect
on number of employees because we have decided before implementation
that we will not layout our any old employee and neither have we
hired any employees.
Q9. Which software was being
used before SAP in PSO?
Ans. Legacy was used before
SAP.
Q10. What is your future
planning? How many modules are there to be installed?
Ans. We have implanted all
modules no other modules are left to be implemented.
Q11. What were the benefits
you gain by implementing SAP?
Ans.
It is very easy to use. It is time saving and
once the person have understood how to used it, It gets easier and
easier. Due to SAP the expansion rate of business is high and once we
have feed one entry it will never go wrong.
NOTE:
Pictures used in PSO Modules doesn’t give the entire
concept of any business workflow in an organization. It just provides
general step by step processes of an organization.
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