its project - main report

8/9/2019 ITS Project - Main Report

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EXECUTIVE SUMMARY

This report gives a brief account of the issues as to why ACS Textiles (BD) Limited should

invest in information technology (IT). The study tries to make an inquiry about why the top

management of a company would go for implementing such costly project. A shift is

occurring in the Information Systems (IS) paradigm towards integrating IS activities with

business activities. To investigate this development further, the study examined business

performance measurement frameworks, and adopted these in compiling IS effectiveness

measures relevant to the business environment.

A critical aspect of a firm's IT investment is that it not only provides gains for the investing

firm, but also creates positive spillovers for value chain members. The Chief Information

Officer (CIO) should have both a deep understanding of information technology and a good

grasp of the business's overall business goals and financial position. They know how

information flows through the company and how to use technology to manage and optimize

that information. These spillovers are attributable to the fact that firm level IT investments

result in the automation and/or reengineering of internal processes downstream.

The paper examines the effectiveness of IT investment leading towards favorable business

results. The data shows that ease of use, frequency and length of use, and company culture

and attitudes of employees towards IT affects the company's performance. The direct

impact of IT investment on performance was not detected. This study found an indirect

effect of investment in IT on performance.

In our study, we have tried to categorically give an overview of some of the major issues

like-

Introduction of ERP (Enterprise Resource Planning) and its impact on an

organization.

Existing business communication system vs. emerging web-based and integrated

communication system.

Manual vs. electronic business communication system.

Porters Five Forces Model and value chain analysis.

Six Strategic objectives a company can pursue through IT investment.

Questionnaire which attempts to explore the employee attitude towards Information

Technology.

Our findings appear to indicate that executives in ACS are business-performance oriented

rather than technology-oriented in their attitudes to IT performance and the top


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management is in favor of smooth flow of an integrated business communication system

which is cost effective.


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CHAPTER-1

INTRODUCTION

1.1Statement of the Research Problem

As a requirement of the course, we got an opportunity to make a project based on IT

investment and its impact in business operation; we are writing this report on the basis of

the facts and figures we have collected and analyzed. During the last three weeks, we have

physically visited different functional departments of ACS and personally interviewed the

employees, top managers of ACS and consulted with knowledgeable persons. This report

has been written based on the findings of the investigation.

1.2Objective of the Study

The basic objective of study was to identify areas where ACS can create business value and

enduring competitive advantages through application of information technologies and

empower its workforce.

Significance

We expect that, the study will help to have ideas about-

Challenges and opportunities of IT investment.

Conflict of Goals between lower level employees and top management regarding IT

issues.

The research findings may help policy-makers to understand what key factors helped

implement successful competitive strategies value creation through IT investment.

1.3Research Methodology

Selection of an appropriate methodology is very much essential and the total success of the

study depends on it. Data collection, processing & the best use of it are very important. The

study was grounded in survey data through questionnaire obtained from the employees of

ACS. The samples were interviewed from different functional departments of ACS. The data

that we have used for research purposes mainly of two types- primary or raw data andsecondary data or published source.

Primary Sources

We have collected data by interviewing people directly. We have prepared questionnaire

using five rating scale and asked them to choose best option according to them. For better

understanding, we also discussed about the topic.


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Secondary Sources

The data and information is also taken from catalogs, newspapers and from the Internet.

1.4Research Instruments

Questionnaire

We prepared a questionnaire with a set of 10 questions and asked the employees and we

also asked random people from different functional departments of ACS.Our questionnaire

pattern is close ended; so that the sampling unit can make it out properly.

1.5Sampling Plan

Sampling Unit

For study purpose, we have chosen employees and top executives of ACS as sampling units.

To conduct survey we have taken interview of 10 respondents opinion to perceive theirattitudes to adaptation with newer technology system and evaluate their opinion regarding

business value creation through IT investment. Judgmental and purposive sampling method

is being followed to get the data from the respondents. Same sampling method is being

followed to get experienced persons opinion.

1.6Contact Method

Personal Interview

We took personal interview procedure for data collection and contact people to conduct our

survey. When we took the interview personally, we prepared a set of questions so that wedo not miss out taking any important information.

1.7Limitations

We have given our level best effort to work on the report and tried to find out outcomes of

our concerned topics. Our honorable teacher has given us the guidelines for completing the

project. But still we have encountered some problems to do our work because of some

limitations. Some of the limitations for this study were as follows:

People were reluctant to provide their valuable time for the collection of data, as

they were busy with their own schedule.

The sample size was small.

The time available for completing the project was not sufficient.


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CHAPTER-2

OVERVIEW AND THEORY

Overview of the Company

ACS TEXTILES (BD) LIMITED is a reputed textile firm which is a 100% British investment in

Bangladesh. CSL Software Resources limited, a local firm of Bangladesh is providing a

complete web based accounting oriented ERP package for ACS.

100% British investment in Bangladesh

Weaving - 500 Air jet in house

100,000m Daily Production@90% efficiency

Bleaching - Continuous Goller 3.2m

120,000m Daily Production Printing - Rotary Zimmer 3.2m 12 Cols

50,000m Daily Production

Dyeing - Continous Thermosol Monforts 3.2m

50,000m Daily Production

Confectioning - Complete Cut to pack facility

30,000 Sets Per day

ETP - Effluent water treatment plant

Strong Emphasis on corporate social responsibility

Different functional departments are- Design, Weaving, Processing, Printing, Cutting,

Stitching, Packaging, Lab, ETP (Industrial wastewater treatment).

Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP) is a system that integrates all the functions (planning,

manufacturing, distribution, shipping, and accounting) into a single system, designed to

serve the needs of each different department within the enterprise. ERP is more of a

methodology than a piece of software. It incorporates several software applications, brought

together under a single, integrated interface.

Let us see what differences ERP makes in the operation of a business and its result. The ERP

through which information is disseminated to all its users in seconds, gives-

Just in time inventory management

Saves storage space and reduces cost

Integration and smooth flow of information to various departments

Removes confusion in communication between various departments

Increases efficiency and effectiveness of a company

Increases transparency and accountability


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Why ERP?

ERP is a common language which translates all the complicated functional and

technical languages (language of accounting, finance, production, procurement etc.) the

into a common business language.

Through the TIME AND ACTION MODULE of ERP, the deadline line of a particular

task is set and job responsibility is allocated among employees/workers in an integrated

way.

There is ALERT MESSAGE SYSTEM if the particular task is not completed as per

schedule, the management can easily trace who is responsible for the job.

ERP practices make a more efficient and knowledgeable workforce who are well

versed in both business process and technical know-how.

Porters Five Forces Model

In porters competitive forces model, the strategic position of the firm, and its strategies,

are determined by competition with its traditional direct competitors and also they are

greatly affected by new market entrants, substitute products and service, suppliers and

customers. Information system help companies compete by maintaining low costs,

differentiating products or services, focusing on market niche, strengthening ties with

customers and suppliers, and increasing barriers to market entry with high levels of

operational excellence. A change in any of the forces normally, requires a business unit to

re-assess the marketplace given the overall change in industry information.


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Firms are able to apply their core competencies, business model or network to achieve a

profit above the industry average. By applying ERP, ACS can make a return in excess of the

industry average.

The intensity of competitive rivalry

Competitive rivalry is likely to be based on dimensions such as price, quality, and

innovation. For most industries, the intensity of competitive rivalry is the major determinant

of the competitiveness of the industry.

Technological advances like smooth functioning of ERP can protect ACS from thiscompetition.

The threat of new market entrants

In the context of Bangladesh, it is a profitable market and yields high returns mainly

because of cheap labor. This results in many new entrants which eventually will decrease

profitability and the profit rate will fall towards a competitive level.

ACS can make the barriers to market entry more difficult with high levels of operational

excellence. Very few new firms can enter right now due to power and gas shortages.

Moreover it is quite difficult for non-performing firms to exit easily as there is huge capital

costs involved.

The threat of substitute products or services

In just about every industry, there are substitutes that the customers might use if the

prices become too high. Since ACSs core products are home textiles, threats of substitute

products are not that significant in the industry.


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The bargaining power of buyer

In modern days highly competitive business environment a minute-late can cause an

institution loose an order from its buyer. In case of ACS, It gives live entries and it is linked

to theirwebsite, so buyer can place an order in advance and choose their item styles giventhere.

The scenario before implementing ERP:

Lack of communication

Lack of Demand /supply adjustment

The scenario after implementing ERP:

Communication with the buyer is much smarter now

Buyer can place an order immediately

The bargaining power of suppliers

The market power of suppliers can have a significant impact on firms profits, especially

when the firm cannot raise prices as fast as can suppliers. The more different suppliers a

firm has, the greater control it can exercise over suppliers in terms of price, quality and

delivery schedules.

The scenario before implementing ERP

Lack of communication with suppliers

Increased product delivery time

Direct information flow to supplier

The scenario after implementing ERP

Lead time reduced significantly

Smooth flow of information

2.4 Value Chain Analysis

A value chain is a chain of activities for a firm operating in a specific industry. The value

chain model views the firm as a series or chain of basic activities that add a margin of value

to a firms product or service. These activities can be categorized as either primary activities

or support activities.

Primary Activities are most directly related to the production and distribution of the firms

products and services, which create value for the customer. Primary activities include

inbound logistics, operations (production), outbound logistics, marketing and sales

(demand), and services (maintenance).

Support Activities make the delivery of the primary activities possible. They are not

directly involved in production but may increase effectiveness or efficiency (e.g. human


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resource management). Support activities include administrative infrastructure

management, human resource management, technology (R&D), supply chains and

distribution networks and procurement.

What activities a business undertakes is directly linked to achieving competitive advantage.

For example, a business which wishes to outperform its competitors through differentiating

itself through higher quality will have to perform its value chain activities better than the

opposition. A value system includes the value chains of a firm's supplier, the firm itself, the

firms distribution channels and the firm's buyers.

External and internal environment of ACS

Foreign Buyer Local Supplier

ACS TEXTILES (BD) LIMITED

Various functional departments

(internal):

Design

Weaving

Processing

Printing

Cutting

Stitching

Packaging

Strategic partners

Banks/Insurance

Competitors

Foreign

Supplier


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Value Chain Analysis describes the activities that take place in a business and relates them

to an analysis of the competitive strength of the business.

Since the company has got such a wide range of buyers and suppliers and their internal

departments they need to go through a complex set of information system in its operation.

Lets present some of the interfaces of the accounting oriented ERP to get some idea abouthow the application of ERP brings operational excellence to the business practices of ACS.

Purchase Requisition

Earlier when the transactions were used to be recorded manually then to approve a

purchase requisition a particular functional department would have to prepare the manual

requisition and send it the another department for approval. But now with the application of

ERP software, the designated employee can approve it immediately without all this

arrangements within seconds notice.

To give the entry of an item received, the item description is given. Then unit of

measurement, rate of item is given by the user and the system automatically shows thesummed up figure which is matched with item sub-group. Additional charges and deduction

is adjusted by the system as well.

When the entry is given, the information is passed to the accounts department. It can easily

detect the nature of the transaction by default and a payable is instantly created. So it

saves a lot of time and hassle which otherwise in case of manual process is quite a tiring

process.


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IMPORT LC

An unattached PI is automatically populated when we give entry of the particular supplier.

When we create a new IMPORT LC we need to click new button and search button for

checking out existing ones which are categorically generated by the software. The system

does not take save until all the process is done correctly.

2.5 Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to achieving competitive advantage.

For example, a business which wishes to outperform its competitors through differentiating

itself through higher quality will have to perform its value chain activities better than the

opposition. By contrast, a strategy based on seeking cost leadership will require a reduction

in the costs associated with the value chain activities, or a reduction in the total amount of

resources used. ACS can capitalize on the situation that very few firms are using ERP

Software currently in Bangladesh. Through the application of ERP, they acquire six strategic

objectives.


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Operational ExcellenceOperational Excellence

Line wise and station wise productionLine wise and station wise production

Actual production statusActual production status

Anytime, any placeAnytime, any place

Production monitoring system (PMS)Production monitoring system (PMS)

GREEN(shipment is quite feasible)GREEN(shipment is quite feasible)

YELLOW(either to cancel shipment or to go for sub-contract)YELLOW(either to cancel shipment or to go for sub-contract)

RED(no way to recover)RED(no way to recover)

New Products, Services & Business ModelsNew Products, Services & Business Models

In a traditional business module, Merchandiser and supplier might pursueIn a traditional business module, Merchandiser and supplier might pursue

their own interest while giving a purchase requisition or receiving goodstheir own interest while giving a purchase requisition or receiving goods

In ERP oriented module it is done in a systematic way to ensure check andIn ERP oriented module it is done in a systematic way to ensure check and

balance and smooth functioning in every single transactionbalance and smooth functioning in every single transaction

Business Process Re-engineering (BPR)Business Process Re-engineering (BPR)

Merchandiser - supply chain management - supplierMerchandiser - supply chain management - supplier

Customer & Supplier IntimacyCustomer & Supplier Intimacy

Since the ERP is web based,Since the ERP is web based,

Place live orders/entriesPlace live orders/entries

Quick feedbackQuick feedback

Two ways flow of informationTwo ways flow of information

Improved Decision MakingImproved Decision Making

Flexibility in decision making

A clearer picture about companys present status within moments notice

Detailed statistics to design future actions

Decision making regarding fund management includes

There is a complex set of interactions

LC/Back to back LC

Negotiation: gap between

Export Value Realized and liability to supplier

Competitive AdvantageCompetitive Advantage

When the above mentioned objectives are achieved a firm definitely enjoysWhen the above mentioned objectives are achieved a firm definitely enjoys

some competitive advantages.some competitive advantages.

As it is a web-based ERP,As it is a web-based ERP,

Buyer can place live orderBuyer can place live order

Better pricingBetter pricing

The systematic operation helps reducing misuse of their inputs and increaseThe systematic operation helps reducing misuse of their inputs and increase

flawless output/input ratioflawless output/input ratio


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SurvivalSurvival

Buyers put emphasis on compliance act/application of ERP as pre-requisiteBuyers put emphasis on compliance act/application of ERP as pre-requisite

Competition forces a firm to adopt technologyCompetition forces a firm to adopt technology


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CHAPTER-3

QUESTIONNAIRE

3.1Questionnaire

This questionnaire attempts to explore the employee attitude towards ERP. Your cooperation

in filling out this questionnaire will be immensely helpful in this regard.

Q.1: How do you perceive the cost of setting up ERP?

Very High High Moderate Low Very Low

Q.2: How do you evaluate the performance of ERP?

Very Good Good Moderate Bad Very Bad

Q.3: Do you think ERP is decreasing your workload?

Strongly Agree Agree Neutral Disagree Strongly Disagree

Q.4: Do you think ERP is increasing your business value?


Q.5: Which system do you feel more comfort to work with?

Existing System (Excel, Excess, TAALI) Integrated ERP System

Q.6: Do you think ERP increases your skill and encourages innovation?


Q.7: Do you encounter any software bugs while operating the system (ERP)?

Yes No

Q.8: After implementing ERP do you think it reduces the irregularities of your organization?


Q.9: Do you think regular training program is necessary to adopt with the change that ERP

brings?


Q.10: Do you think ERP is responsible for higher employee turnover rate?



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CHAPTER-4

FINDINGS, RECOMMENDATIONS AND CONCLUSION

4.1Findings

Resistance to change

In our investigation, we have found that even some highly educated employees who can

easily grab the technical know how are indifferent to learn or use this electronic business

communication system. They feel comfort with the existing system and hardly like any

changes in the system. The attitude of the employees shows they are not technology

friendly.

Fear of losing job

Some people think that the application of the software would increase employee turnover

rate. They believe the experienced workforce would be replaced by a younger generation

who are technology oriented.

Minimization of irregularities

Comparing the present communication system with the earlier manual system, the top

management expressed their satisfaction in the efficient use of resources (input). The

system lost is significantly reduced.

Bugs (Error, flaw, mistake, failure, or fault in the system)

Technical bug is a common issue encountered by the users of software program. The

employees realize the implementation process and their day to day transactions go on sideby side. So they are irritated by the bugs. Sometimes they complain the system is rather

increasing their workload.

Huge set up cost

The response of the top management indicates that the set up cost is huge and the

installation time period is long. There is huge set up and implementing costs involved. A full

package of ERP costs around 6 to 10 million and installation period varying from 6 to 12

months.

Regular training programs

For smooth operation and maintenance of the software and the business operation, regularand proper training facilities should be available. ERP a ever-changing communication

system which changes its features as per the newer requirements of business. Updates and

innovations are required all the time. So a regular training facility is a must for ERP.


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4.2Recommendations

Based upon our findings, we have recommended some aspects that can potentially lead to

improvements. The management of a company should compare the cost incurred for

implementing ERP with the value it creates and the Excellency in business operation it

achieves. If the management is to enjoy the fruits of IT investment they should set thepriorities in choosing various products of ERP (Acounting, Fixed Asset Management, Hr

Software etc). Not all the parts (full package) are required for each and every company.

ACS can take advantage from economies of scale. Their bulk production and so many

departments can make the investment cost effective. They just need to focus on proper

implementation, training program and make their employees technology oriented.

4.3Conclusion

Web-based integrated business communication is replacing the age-old manual system in allover the world since it is a question of survival. The ERP (Enterprises Resource Planning) is

popular now and the demand is on rise as the international buyers consider ERP as ERM

(Enterprises Resource management) system. They include it in the compliance act and set

as prerequisite. But for ACS or any other organization doing business in Bangladesh, the

challenges are many- huge set up cost, the socio-cultural aspects, peoples attitude and

readiness to adapt with newer technologies are major issues to be dealt with efficiently.


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BIBLIOGRAPHY

1. Laudon Kenneth C. & Laudon, Jane P., Management Information System

2. http://www.importers.com

3. http://www.acstextiles.com

4. http://www.wikipedia.com

5. http:// www.allbusiness.com

6. http://www-management.wharton

7. http://wiki.answers.com

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