Getting An IT Grip on Costs Smart Investor, November, 2002 Competition in the post-AFTA manufacturing environment will be stiff, especially for the small-and-medium enterprises. One solution to implementing a reliable, customisable and user-friendly solution is the KarenSoft Extended Enterprise Resources Planning (ERP2) for the SMI's manufacturing environment. The Asian Free Trade Area (AFTA) implementation is just around the corner. You're in the Small Medium Industry (SMI) and you wonder what the hoopla is all about. After all, AFTA doesn't affect you, right? Wrong! All businesses be they big or small will be influenced by the effects of globalisation, deregulation and digitisation. You've heard about how AFTA will open global markets and how you will earn from an almost limitless market but if you do not have a proper internal system of handling the new onslaught of business, you'd be at best, floundering while the rest of the SMIs gleefully anticipate earning considerable profits. Looking at this scenario, how would an SMI take charge and still be in control when AFTA happens? To be able to compete and still operate profitably, SMIs acknowledge that cost reduction is the key. Escalating costs have always been the bogeyman for the business community, and more so for SMIs. The main point is this: only when your costs have been lowered can you begin to look into areas like competing with the other SMIs in the local or, in this case, the international arena. Lowered costs means an SMI can begin to look beyond local boundaries - the SMIs can then tap into the much talked about global market, provided the SMIs costs are kept low. The question is, how does an SMI lower costs? The answer lies in implementing a reliable, customisable and user-friendly solution such as the KarenSoft Extended Enterprise Resources Planning (ERP2) for the SMI's manufacturing environment. KarenSoft ERP2 clearly simplifies the job for many SMIs eager to lower costs and increase efficiency in their manufacturing environments. The KarenSoft ERP2 is also a web-enabled e-Business solution (applicable to both industrial and commercial sectors) so it's basically a two -in-one solution - one that allows you to improve and automate your internal processes and one that enables you to conduct e-Business. Automating SMIs' Internal Processes The KarenSoft ERP2 is an all-inclusive solution which comprises seven cycles: Sales Distribution, Materials Requirements Planning, Logistics Management, Planning and Production, Financial Accounting & Fixed Assets, Human Resources information, and Customer Relationship Management. The Customer Relationship Management (CRM) system assists SMIs in managing and ultimately, applying existing customers' information to maintain and improve the business. At the same time, it also generates more prospects, taking into account their product information, marketing strategies, customer feedback and competitors. This means through CRM, SMIs can analyse market share and market intelligence, track marketing campaigns and handle sales force management so SMIs can increase rapport with current customers while strategizing and growing their business. On a more pragmatic note, CRM improves customer retention rate leading to greater customer lifetime value (CLV). Customer lifetime value (CLV) describes the present value of the stream of future profits expected over the customer's lifetime purchases. For example, the CLV of a supermarket's loyal customer can easily exceed RM30,000.00. Figures like this, coupled with the fact that it costs roughly five times more to attract a new customer than to retain an existing one, demonstrates the absolute necessity of CRM. SMIs can use the Financial Accounting (FAS) & Fixed Assets (FAR) systems to manage fixed assets, generate unlimited financial reports, manage cash flow, calculate reinvestments, track and improves cash management and more. Furthermore, KarenSoft ERP2's Financial component saves time, reduces workload and optimises scarce resources. Besides the two systems, SMIs would also find the Sales Distribution System (SDS) incredibly easy to use and extremely helpful for the sales and marketing departments. They would be able to use this system to capture customer information, track sales quotations, initiate sales processes based on sales orders and monitor multicurrency pricing, order status and sales performance. Besides the Sales Distribution System, the Materials Requirement Planning (MRP) component enables the Materials Control Department of any SMIs to explode material requirements based on sales orders or forecasts with reference to a structured Bill of Materials. As Such, when an order is received, the SMI would be able to know automatically how much of stock is currently stored, how much of materials to purchase and if extra materials are needed, the minimum quantity to order Included in the KarenSoft ERP2 is another component which allows SMIs to control scheduling and planning. The Planning and Production system (PPS) allows SMIs to plan product scheduling based on the current orders or forecasts, machine capacity and manpower. SMIs would find this module irreplaceable as it gives SMIs an accurate idea of the available resources as well as them monitor quality at each process and stage and provides support for inventory management. For example. SMIs can monitor material issues, machine performance, production flow, daily output and control each process. Since the system can handle unlimited user-defined work-in-processes, SMIs will find this system helpful in supporting the Shop floor in the case of semi-finished and finished goods inventory management. Subsequently, procurement is handled by the Logistics Management System (LMS) whereby the Purchasing/Logistics department can initiate purchasing processes based on purchase requisitions and subsequently monitor order status. At the same time, they can also monitor vendors/subcontractors' performance, multi-currency pricing, delivery and quality. When this is integrated into the Financial component, Purchase Orders can be automatically generated, thus saving time and increasing work efficiency. Moreover, KarenSoft ERP2 taps into the local SMI environment, understanding local operations, statutory requirements and cultural factors, rendering it completely user-friendly. With the Internet becoming more prevalent in today's business, SMIs would be glad to know that KarenSoft ERP2 comes fully web-enabled to support IT initiatives. KarenSoft also provides IT and applications training with after-sales services and support so SMIs can be assured of quality support all the time. SMIs and SMEs would find the KarenSoft ERP2 comprehensive as it supports the Balanced Scorecard concept ie looking at four perspectives of the business - the financial, customer, innovation and learning as well as internal processes. Implementing KarenSoft ERP2 in their respective organisations would equip SMIs with an added competitive edge. Among the other clear-cut benefits are: duplicated work is minimized; bottlenecks and inefficiencies can be identified; pricing remains competitive; inventory holding costs and human resources costs are lowered and the SMI concerned can respond to customers in a timely manner. KarenSoft ASP Model - An Alternative Besides the standard version, KarenSoft also offers the ASP version of ERP for SMIs who are unable to afford ERP2. KarenSoft provides SMIs with the Supply Chain Management solution via the ASP model where software is delivered over the Internet for a fee. As an Intel Solutions Provider, KarenSoft works closely with world-class data centres to supply SMIs with web-enabled ERP2 solution.