If Pakistan Defaults?

What happened if Pakistan defaults or bank corrupt and what a common people can do in this situation. These are the most frequently asking question now a days.

Let’s understand first, what is default means in economy. If a person fails to pay financial debt and declared that he or she has no source to pay the debt, than bank or mortgage company declared him or her as defaulted person. Similarly, when a country is unable to honor its financial commitment on time with its creditors such as IMF, world bank or other private financial institutions then a country considered to have defaulted.

The Worst Scenario. What is the possibility to default Pakistan?

Initially state declared to IMF and other creditors that they have defaulted. IMF give them one- or three-months’ notice to pay their debts and other financial commitments. If Government unable to pay the debts than you may ask them to renegotiate. In this case IMF may increase the interest rate , it damage your credit rating. After that, no other financial institution gives you further loan if you defaulted. If you cannot take further loan than your development work cannot be continued, and you must postpone your development projects. The second impact on stock market, investor withdraw all their investment and resulting your stock market may crash. Due to your bad credit rating, you cannot open new L.C (Letter of Credit) and cannot import materials and necessary things, it affects your industries and consequently resulting unemployment in the country, increase inflation and the currency of the country can be devaluated, if Pakistan declared defaulted than dollar may reach up to Rs.350 or Rs.400. Default is not a good condition for any country, it takes around two years to stabilize the country and five years to regain your credit credibility in the world. This is the worst situation if Pakistan default.

The positive Points

Now comes to the positive points, “The Half Glass is filled.” Countries can behave differently during their default.

Pakistan never default Alhamdulillah since its beginning. It is not rare for a country to default. Many countries default many times, its about 146 countries which have been defaulted some time.

Before 1939: Spain declared as defaulted about fifteen times.

1987: North Korea defaults

1994: Mexico defaults

1998: Russia defaults when it unable to pay its treasury bond.

2001: Ecuador defaults

2015 Greece defaults

2017 Venezuela defaults.

All these countries are surviving after these crises. Iran is facing sanctions since couple of decades, but they are still surviving. It is an inconvenient situation but not a question of life and death. Alhamdulillah Pakistan is a food sufficient country we have enough food to survive in sanctioned situation. We are depending on Oil, and we face energy crises, but we have hydro power as well as solar power to produce energy, even though its not sufficient but prevent blackout situation in the country. The major source of our income is our foreign remittance, if they have trust on the Government, they keep continue to send remittance in the country, which may help to stabilize our economic situation. Currency devaluation can help exporters and makes it cheaper for foreign countries to buy its products and services. Hope for the best.

What an average person can do?

              

1.     Convert their savings into Gold (Gold bars)

2.     Convert their savings into other stable currency.

3.     Purchase property (rental property)

4.     Farming (vegetables, cattle)

5.     Install solar panel to avoid upcoming energy crises.

6.     If you are running business, then open an office in other country also.

 

All above are my personal recommendation not an expert advise hope for the best once again.

 

Why we need ERP in Automotive Industry ?

 

 

Why we need ERP in Automotive

 Industry ?

The very basic question comes in our mind, is why Enterprise resource planning? Which called ERP. To answer this question, let's examine this typical business scenario. A client approaches the sales team to buy a car of a particular model. The sales team approaches the Delivery yard to to Check the availability of the required product. In this case the product is out of stock the sales team approaches the production planning Department to manufacture the product the production planning team checks with the Material Handling department for availability of CKD KIT, local parts, raw material, and consumables. If the required raw material and parts are not available within the inventory the production planning team buys the raw material from the vendors/suppliers. Then production planning forwards the raw materials to the shop floor for the execution of actual . Quality Department check the quality of the product during the production execution. Once the product is ready, the [shop] floor team forwards the goods to the sales team who in turn deliver it to the client via dealer. The sales Team updates the finance Department with revenue generated [by] the sale of the car. The production planning team updates the finance department with payments to be made to different vendors for raw materials. Plant maintenance department ensure the availability of machines and perform periodic maintenance to avoid any machine breakdown. All departments approach HR for any human resource related issues.

 

That is the typical business process of any manufacturing company. To summaries we can say Enterprise has many departments or business units to achieve a common goal to produce a product at right time, right quantity in right cost and deliver it timely to earn profit.

To achieve this common goal, these departments or business units continuously communicate and exchange data with each other. The success of any organization lies in its effective communication and Data exchange within these departments as well as associated business partner such as vendors and customers.

Based on the Manners in which communication and data exchange is managed Enterprise software systems can be broadly classified as

 

1.     Ddecentralized systems

2.     Centralized systems

Decentralized systems

 

It is very old concept and lies before or early age of computer systems, in this system, each department is the owner of its data and share this data with other department on request. It was called as decentralized system of Data Management. There are lot of problem with this system, Departments do not have access to information or data of other departments.

to identify the problems arising from Decentralized Enterprise management systems let's look at the same business process again the customer approaches the sales team for a product But this time he needs the product on an urgent basis The sales team do not have real-time information access to the products inventory so they approach the inventory Department to check the availability of the product This process takes time and the customer chooses another vendor, leading to loss of revenue and customer dissatisfaction.

 Now suppose the product is out of stock and the sales team approaches the production planning team to manufacture the product for future use. The production planning team checks the availability of the raw materials required. Raw material information is separately stored by production planning as well as the inventory department. Thus the data maintenance cost goes up. A particular raw material required to manufacture the product is available in the inventory but according to the database of the production planning team, the raw material is out of stock, so they go ahead and buy the raw material. Thus material as well as inventory costs go up. Once the raw material is available the shop floor department suddenly realizes, they are short of workers, they approach the HR department, who in turn hire temporary employees and higher than market rates. Thus labour cost increases The production planning department fails to update the Finance Department on the materials they have purchased. The Finance Department Defaults the payment deadline set by the vendor causing the company loss of its reputation and even inventing a possible legal action. These are just a few of the many problems with decentralized systems.

Some major problems with the decentralized system are Numerous disparate information systems that are developed individually over time and are difficult to maintain Integrating the data. It is time and money consuming, inconsistencies and duplication of data, lack of timely information leads to customer dissatisfaction, loss of revenue and reputation. High inventory  and human resource . These are just some of the major drawback for which we need a solution

Centralized System

 

Well, the solution lies in Centralized systems that is ERP in a company with a centralized system of information and Data Management. The data is maintained at a central location and is shared with various departments? Departments have access to information or data of other departments.

Let's look at the same business process again to understand how a centralized enterprise system helps overcome problems posed by a decentralized Enterprise system. In this case all departments update a central information system. When a customer approaches the sales team to buy a product on an urgent basis the sales team has real-time information access to the products in inventory, which is updated by the inventory department in the centralized system.

The sales team responds on time leading to increased revenue and customer delight. In case manufacturing is required, the sales team updates the demand in centralized database and Production planning Department is aware about the new demand. The production planning team checks the availability of the raw materials required via central database, which is updated by the inventory department? Thus, data duplication is avoided, and accurate data is available for timely decision. The shop floor team updates their manpower status regularly in the central database which can be accessed by the HR Department. In case of a shortage of workforce, the HR Team starts recruitment process with considerable lead time to hire a suitable candidate at market price. Thus labor costs go down. Vendors can directly submit their invoices to the centralized Enterprise system Which can be accessed by the finance department? Thus, payments are made on time and possible legal actions are avoided. It eliminates the duplication which is the key benefit of ERP. Hence a centralized Enterprise management system is required to streamline business process. This is one of many business process, there are many process in an Enterprise which have many complexity. There are many centralized Enterprise management system in the market which help organizations to automate and streamline their business process. These centralized Enterprise Systems commonly known as ERP (Enterprise Resource Planning) System. SAP is widely used ERP system around the world.

 

3 Important Batch managed materials in Automotive

 The good news for SAP consultant is that there is extremely limited concept of batch in Automotive products, but the sad news is that we must define materials as batch managed. We will cover following concepts in this blog.

What are Batch Managed Materials

What is the concept of Batch in Automotives?

Which material types should be batch managed?

 

What are Batch Managed Materials

 

Normally batch management is use in process industries such as cement industry, Batch is a group of finished or semi-finished goods having same characteristics such as color, raw material, date of manufacturing, machine/work center etc. The purpose of managing Finish Goods in batch is to identify unique group of products which are produced.

Concept of Batch in Automotives?

 

In automotive industry, every vehicle is unique. Every vehicle can recognize from its Chassis or Engine Number. But the problem is that SAP only recognize Finished Goods (FG) or Semi Finish Goods (SFG) by its batch number not by Chassis number or engine number. The solution of the problem as we solved is

1.     Define all FG and SFG materials as batch managed.

2.     Define lot size to 1 because every vehicle unit is unique.

3.     Define a batch characteristic of Chassis# and Engine number in Class characteristic.

4.      At the time of creating production order. we write vehicle’s planned chassis number as batch characteristic and Engine number as batch characteristic of Engine material.

Which material types should be batch managed?

 

All Finished Goods can define as FERT Materials and batch managed.

Those SFG which are dependent of FG materials such as Welded Body, Painted Body, assembled body and Engine Item can define as HALB material types and batch managed.

There is another material type which must be managed as batch managed material, which is CKD KIT. It is a major share of materials. CKD abbreviated Complete Knock Down KIT. Every model has its KIT which consist of all parts/components required to Assemble a complete vehicle. CKD KIT normally import in lot and each lot has a fixed lot size, normally 48 or 96 unit in one lot. CKD KIT need to be store and manage in batch and each batch represent a unique lot.

 

There might be some other materials which can be batch managed but above material types are necessary to defined as batch managed for successful implementation of SAP in automotive.

5 Mistakes avoided with S.A.P implementation in Automotive

 

Introduction

SAP is a tried-and-true business management platform that can provide considerable value to your organization. However, if an implementation isn’t managed properly, it can end up being a disastrous failure that costs your company millions of dollars and sets you back months – or years – in terms of achieving strategic objectives. A lot of companies learn this lesson the hard way, but you don’t have to be one of them. By avoiding these five common errors, you will save yourself a lot of pain and aggravation in the long run:

1.   Not using SAP recommended implementation approach and methodology

You should not take a piecemeal approach to implementing SAP.

SAP recommends that you implement it in phases, and follow a methodology that has been proven over time to work best. By doing so, you can minimize risk and ensure that your organization gets the most value out of the implementation project.

An SAP implementation partner with experience in automotive is vital for success. We have taken part in many successful implementations and can help you avoid these common mistakes by applying our experience and expertise to your project team.

2.   Underestimating the effort and costs of data migration

It is an activity that you cannot underestimate.

Data migration is a high-risk activity and not a one-time activity, it’s long term and complex, resource intensive and high priority, critical and expensive. It should be treated as an underestimated activity which requires constant attention throughout the project lifecycle in order to avoid issues down the road and ensure an efficient transition. Data migration can take place in an iterative manner or all at once depending on the level of complexity and amount of data involved but either way it requires careful planning in order to avoid data loss or corruption during the process.

Cost and Efforts

3.   Not focusing on change management

Change management is crucial when implementing a new system. Whether you're an IT consultant or a Chief Information Officer (CIO), it's best to plan out how your company will handle the changes that come with SAP implementation. Here are some tips for change management on this journey:

• First, develop a plan for what needs to be done and by whom.
• Next, create a communication strategy so staff knows how they fit into this process and what kind of changes they can expect over the next year or two.
• Create training programs for those who will be using SAP, as well as any other necessary stakeholders who will be affected by its implementation—for example, manufacturing personnel or even quality assurance teams may need special attention if they're being impacted by software updates.

4.   Not adequately managing your third-party consultants

Make sure you have a clear understanding of the consultant’s role. It is important to note that consultants may not be able to develop or implement your project, but will rather serve as an advisor or coach. Make sure you understand their capabilities and background before engaging them on your project.

Understand the communication style of your third-party consultant. This is particularly important when dealing with outside organizations where cultural differences may exist between yourself and those working within these firms. A good way to accomplish this is by having regular discussions about progress made and any problems encountered along the way (both in person, via phone/Skype calls).

5.   Make sure you avoid these mistakes.

As an automotive company, it’s important to avoid the following mistakes:

• Not understanding your business needs and what’s required for a successful implementation
• Not having enough resources committed to the project
• Not using a best practice approach (examples include taking advantage of multi-plant capabilities and using SAP recommended implementation approach and methodology)

Summary

We hope this list of mistakes to avoid when implementing SAP has been helpful. If you have more specific questions about your own implementation journey, please don't hesitate to reach out to us for advice and guidance.