Enterprise Resource Planning


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Enterprise Resource Planning

  1. 1. Enterprise Resource Planning Selected Slides from Jacobs et al, 9 th Edition Operations and Supply Management Chapter 14 Edited, Annotated and Supplemented by Peter Jurkat
  2. 2. Enterprise Resource Planning (ERP) Systems <ul><li>Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm </li></ul><ul><li>This integration is accomplished through a database shared by all application programs </li></ul><ul><li>Goal is to have a single master data base (except for partitions and replications) so that the entire enterprise is working off the same, continuously updated, data </li></ul>14-
  3. 3. McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved . Major Vendors Do not grow your own ERP unless you want to get into the ERP business!!! <ul><li>Usually based on three tier architecture interconnected with private/public network </li></ul><ul><ul><li>client (desktop, laptop, hand held, largely common across organizations) </li></ul></ul><ul><ul><li>Application servers (apply the business logic – many common, some unique) </li></ul></ul><ul><ul><li>Back- end data base (permanent storage carefully controlled – data base management system common, data unique) </li></ul></ul>
  4. 4. SAP R/3 System Functional Components R/3 System Functional Components 14- Corporate Services Human Capital Resources Operations Financials
  5. 5. SAP R/S 3 <ul><li>Financials </li></ul><ul><li>Financial (retrospective) and managerial accounting (prospective) </li></ul><ul><li>Internal Controlling and Audit </li></ul><ul><li>Financial Supply Chain Management </li></ul><ul><li>Human Capital </li></ul><ul><li>Payroll </li></ul><ul><li>Benefits administration </li></ul><ul><li>Applicant data administration </li></ul><ul><li>Personnel development planning </li></ul><ul><li>Workforce planning </li></ul><ul><li>Schedule & shift planning </li></ul><ul><li>Time management </li></ul><ul><li>Travel expense accounting </li></ul>
  6. 6. SAP R/S 3 <ul><li>Operations </li></ul><ul><li>Materials management </li></ul><ul><li>Plant maintenance </li></ul><ul><li>Quality management </li></ul><ul><li>Production planning & control </li></ul><ul><li>Project management system </li></ul><ul><li>Corporate Services </li></ul><ul><li>Asset management </li></ul><ul><ul><li>Investments </li></ul></ul><ul><ul><li>Real estate, property </li></ul></ul><ul><ul><li>machinery </li></ul></ul><ul><li>Building operations and maintenance </li></ul><ul><li>Travel planning, reservations </li></ul>
  7. 7. SAP R/S 3 <ul><li>Operations </li></ul><ul><ul><li>Customer relationship management (CRM) </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Supply chain management (SCM) </li></ul></ul><ul><ul><li>Supplier relationship management </li></ul></ul><ul><ul><li>Product life cycle management </li></ul></ul><ul><ul><li>Mobile business applications </li></ul></ul><ul><li>User extensions using NetWeaver: </li></ul><ul><ul><li>application builder from SAP for integrating business processes and databases from a number of sources (vendors and home grown) </li></ul></ul><ul><ul><li>common brand name for all the SAP products that follow the SAP R/3 ERP software </li></ul></ul><ul><ul><li>delivers two completely independent (and incompatible) development frameworks </li></ul></ul><ul><li>Can run entirely on SAP servers </li></ul>
  8. 8. ERP in the Service Sector <ul><li>ERP systems have been developed for health care, government, retail stores, hotels, and financial services </li></ul><ul><li>Also called efficient consumer response (ECR) systems </li></ul><ul><li>Objective is to tie sales to buying, inventory, logistics, and production </li></ul>
  9. 9. The Good News: ERP Systems <ul><li>provides integration of the supply chain, production, and administration – can reduce transaction costs and increase speed and accuracy of communication </li></ul><ul><li>creates commonality of databases </li></ul><ul><li>can incorporate improved best processes – e.g. , JIT and systems integration </li></ul><ul><li>increases communication and collaboration between business units and sites </li></ul><ul><li>has an off-the-shelf software database </li></ul><ul><li>can be implemented module by module </li></ul><ul><li>may provide a strategic advantage for a limited time </li></ul>
  10. 10. The Bad News: ERP Systems <ul><li>Are very expensive to purchase and even more so to customize </li></ul><ul><li>May require major changes in the company (and you know how easy that is!!) and its processes to implement </li></ul><ul><li>Can be so complex that many companies cannot adjust to it </li></ul><ul><li>Involve an ongoing, possibly never completed, process for implementation </li></ul><ul><li>Require expertise in limited supply with ongoing staffing problems </li></ul><ul><li>But it may be a necessary evil for competitive purposes </li></ul>