Learning Objectives

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Learning Objectives

  1. 1. Learning Objectives IST 301: Process Integration Identify the factors that led to the III-A Enterprise Resource development of ERP systems. Planning (SAP R/3) To describe modules distinguishing characteristics of ERP software. To discuss the pros and cons of implementing ERP systems. Abdullah Konak School of Information Sciences and Technology Penn State Berks A. Konak 2 IST 301/ ERP Intro Before Enterprise Resource Enterprise Resource Planning Planning Production Human Res. Manufacturing An ERP system, when implemented correctly, Management links all the functions of a business. Suppliers Suppliers Accounting Marketing Finance Production Human Res. Manufacturing Management Accounting Marketing Finance Central Data A. Konak A. Konak 3 4 IST 301/ ERP Intro IST 301/ ERP Intro ERP Definition Evolution of ERP Systems An ERP system is a packaged business 1970s 1980s 1980s software system that allows a company to automate and integrate the majority of its MRP MRP-II business process; share common data and Material Manufacturing ERP Requirement Resource Systems practices across the enterprise; and produce Planning Planning and access information in-real time environment. Manufacturing+ Scope of Manufacturing Services+ Implementation Manufacturing Supply-Chain A. Konak A. Konak 5 6 IST 301/ ERP Intro IST 301/ ERP Intro 1
  2. 2. Major Vendors for ERP Systems SAP's R/3 SD FI Financial Sales & Accounting Distribution Vendor Special Software Feature CO Accounting Accounting Logistic Logistic MM Controlling America Software Comprehensive, focus on supply chain Materials Mng. management AM PP Fixed Assets The Baan Company Comprehensive, selection of software for flow and Management discrete manufacturing Production R/3 Planning Client/Server i2 Technologies Forecasting, and flow manufacturing Manugistics Optimization for logistics QM ABAP/4 Development PM Quality Personnel Mng. Management Oracle Comprehensive system, database PM TM Human Human Plant Time PeopleSoft Comprehensive client/server Maintenance Management Resource Resource PS BW SAP Integrated client/server Project Business A. Konak A. Konak Systems Warehouse 7 8 IST 301/ ERP Intro IST 301/ ERP Intro Production Planning Module R/3 Hardware-Three Tier Architecture PP-SOP Sales and Order Planning PP-MP Master PP-PDC Planning Plant Data PP-CRP Collection Capacity Requirement PP Panning Production PP-PPI Planning PP for PP-MRP Process Material Industries Requirement PP-ATO Panning Assembly PP-KAB Orders Kanban/JIT PP-REM Production Repetitive Presentation User Applications Servers Database Servers A. Konak A. Konak Manufacturing 9 (Computers) 10 IST 301/ ERP Intro IST 301/ ERP Intro Centralized Database Concept SAP R/3 Concept Information Information Technology Technology Manufacturing Manufacturing Accounting Accounting Database Database Marketing Marketing Finance Finance A. Konak A. Konak 11 12 IST 301/ ERP Intro IST 301/ ERP Intro 2
  3. 3. Legacy Systems Case Study The Free On-Line Dictionary Of Computing Video Case Study: ERP (FOLDOC) defines them as, “A computer system or application Systems implementation at program which continues to be used Hillerich & Bradsby because of the prohibitive cost of replacing or redesigning it and despite its poor competitiveness and compatibility with modern equivalents. The implication is that the system is large, monolithic and difficult to modify.” A. Konak A. Konak 13 14 IST 301/ ERP Intro IST 301/ ERP Intro SAP R/3 Penn State An Example R/3 http://s04.win.psu.edu/scripts/wgate/webgui/! Logistics Accounting Human Resources $50 A. Konak A. Konak 15 16 IST 301/ ERP Intro IST 301/ ERP Intro The company receives a telephone inquiry from a potential customer. She wants 4000 pairs of shoes as soon as possible. The customer's details are taken and entered into Sales and The information entered in SD initiates the ordering process which starts with the production Distribution, SD, as a Customer Master Record. This is the record of the company's business of a quotation for the customer. The quotation includes the information such as the prices, relationship with the customer and includes such items as the address, payment terms, sales quantities, terms of the delivery and the period for which the quotation is valid. history and company code. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources SD 4000 SD Customer (Sales & Customer (Sales & Master pairs! Master Distribution) Distribution) Quotation Quotation Model: FS-10 Model: FS-10 Number: 4,000 Number: 4,000 USD: 200,000 USD: 200,000 Delivery:04/15/04 Delivery:04/15/04 A. Konak A. Konak 17 18 IST 301/ ERP Intro IST 301/ ERP Intro 3
  4. 4. A few days after submitting the quotation, a written order is received. The order can now be Now that the order has been confirmed and an order number assigned, the information is entered. Most of the data required for the order can be taken from the customer master record, passed from SD to the Materials Management, MM, and Production Planning, PP, to initiate so it does not have to be entered again. When the order entry is completed and the information the production of the shoes. is saved, the R/3 system automatically assigns an order number. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources SD SD Customer Sales Order (Sales & (Sales & Sales Order Master Model: FS-10 Distribution) Distribution) Model: FS-10 Number: 4,000 Number: 4,000 USD: 200,000 USD: 200,000 Delivery:04/15/04 Delivery:04/15/04 MM Sales Order Sales Sales (Materials Sales Order Model: FS-10 Model: FS-10 Order Order Management) Order No= 78773 Order No= 78773 Number: 4,000 Number: 4,000 USD: 200,000 PP USD: 200,000 Delivery:04/15/04 (Production Delivery:04/15/04 Planning ) A. Konak A. Konak 19 20 IST 301/ ERP Intro IST 301/ ERP Intro The Materials Management module, MM, receives the information from SD that 4,000 pairs of shoes are scheduled to be delivered and checks the database for the number that are MM reserves the existing shoes and all available parts which are in stock. It then orders currently available. The inventory shows that there are only 1,000 pairs of shoes available. additional unfinished parts from suppliers. Additional 3000 pairs of shoes will have to be manufactured to meet the customer's order. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources SD SD (Sales & (Sales & Distribution) Distribution) Vendor Master MM MM Material (Materials (Materials Master Management) Management) Material Master FS Item Onhand Item Onhand Required Item Onhand Item Onhand Required Reserved Reserved Required Required Suppliers FS-10 1000 3000 A (1) B (2) Part AA 1000 2000 FS-10 1000 3000 Part 1000 2000 Part BB Part 1000 1000 5000 5000 :: A. Konak A. Konak 21 22 IST 301/ ERP Intro IST 301/ ERP Intro MM provides the facility for invoice verification. This is used to check that suppliers invoices When the raw materials arrive from the suppliers, the warehouse clerk enters the details in relate to the valid orders and that pricing. This information is then passed to the Finance and MM to update the inventory. Accounting module, FI, which determines payments terms and arranges payment fro the suppliers. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources Vendor FI Master (Finance SD SD & Accounting) (Sales & (Sales & Distribution) Distribution) Accounting Data MM MM Material (Materials Material (Materials Master Management) Master Management) Item Onhand / / Reserved Item Onhand Reserved Part AA Part 3000 3000 Suppliers Suppliers Part BB 6000 Part 6000 :: A. Konak A. Konak 23 24 IST 301/ ERP Intro IST 301/ ERP Intro 4
  5. 5. The Production Panning module, PP, schedules the machines necessary for the production of The PP module passes the data on working hours to the Personnel Administration module, the shoes. It calculates the machine time required and the man hours that are needed to meet PA, which initiates the calculation of the salaries. the order. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources SD SD (Sales & (Sales & PA Basic Pay (Personnel Distribution) Distribution) Data Administration ) MM MM (Materials (Materials Management) Management) 100 hours PP PP Material (Production (Production Master Planning ) Planning ) A. Konak A. Konak 25 26 IST 301/ ERP Intro IST 301/ ERP Intro When planning the machine time to meet the production deadline, the PP module needs to During the production, quality assurance is carried out through test schedules specified by the postpone the maintenance of one of the machines. This information is passed to the Quality Management (QM) module. When production and testing is complete, the final Production Maintenance module, PM, for implementation. availability is fed back to MM and SD. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources Resources SD (Sales & SD Distribution) (Sales & Distribution) MM (Materials MM Management) (Materials Management) PP (Production PP Planning ) (Production Planning ) PM (Production PM Maintenance ) (Production A. Konak Maintenance ) A. Konak QM 27 (Quality 28 IST 301/ ERP Intro IST 301/ ERP Intro Management ) Throughout the manufacturing process, any information which has financial implications has MM arranges for the completed order to be made up from the stocks in the warehouse. SD been passed to Financial Accounting from the Logistics modules. When FI is told that the automatically prepares and arranges transport of the shoes to the customer. order has been shipped, it creates the final invoice. R/3 R/3 Logistics Accounting Human Logistics Accounting Human Resources SD SD Resources (Sales & (Sales & FI Distribution) Distribution) Customer Master (Finance & Accounting) MM MM (Materials (Materials Management) Management) PP PP (Production (Production Planning ) Planning ) PM PM (Production (Production Maintence ) Maintence ) A. Konak QM A. Konak QM (Quality 29 (Quality 30 IST 301/ ERP Intro Management ) Management IST 301/ ERP Intro ) 5
  6. 6. The Controlling Module, CO, has been monitoring information from other modules. It may When the customer pays the invoice, FI updates the general ledger account and the customer use this information to modify modules such as MM and PP to improve future performance. It database. also prepare performance reports. R/3 R/3 Logistics Accounting Human Logistics Accounting Human SD Resources SD Resources (Sales & FI (Sales & FI Distribution) Customer Distribution) PA Master (Finance (Finance (Personnel & Accounting) & Accounting) Administration ) MM MM (Materials (Materials Management) General Management) C0 Ledger (Controlling) PP PP (Production (Production Planning ) Planning ) PM PM Cost Analysis (Production (Production Maintence ) Maintenance ) Productivity Reports A. Konak QM A. Konak QM (Quality 31 (Quality 32 Management IST 301/ ERP Intro ) Management IST 301/ ERP Intro ) 6

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