Rabelani dagada wbs erp


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Rabelani Dagada, Development Economist and Author

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Rabelani dagada wbs erp

  1. 1. ERP – Expensive Reporting Programme<br />www.csntechnologies.co.za<br />Colin Pillay<br />GUEST LECTURE PRESENTED DURING RABELANI DAGADA'S TECHNOLOGY &<br /> INFORMATION MANAGEMENT <br />AT THE WITS BUSINESS SCHOOL, 17 FEBRUARY 2011<br />
  2. 2. What is ERP? <br />ERP is a packaged business software system that processes transactions on a single software platform and a single database<br />
  3. 3. What does an ERP system do? (1)<br />Integrates information across all departments<br />Facilitates the flow of information among the different functions and processes of an enterprise<br />functions: manufacturing, finance, HR<br />processes: order entry<br />Tracks a wide range of events in the enterprise in an integrated fashion<br />Plans future activities based on these events<br />Supports analysis of trends in these events, to improve the performance of the enterprise.<br />
  4. 4. 2. What does an ERP system do? (2)<br />Allows users to <br />input data in one location, that can be processed with other data and accessed as informational reports in a real-time environment<br />share common data and practices across the entire enterprise<br />reengineer the majority of its processes<br />
  5. 5. 3. Drivers of an ERP investment<br />Technology<br />Business processes<br />Strategy<br />Competition<br />
  6. 6. 3. Drivers of an ERP investment3.1. Technology<br />Need for an infrastructure that will provide information across all functions and locations within the organization<br />Difficulty maintaining existing legacy systems <br />Difficulty integrating acquisitions<br />Obsolete hardware<br />
  7. 7. 3. Drivers of an ERP investment3.2. Business processes<br />Complex, ineffective business processes<br />Business processes are not integrated<br />Need for a set of tools for planning and monitoring the various functions and processes in a company<br />Opportunity to reengineer business processes<br />
  8. 8. 3. Drivers of an ERP investment3.3. Strategy<br />Globalization<br />New products, new services<br />Need to be more responsive to customers<br />Cost structures too high<br />Poor quality or visibility of information<br />Foundation for e-business<br />
  9. 9. 3. Drivers of an ERP investment3.4. Competition<br />Competitors have an ERP system<br />
  10. 10. 4. Evolution of enterprise software<br />- the applications typically come from multiple <br /> vendors and run on multiple platforms<br />- companies are managed along functional lines<br />- task oriented applications<br />Before 1980<br />- functional applications<br />- some integration<br />1980s<br />- cross-functional applications <br />- integrated applications<br />- versions for the client-server architecture<br />1990s<br />
  11. 11. 5. Evolution of ERP systems<br />ERP has its origin in the manufacturing industry<br />Inventory<br />Control<br />1960s<br />MRP<br /> 1970s<br />MRP II<br /> 1980s<br />ERP<br /> 1990s<br />Extended<br /> ERP<br /> 2000<br />
  12. 12. 5. Evolution of ERP systems 5.1. Inventory Control<br />Most common approach: <br />If the inventory drops below a minimum quantity, it is replenished with the Economic Order Quantity (EOQ)<br />Disadvantages<br />very large inventory investment<br />unreliable with a highly varying demand rate<br />large investment in safety stock<br />requires forecasts for all items<br />based on past demand data<br />material obsolescence is more likely<br />
  13. 13. 5. Evolution of ERP systems 5.2. MRP<br />Material Requirements Planning<br />Calculates component requirements based on the Master Production Schedule (MPS), Bill of Material (BOM) and inventory data<br />Determines batch sizes for purchasing and manufacturing, and sends out purchasing / manufacturing orders for them at the appropriate times<br />
  14. 14. 5. Evolution of ERP systems 5.3. Closed-loop MRP<br />Considers material and capacity requirements<br />Prior to releasing production orders to shopfloor, it adds the planned workload to existing workload, and compares it with the available capacity<br />Assesses whether work should be rescheduled in order to smooth out any peaks in capacity utilization (CRP)<br />
  15. 15. 5. Evolution of ERP systems 5.4. MRP II<br />Manufacturing resource planning<br />closes the loop with sales, financial and operations planning<br />includes the allocation of production equipment and labor<br />can manage changes in the production plan<br />includes JIT capabilities<br />
  16. 16. 5. Evolution of ERP systems 5.5. ERP<br />Enterprise resource planning<br />ERP systems go beyond the barrier of manufacturing organizations<br />Data are generated as a result of diverse transactions and integrated to be used by multiple users, for multiple purposes and at multiple places<br />
  17. 17. 6. ERP components<br />Financials<br />Human resources<br />Sales and Distribution<br />Manufacturing<br />Materials management<br />Logistics<br />Reporting<br />
  18. 18. 6. ERP components6.1. Financials<br />General ledger<br />Accounts receivable<br />Accounts payable<br />Asset management<br />Treasury management<br />Controlling<br />
  19. 19. 6. ERP components6.2. Human Resources<br />Human resources administration<br />Payroll<br />Self-service<br />Planning<br />personnel development<br />workforce<br />shift<br />
  20. 20. 6. ERP components6.3. Sales and Distribution<br />Prospect and customer management<br />Sales order management<br />Billing, invoicing and dispatch<br />Sales history<br />
  21. 21. 6. ERP components6.4. Manufacturing<br />Bills of materials, routings<br />Different planning functions<br />production planning<br />capacity planning<br />shop floor control<br />production scheduling<br />Project management<br />Plant maintenance<br />Quality management<br />
  22. 22. 6. ERP components6.4. Manufacturing (2)<br />Multi-mode manufacturing functionalities<br />make-to-stock<br />make-to-order<br />assemble-to-order<br />engineer-to-order<br />JIT<br />Industry-specific solutions<br />discrete manufacturing: automotive, high tech<br />process industries: chemicals, oil & gas <br />services: public services, banking, insurance<br />
  23. 23. 6. ERP components6.5. Materials management<br />Procurement<br />generate purchase orders<br />know the prices<br />measure vendor performance<br />receive goods into inventory<br />pass invoices to accounts payables<br />Inventory management<br />where is all stock<br />what is it worth<br />stock movement tracking<br />
  24. 24. 6. ERP components6.6. Logistics<br />Warehouse management<br />maintains records of warehoused goods<br />process movement of products through warehouses<br />Transportation management<br />manages delivery of products to customers<br />produces legal documents for tax, customs, shipping agents<br />
  25. 25. 6. ERP components6.7. Reporting<br />Information is made available to particular users in the form of specific reports. <br />In addition, there are other approaches to generating data from the system, including database queries. <br />Recently, ERP reporting capabilities have begun to evolve as ERP vendors have tried to increase the accessibility and ease of use of the ERP software.<br />
  26. 26. 7. ERP implementation7.1. Challenge<br />Moving away from functional silos and creating effective cross-functional processes that are truly integrated via an ERP system<br />
  27. 27. 7. ERP implementation7.2. Preparation (1)<br />Develop a clear business case<br />costs versus benefits<br />operational outcomes<br />Set company goals and commitments<br />Build understanding and commitment, enabling continuous improvement (change management)<br />Examine current state<br />Reengineer business processes<br />
  28. 28. 7. ERP implementation7.2. Preparation (2)<br />Make decisions about the IT infrastructure (hardware, network, telecommunications, support)<br />Estimate project resources, costs and duration of each activity<br />Break the implementation effort into manageable and measurable work phases<br />Perform a risk assessment: proactive process to reduce uncertainty<br />
  29. 29. 7. ERP implementation7.3. Software selection<br />Vendors criteria<br />financial stability<br />long-term viability<br />implementation services<br />life cycle services (support, maintenance)<br />Software criteria<br />industry specific<br />functionalities must meet business requirements<br />performance<br />default settings versus customizing<br />Costs<br />
  30. 30. 7. ERP implementation7.4. Implementation steps (1)<br />Installation<br />Big Bang<br />Implementing all targeted functionality at the same time.<br />A certain efficiency and effectiveness is achieved by implementing all modules as a single project.<br />Phased<br />Implementing targeted functionality in phases<br />by module<br />by geography<br />by business unit<br />Company expects to grow into ERP<br />
  31. 31. 7. ERP implementation7.4. Implementation steps (2)<br />Project management<br />tracking, measuring and rechecking of milestones to ensure that scheduled changes are made on time and on budget<br />Training<br />provide training to everyone involved in the project <br />Go Live<br />Improvement<br />
  32. 32. 7. ERP implementation7.5. Key factors for successful implementation<br />Keep top management involved<br />Select the right project manager<br />Set-up cross functional implementation teams<br />Obtain a good implementation partner<br />Ensure that the OEM/Vendor is held accountable for QA on the project.<br />
  33. 33. 7. ERP implementation7.6. Review<br />ERP project<br />on time, within budget, expected scope<br />Business operations<br />user performance<br />system performance<br />business process performance<br />Organization<br />competitive advantage/disadvantage<br />process visibility and continuous improvement<br />sound IT architecture <br />adaptability for mergers, reorganizations<br />
  34. 34. 8. Costs<br />Acquisition costs<br />Implementation costs<br />Life cycle costs<br />Training Costs<br />
  35. 35. 8. Costs8.1. Acquisition costs<br />Acquisition costs<br />selecting the ERP system<br />education<br />consulting<br />software licenses<br />IT infrastructure<br />hardware<br />telecommunications<br />
  36. 36. 8. Costs8.2. Implementation costs<br />Implementation costs<br />people: consultants, project team, trainers<br />travel<br />administrative: support, supplies, office space<br />integration with other applications<br />
  37. 37. 8. Costs8.3. Life cycle costs<br />Life cycle costs<br />maximizing the value of the ERP system ownership<br />maintenance <br />support<br />Upgrades<br />Ongoing Training<br />
  38. 38. 9. Benefits<br />Improved integration<br />Improved efficiency<br />Improved information quality<br />Improved worldwide communication<br />Improved customer service<br />
  39. 39. 9. Benefits (1)<br />Improved integration<br />Seamless integration of all the information flowing through a company<br />financial and accounting information<br />human resource information<br />supply chain information<br />customer information<br />Single database<br />Corporate functions are linked together<br />elimination of functional silos<br />
  40. 40. 9. Benefits (2)<br />Improved efficiency<br />Quickly entering and retrieving of information<br />Information entered once into the system<br />Improved information quality<br />Greater accuracy of information<br />Improved access to information<br />Improved worldwide communication<br />Multi lingual and multi currency capacity<br />
  41. 41. 9. Benefits (3)<br />Improved customer service<br />Reduced errors in ordering, billing, shipping<br />Decreased lead time<br />Increased quality<br />Improved on-time delivery performance<br />
  42. 42. 10. The Future of ERP (1)<br />Move from client/server applications to Internet-basedapplications (cloud computing)<br />Enterprise systems will connect to suppliers and customers.<br />supply chain management<br />customer relationship management<br />E-Business<br />self-service applications (ex. Order entry)<br />Information will increasingly be seen and managed as an asset<br />
  43. 43. Extended ERP<br />Internal focus<br />External focus<br />E (M)-<br />Commerce<br />CRM<br />SCC<br />Basic<br />ERP<br />Planning<br />Execution<br />MA<br />SFA<br />CSS<br />CPFR<br />E-<br />Hubs<br />EC<br />EP<br />HR<br />FIN<br />…..<br />Local<br />APS<br />MES<br />WHM<br />TM<br />Business Intelligence<br />User Interface: Personalized Portal<br />
  44. 44. 10. The Future of ERPExtended ERP abbreviations<br />CRM: Customer Relationship Management<br />MA: Marketing automation<br />SFA: Sales Force Automation<br />CSS: Customer Service and Support<br />SCC: Supply Chain Collaboration<br />CPFR: Collaborative Planning, Forecasting, Replenishment<br />APS: Advanced Planning and Scheduling<br />MES: Manufacturing Execution Systems<br />WHM: Warehouse Management Systems<br />TM: Transportation Management Systems<br />EP: E-Procurement<br />EC:E-Commerce<br />
  45. 45. 11. Summary (1)<br />ERP systems are fast replacing legacy systems<br />ERP can integrate all of your business units<br />Proper implementation will help the business function better<br />ERP affects many key business processes and employees profoundly: change management and training are important<br />Move to mid-size companies and internet-based collaborative applications <br />
  46. 46. 11. Summary (2)<br />Necessary actions before acquiring an ERP system<br />In-depth study of existing systems and processes<br />Development of a clear business case<br />costs versus benefits<br />operational outcomes<br />risks<br />
  47. 47. The end<br />Please feel free to give any comments to<br />colin@csntechnologies.co.za<br />