Technical University – Sofia



Computer Integrated
Manufacturing – Scholarly
Essay
Integration of ERP suites in the moder...
Computer Integrated Manufacturing – Scholarly Essay 2009



Table of Contents
I.         Introduction .......................
Computer Integrated Manufacturing – Scholarly Essay 2009



   I. Introduction

Enterprise Resource Planning (ERP) is a te...
Computer Integrated Manufacturing – Scholarly Essay 2009


   II. Implementation and Process Design

To implement ERP syst...
Computer Integrated Manufacturing – Scholarly Essay 2009


Configuration Tables – A configuration table enables a company ...
Computer Integrated Manufacturing – Scholarly Essay 2009


    Many of the integrated links need high accuracy in other a...
Computer Integrated Manufacturing – Scholarly Essay 2009




However, it can be used for:

       Drive Profitable Produc...
Computer Integrated Manufacturing – Scholarly Essay 2009




Oracle's Complete, Open and Integrated applications strategy ...
Computer Integrated Manufacturing – Scholarly Essay 2009




   2. SAP
For many organizations, the SAP ERP Operations solu...
Computer Integrated Manufacturing – Scholarly Essay 2009


       Improve operations performance with strategic business ...
Computer Integrated Manufacturing – Scholarly Essay 2009


    Retail

    Floor shop manufacturing

    More, accordin...
Computer Integrated Manufacturing – Scholarly Essay 2009


                                       Since the Calendar for e...
Computer Integrated Manufacturing – Scholarly Essay 2009


Planning

      Use the graphical planning engine to view the ...
Computer Integrated Manufacturing – Scholarly Essay 2009



V. References
     1. Wikipedia – http://en.wikipedia.org/wiki...
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ERP Industrial Planning

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This is an essay I had to prepare after my course of Computer Integrated Manufacturing at Technical University - Sofia

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ERP Industrial Planning

  1. 1. Technical University – Sofia Computer Integrated Manufacturing – Scholarly Essay Integration of ERP suites in the modern manufacturing processes Kiril Iliev, 221206007 09
  2. 2. Computer Integrated Manufacturing – Scholarly Essay 2009 Table of Contents I. Introduction ................................................................................................................................2 II. Implementation and Process Design............................................................................................3 III. Advantages and Disadvantages ...............................................................................................4 1. Advantages .............................................................................................................................4 2. Disadvantages .........................................................................................................................4 IV. ERP vendors ............................................................................................................................5 1. Oracle .....................................................................................................................................5 2. SAP..........................................................................................................................................8 3. Microsoft ................................................................................................................................9 Operations management........................................................................................................... 11 Manufacturing .......................................................................................................................... 11 Design ....................................................................................................................................... 11 Supply chain .............................................................................................................................. 11 Planning .................................................................................................................................... 12 Customer orders ....................................................................................................................... 12 Analysis and reporting ............................................................................................................... 12 Multi-country/region capability and CRM.................................................................................. 12 V. References ................................................................................................................................ 13 1
  3. 3. Computer Integrated Manufacturing – Scholarly Essay 2009 I. Introduction Enterprise Resource Planning (ERP) is a term usually used in conjunction with ERP software or an ERP system which is intended to manage all the information and functions of a business or company from shared data stores. An ERP system typically has modular hardware and software units and "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed. To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package. Examples of modules in an ERP which formerly would have been stand-alone applications include: Product lifecycle management, Supply chain management (e.g. Purchasing, Manufacturing and Distribution), Warehouse Management, Customer Relationship Management (CRM), Sales Order Processing, Online Sales, Financials, Human Resources, and Decision Support System. The term "Enterprise resource planning" originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP). MRP evolved into ERP when "routings" became a major part of the software architecture and a company's capacity planning activity also became a part of the standard software activity. ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. ERP software can aid in the control of many business activities, including sales, marketing, delivery, billing, production, inventory management, qruality management, and human resource management. ERP systems are cross-functional and enterprise-wide. All functional departments that are involved in operations or production are integrated in one system. In addition to areas such as manufacturing, warehousing, logistics, and information technology, this typically includes accounting, human resourcers, marketing and strategic management. ERP II, a term coined in the early 2000s, is often used to describe what would be the next generation of ERP software. This new generation of software is web-based and allows both employees and external resources (such as suppliers and customers) real-time access to the system's data. Most of the vendors already supply these kind of software. EAS — Enterprise Application Suite is a new name for formerly developed ERP systems which include (almost) all segments of business using ordinary Internet browsers as thin clients. 2
  4. 4. Computer Integrated Manufacturing – Scholarly Essay 2009 II. Implementation and Process Design To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting; customization; and support. The client organization can also employ independent program management, business analysis, change management, and UAT specialists to ensure their business requirements remain a priority during implementation. Data migration is one of the most important activities in determining the success of an ERP implementation. Since many decisions must be made before migration, a significant amount of planning must occur. Unfortunately, data migration is the last activity before the production phase of an ERP implementation, and therefore receives minimal attention due to time constraints. The following are steps of a data migration strategy that can help with the success of an ERP implementation:  Identifying the data to be migrated  Determining the timing of data migration  Generating the data templates  Freezing the tools for data migration  Deciding on migration related setups  Deciding on data archiving ERP vendors have designed their systems around standard business processes, based upon best business practices. Different vendor(s) have different types of processes but they are all of a standard, modular nature. Firms that want to implement ERP systems are consequently forced to adapt their organizations to standardized processes as opposed to adapting the ERP package to the existing processes. ERP implementation is considerably more difficult (and politically charged) in organizations structured into nearly independent business units, each responsible for their own profit and loss, because they will each have different processes, business rules, data semantics, authorization hierarchies and decision centers. Configuring an ERP system is largely a matter of balancing the way you want the system to work with the way the system lets you work. Begin by deciding which modules to install, then adjust the system using configuration tables to achieve the best possible fit in working with your company’s processes. Modules — Most systems are modular simply for the flexibility of implementing some functions but not others. Some common modules, such as finance and accounting are adopted by nearly all companies implementing enterprise systems; others however such as human resource management are not needed by some companies and therefore not adopted. 3
  5. 5. Computer Integrated Manufacturing – Scholarly Essay 2009 Configuration Tables – A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. For example, an organization can select the type of inventory accounting – FIFO or LIFO – it will employ or whether it wants to recognize revenue by geographical unit, product line, or distribution channel. III. Advantages and Disadvantages 1. Advantages  ERP systems connect the necessary software in order for accurate forecasting to be done. This allows inventory levels to be kept at maximum efficiency and the company to be more profitable.  Integration among different functional areas to ensure proper communication, productivity and efficiency  Design engineering (how to best make the product)  Order tracking, from acceptance through fulfillment  The revenue cycle, from invoice through cash receipt  Managing inter-dependencies of complex processes bill of materials  Tracking the three-way match between purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)  The accounting for all of these tasks: tracking the revenue, cost and profit at a granular level. ERP Systems centralize the data in one place. Benefits of this include:  Eliminates the problem of synchronizing changes between multiple systems  Permits control of business processes that cross functional boundaries  Provides top-down view of the enterprise (no "islands of information")  Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure. 2. Disadvantages  Customization of the ERP software is limited.  Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.  ERP systems can be very expensive (This has led to a new category of "ERP light" solutions)  ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure. 4
  6. 6. Computer Integrated Manufacturing – Scholarly Essay 2009  Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications.  Once a system is established, switching costs are very high for any one of the partners (reducing flexibility and strategic control at the corporate level).  The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale.  Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software.  Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and consolidation into a single enterprise may yield limited benefits. IV. ERP vendors There are several major ERP vendors including renowned companies such as IBM, Oracle, SAP and Microsoft. In this scholarly essay we will cover Oracle, SAP and Microsoft as the most distributed ERP suites for Bulgaria at the moment. The biggest market share as of year 2009 has SAP with 33.34%, then Oracle Applications with 21.38, and finally Microsoft Dynamics with 14.25%. The rest percentages are distributed among other vendors. Of course, there are a lot of open source (free) ERP solutions, but they are not recommended for implementation in critical business. 1. Oracle Example application: you want to minimize changeovers due to non-dedicated equipment while leveraging duplicate systems resulting from consolidation. Oracle Supply Chain Planning helps you improve demand predictability, minimize inventory costs, and develop a single, holistic supply chain plan. And Oracle Manufacturing helps you move from push- to pull-based production with complete mixed-mode capabilities, including tools to manage outsourced, in-house, and hybrid models. Oracle ERP for Industrial Manufacturing is not as flexible as Microsoft Dynamics Suites. 5
  7. 7. Computer Integrated Manufacturing – Scholarly Essay 2009 However, it can be used for:  Drive Profitable Product and Project Evolution  Deliver a Consistent Customer Experience Across All Channels and Order Phases  Produce Flexible Operational Networks  Establish a Profitable Service and Repair Business 6
  8. 8. Computer Integrated Manufacturing – Scholarly Essay 2009 Oracle's Complete, Open and Integrated applications strategy helps customers transform their business — creating value and reducing cost and risk through:  The most complete portfolio of core business and industry applications  The most open application offerings and architecture  The most integrated applications, business intelligence and infrastructure solutions 7
  9. 9. Computer Integrated Manufacturing – Scholarly Essay 2009 2. SAP For many organizations, the SAP ERP Operations solution has become the software backbone that contributes to excellent performance supporting end-to-end operational processes in all key areas: procurement and logistics execution, product development and manufacturing, and sales and service. This excellence is a culmination of SAP's experience over more than 30 years, with thousands of successful customers in more than 25 industries. With SAP ERP Operations, organizations can realize their full efficiency and cost- effectiveness potential. With smoother day-to-day operations, one can maximize its profitability, free up resources and budget so that you can invest more in innovation. Gaining competitive advantage, you can look toward the future, and operate as a best-run business over the long term. With SAP ERP Operations, one can:  Automate and streamline operational processes with greater adaptability.  Increase productivity in your operations with a role-based solution and centralized information.  Extend collaboration to all value chain partners. 8
  10. 10. Computer Integrated Manufacturing – Scholarly Essay 2009  Improve operations performance with strategic business insight. 3. Microsoft Microsoft’s software suite is named Microsoft Dynamics. There are several editions suitable for different business needs. For example, Microsoft Dynamics AX is suitable for large enterprises, while Microsoft Dynamics NAV is suitable for small and middle sized businesses. In this sheet, we will cover Microsoft Dynamics AX (since my diploma project will be held on this suite). Dynamics AX could be applied for numerous industrial applications, including:  Discrete Manufacturing  Distribution  Process Manufacturing 9
  11. 11. Computer Integrated Manufacturing – Scholarly Essay 2009  Retail  Floor shop manufacturing  More, according to the business needs This system has four tiers, unlike other editions of the suite. More tiers means more functionalities, and therefore more hardware resources and different architecture. The four tiers are:  Database server (1st tier). Contains the business logic and processes within the tables of the database.  ERP server (2nd tier). Responsible for running the server.  Local cache ERP servers (3rd tier). These servers cache data on a local level (for example for the design department)  Client PC (4th tier). The implementation of this suite can be additionally reinforced by Microsoft SharePoint services, and integrating Microsoft Office package for end users. For example, the marketing manager can collaborate on the same Word document along with the chief engineer to identify features of an upcoming product while the document is accessible from one central place. SharePoint services can be used to connect employee’s smart phones and greatly decrease the mobile phones taxes, making them literally free of charge since all the traffic is processed through the server. In addition, employees will be notified once a new task has been assigned to them via an SMS or Calendar Task sent by the server. 10
  12. 12. Computer Integrated Manufacturing – Scholarly Essay 2009 Since the Calendar for each employee is visible by his/her peers and managers, at any given moment everyone can schedule a task or a meeting with an employee (for example: review a placed order and identify why it has been delayed). This task will be immediately synchronized with the smart phone’s calendar and the client’s PC calendar of the employee. Dynamics AX is suitable for the following industrial applications: Operations management  Streamline operations by automating processes and integrating project, customer, and financial information.  Track materials from the time of purchase to the time of sale with lot and location control.  Manage items from design through maintenance with a product lifecycle management (PLM) system. Manufacturing  Serve multiple business models, including make to stock (MTS), make to order (MTO), assemble to order (ATO), configure to order (CTO), and engineer to order (ETO).  Manage materials, schedule shop floor activity, and track order progress efficiently for just in time (JIT) delivery. Design  Create accurate engineering design documents quickly with the built-in integration of product data management (PDM) systems and computer-aided design (CAD) systems.  Quickly adjust to new specifications and minimize rework for projects already in process.  Enable global design collaboration. Supply chain  Synchronize demand data with supplier and production availability.  Manage the capacity and availability of materials with available-to-promise (ATP) capabilities. 11
  13. 13. Computer Integrated Manufacturing – Scholarly Essay 2009 Planning  Use the graphical planning engine to view the impact of changes on your processes. Customer orders  Quote and deliver multivariant products quickly and cost effectively.  Streamline quoting and estimating processes to shorten fast request for quotation (RFQ) development time. Analysis and reporting  Improve decision-making.  Target the most attractive markets.  Reduce risk.  Analyze integrated information using both summary and detailed views. Multi-country/region capability and CRM  Use multi-country/region and multi-language capabilities to smooth international transactions.  Customize your solution to meet increasing customer demands for quality, safety, and performance. 12
  14. 14. Computer Integrated Manufacturing – Scholarly Essay 2009 V. References 1. Wikipedia – http://en.wikipedia.org/wiki/Enterprise_resource_planning 2. Microsoft Dynamics AX – http://www.microsoft.com/dynamics/en/us/products/ax- overview.aspx 3. SAP systems – http://www.sap.com/solutions/business-suite/erp/ 4. Oracle Applications – http://www.oracle.com/us/products/applications/index.htm 13

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