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Chapter 5  E R P  Modules    Alexis  Leon
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Chapter 5 E R P Modules Alexis Leon


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  • 1. Chapter 5 ERP Modules By Sonali Chauhan UDIT, TYBSc. IT 7/3/2010 1 Objective: ERP Modules • Introduction • Finance • Plant Maintenance • Quality Management • Materials Management 7/3/2010 2 • ERP Packages contains many modules • Features vary with ERP packages • Most common modules in ERP are: – Finance – Manufacturing & Production Planning – Sales and Distribution – Plant maintenance – Quality Management – Materials Management etc 7/3/2010 3 1
  • 2. FINANCE : Introduction • Concept of Information technologies means providing: – Right information – Right time – Right people – Can make critical difference to the organization • Financial data provides key information 7/3/2010 4 The finance module of most ERP system will have the following sub-system – Financial Accounting • (General Ledger, Accounts Receivables/ Payable, Fixed Assets Accounting, Legal consolidation) – Investment Management • (Investment planning, Budgeting, controlling, Depreciation, Forecast Simulation Calculation) 7/3/2010 5 Cont... – Controlling • (Overhead cost controlling, Activity based costing Product cost Accounting Profitability analysis) – Treasury • (Cash Management, Treasury Management, Market Risk Management, Funds Management) – Enterprise Controlling • (Executive Information System (EIS), Business Planning and Budgeting, Profit centre Accounting) 7/3/2010 6 2
  • 3. Financial Accounting... • Objective : – Integration of financial information essential for strategic decision-making – Centrally track financial accounting data within international framework 7/3/2010 7 Financial Accounting... General Ledger : • Essential for financial accounting and decision making • Serves as a central pool of financial data and in accounting area, Origin of a transaction can be traced, • Supports all the functional needs in financial accounting. 7/3/2010 8 Financial Accounting... Typical General Ledger contains i.e. summary information of other components: – Purchasing (Quantity and value) – Sales (order and bill) – Vendor (Payable) – Customer (Receivables) – Fixed assets – Employees (salary and wages) 7/3/2010 9 3
  • 4. Financial Accounting... Accounts Receivables/ Payable: • These subsystems are integrated with all other subsystems where financial data originates: both with General Ledger ,Sales and Distribution, Material Management. • Transaction performed automatically 7/3/2010 10 Financial Accounting... • Accounts Receivable and Payable functions include: – Internet integration – Document management – Important support for EDI processing – Enterprise-wide credit management – payment automation 7/3/2010 11 Financial Accounting... Asset Accounting: • Serves as a sub ledger to the General Ledger • Manages company’s fix assets and provides detail info abt assets related transaction. • Integration with plant management • Management of leased assets and lease under construction 7/3/2010 12 4
  • 5. Financial Accounting... Legal Consolidation: • serves as a tool to make a consolidated financial statement with operational data • Legal consolidation is closely integrated with Financial Accounting system • permit direct data transfer from individual statement into consolidated report 7/3/2010 13 Financial Accounting... • Ease the workload and reduces data entry error • Allows multiple view of ur consolidation data. • Generate reports about legal entries and segments of ur business. 7/3/2010 14 Controlling... FINANCE • Introduction – Gathers functions for Internal cost accounting – Versatile information system • Generate reports 7/3/2010 15 5
  • 6. Controlling... FINANCE Overhead Cost Controlling: • Focus on monitoring n allocation of overhead Cost Centre Accounting: • Analyses where overhead occurs Overhead Orders: • Collects and analysis cost based on individual internal measures • Monitors and automatically check budgets assign to each measures 7/3/2010 16 Controlling... FINANCE Activity Based Costing: • Goals of the entire enterprise should come before the goals of individual activity Product Cost Controlling: • determine cost of product or services • Use to determines the lowest price limit 7/3/2010 17 Controlling... FINANCE Cost Object Controlling: • Helps to monitor manufacturing orders • Integration with logistics, provides actual cost of the object costs • Determine n analysis Variance betw actual manufacturing cost and plan cost Profitability analysis: • Examines the sources of returns. • Revenues are assigned according to market segment 7/3/2010 18 6
  • 7. Investment management... FINANCE • Investment planning – Where to invest, what is the expected profit of each ventures. Which department to need more investment? • Budgeting – Financial layout of new or existing project – Availability and cost of finance • Controlling – The expenses, the overheads • Depreciation - Budgeted balance sheets and cost planning are always on current values. • Forecast – Speculation and forecast of market trend. Rising or declining? • Simulation Calculation: Making a mathematical model and deriving alternatives to choose from. 7/3/2010 19 Treasury Modules... FINANCE • Managing long ,short, medium payment flow • Managing Risk factor • Planning financial transaction. 7/3/2010 20 Treasury... FINANCE Cash Management: • Analysis financial transaction for given period • Manages cash inflow and outflow • Distinction is made according to time period (short medium long) • Information is available to make cash management decision and for analyzing purpose. Treasury Management: • Current liquidity, Currency, Risk position • Conditions prevailing on the money and capital market • Consider all those before taking decision • Securities and loans 7/3/2010 21 7
  • 8. Treasury... FINANCE Market Risk Management: • Ensures competitiveness • Complex feed back loop: from data collection, risk management, analysis and simulation • Assessing the interest rates • Assessing the currency rates • Simulate market data – “what if” analysis Funds Management: • From budgeting to payment on one side and • From Billing to actual receiving on the other • Enables to control funds commitments and determine the budget utility. • 7/3/2010 Helps to identify budget bottleneck 22 Enterprise Controlling... FINANCE Introduction • Compromise to optimize share holder value, for growth and investment. • Modules includes : – Executive information system – Business planning and budgeting – Profit centre Accounting 7/3/2010 23 Enterprise Controlling... FINANCE Executive Information System: • Provides overview of critical parameters • Gets both internal and external data • Drill-Down reporting to evaluated data Business Planning and Budgeting: • Business targets such as Return on investment • Central investment planning, budget release and tracking Profit Centre Accounting: • Analysis profit • Possible to analysis selected balanced sheet items and use for calculation of ratio such as ROI 7/3/2010 24 8
  • 9. PLANT MAINTENANCE ... • Introduction – Preventive Maintenance control – Equipment Tracking – Component Tracking – Plant Maintenance Calibration Tracking – Plant Maintenance Warranty Claims Tracking 7/3/2010 25 Plant Maintenance... Preventive Maintenance Control: • Planning • Keeping track of • Scheduling – Hours of usage Production produced • Control of facilities – Consumables (fuel) and equipment – Days in operation • Equipment lubrication – Life of each component • Component • Lower repair cost replacement • Avoiding downtime, m/c • Safety inspection breakage etc. • Monitoring • Improve m/c reliability whc leads to higher production 7/3/2010 26 Plant Maintenance... Equipment tracking: • Equipment is an asset to be used, monitored and protected • History of equipment: acquisition to write off • Operational dependencies • (special features, imported spare parts, their cost and expected life ,Guarantee period, Next service due) • Information (model and serial no) for each equipment to be made available. • Provide detail information to technical specialist. 7/3/2010 27 9
  • 10. Plant Maintenance... Component Tracking: • Components are typically sub-set of large equipment. • Enable to identify chronic repair problem of component – replacement or repair • Do not wait for components to fail, replace it before that • Reduce downtime • Also include repair/exchange history and component service life. 7/3/2010 28 Plant Maintenance... Plant Maintenance Calibration Tracking : • Allows organization to leverage their investment in Plant Maintenance module by providing for tracking of equipment calibration in support of ISO 9000 requirement 7/3/2010 29 Plant Maintenance... Plant Maintenance Warranty Claim Tracking : • Administrative system designed to provide control of all items covered by manufacturer and vendor warranty • Recover imbursement to which they are entitled. • Type and length of warranty – elapsed time ,operating unit • generate Complete information regarding warranty service provider 7/3/2010 30 10
  • 11. QUALITY MAINTENANCE... • Introduction – ISO Standards defines: • Functions of QM • Elements of QMS – In Production, Quality Assurance • No longer just “Inspection” and “Elimination” • But also the production process becomes the focus of attention. – Quality spreads to the entire loop: Product development – procurement of sales and distribution – (entire usage phase) 7/3/2010 31 Quality Maintenance... CAQ and CIQ: • CAQ : Computer Aided Quality Management – Isolated, cnt carry out comprehensive tasks of QMS • CIQ: Computer – Integrated Quality Management – More appropriate • Supports quality management in procurement, product verification, quality documentation, processing of the problem • Module do not direct interact wit other modules 7/3/2010 32 Quality Maintenance... The quality Management Module fulfills the following functions: • Quality Planning : – Management for basic data for quality planning and Inspection planning, Material Specification • Quality Inspection: – Trigger inspections, Inspection processing with inspection plan selection and sample calculation, – Print shop papers for sampling and inspection. – Records results and defects – Makes the usage decision and trigger follow up action 7/3/2010 33 11
  • 12. Quality Maintenance... Cont... • Quality Control: – Dynamic sample determination on the basis of Quality level history. – Application of statistical process control techniques using quality control charts – Quality scores for inspection lots, – Quality notification for processing internal or external problems and initiating corrective action to correct the problems – Inspection of lot processing – QMIS (Quality Management Information System) for inspection and inspection results and quality 7/3/2010 notification 34 Quality Maintenance... CIQ (Computer – Integrated Quality Management) • Only an integrated system can support all the elements of Quality Management System according to ISO 9000. • Quality Management function influence all the function within company, affecting all the phase. • QM Module integrate with other modules to link the task on quality management. 7/3/2010 35 Quality Maintenance... • The quality Management Module is integrated with the master data and processes of the following applications... – Material Management:  Purchasing, inventory management, warehouse management, Material requirement planning – Production:  Work scheduling, shop floor control – Sales and Distribution:  Delivery, creation of quality certificates 7/3/2010 36 12
  • 13. Quality Maintenance... • The Quality Management module supports the exchange of data with other application in order to: – Prevent related data from being recorded and stored redundantly. 7/3/2010 37 MATERIALS MANAGEMENT... Introduction: • The Material Management Module optimizes: – All purchasing process with work-flow driven processing functions – Enables automated supplier evaluation, – Lowers procurement and warehousing costs – Integrates invoice verification – In short decides - When to buy, What to buy and How much to buy! 7/3/2010 38 Material Management... • The main Modules of Material Management Module are: – Pre-purchasing Activities – Purchasing – Vendor Evaluation – Inventory Management – Invoice Verifications and – Material Inspection 7/3/2010 39 13
  • 14. Material Management... Pre-Purchasing Activities : • Maintain service master database. • Service specification which include service wit item and item with material. • Manual entry effort is reduced • 2 ways of entering service specification – PLANNED – UNPLANNED 7/3/2010 40 Material Management... Cont... • Planned Serviced Specification: – service whose precise nature n intended scope is known at the beginning of the project – Price n quantities are both stipulated • Unplanned Serviced Specification: – Services which cannot be initially specified in detail – No description – Entered in the form of money value limit 7/3/2010 41 Pre-purchasing activities modules Requirements Calculation Requisition for Quotations Vendor Rating Quotation Evaluation Vendor Selection 7/3/2010 Contracts 42 14
  • 15. Material Management... Purchasing : • Important component of Material Management. • Integrated with other modules and communicates with them for constant flow of data • Support all phase: – Material planning and control, purchasing, – goods receiving – Inventory management – Invoice management • Follows task like – Procurement of material, n service ,determine source of supply , planning n control of material, monitoring delivery n payment of vendors 7/3/2010 43 Material Management... Vendor Evaluation: • Integrated into MM • Information like delivery dates ,prices n quantity are taken from purchase order • Also used data of QM 7/3/2010 44 Material Management... • In procurement of material: – Select suppler according to existing supply relationship – Provide with proper information on prices n terms of payment and delivery – Evaluate vendors • In procurement of service: – Check reliability of vendors – Check vendors performance 7/3/2010 45 15
  • 16. Material Management... Inventory Management: • Allows to manage stocks • Obtain overview of current stock • Shows all entries of stocks like – warehouse, – stock orders but not delivered, – reserved for production or for customers, • quality and quantity inspection and monitored of stock • Stocks frm vendors and from customers managed separately 7/3/2010 46 Material Management... Cont... • Stocks are managed by values and quantity basis • Prerequisite cost accounting • With every goods movement following are updated – Stock value for inventory Management – Account assignment for cost accounting – G/L account • Both quantity n values are updated automatically with the goods movement • Goods movement includes – Internal movement (goods from production,stock transfer) – External movement (goods from sales order) 7/3/2010 47 Material Management... Cont... • Inventory management includes inventory methods: – Periodic Inventory – Continuous Inventory – Inventory Sampling – Cycle Counting 7/3/2010 48 16
  • 17. Material Management... Invoice Verification and Material Inspection: • Link between MM and financial management, controlling and asset accounting components • It serves the following propose: – Completes the material procurement – Allows invoice that do not originate in material procurement – Allows credit memos 7/3/2010 49 Material Management... Cont... • Donot handle payment or invoice • Information is passed on to other department • Invoice contains many information which has to be posted i.e. enter into the system. • Refers to current transaction, purchase transaction • posting invoice completes invoice verification • System now contains data necessary for invoice to be paid. • Accounting department retrieve this data for appropriated payment 7/3/2010 50 Thank you 7/3/2010 51 17