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ERP 101- Introduction to ERP for Manufacturing & Distribution

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This is the first webinar of ERP 101 series.
Key topics discussed in the webinar:
The special needs of Manufacturing and Distribution organizations.
Key terms - Bill of Materials, MRP, and ERP.
The evolution of ERP over the last four decades.
The differences between MRP and ERP, and how they fit in with other business systems.

Published in: Software
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ERP 101- Introduction to ERP for Manufacturing & Distribution

  1. 1. ERP 101 Introduction to ERP for Manufacturing & Distribution Pat Garrehy Founder and CEO, Rootstock David Bush Senior Manufacturing Consultant, Rootstock
  2. 2. Meet Our Speakers David Bush Senior Manufacturing Consultant, Rootstock • 30+ years of manufacturing and MRP/ERP systems experience • Previously at General Microcircuits, Consona Corporation, Relevant Business Systems, Inc Pat Garrehy Founder and CEO, Rootstock • 40+ years of manufacturing and MRP/ERP systems experience • Founder and CEO at Relevant Business Systems • Previously at Martin Marietta
  3. 3. About This Webinar Series • This is a 10-part webinar series that will: – Focus on ERP for Manufacturing & Distribution – Touch upon the evolution of ERP from MRP and MRPII – Describe ERP in business English with a focus on real-life use cases • It will not be: – A highly technical description of each module in an ERP system (that might come in a future series)
  4. 4. Three key concepts before we dive into the subject
  5. 5. Before We Go Into ERP • Organization of manufacturing & distribution companies – What is the organizational structure? – Why does that matter here? • Four terms you will be hearing often – BOM – MRP – MRPII – ERP • The evolution BOMP to MRP to MRPII to ERP
  6. 6. Organization of manufacturing & distribution companies
  7. 7. A Typical Software Company Administration Finance Marketing Sales IT Support/ServiceEngineering HR Internal External
  8. 8. A Typical Distribution Company Administration Finance Marketing Sales ITHR Internal External Support/Service PurchasingMaterial Control Cost Accounting Receiving/Shipping Engineering
  9. 9. A Typical Manufacturing Company Internal External These functions:  Have distinct needs  Have specific processes  Are highly interconnected Administration Finance Marketing Sales ITHR Support/Service Purchasing Material Control Cost Accounting Receiving/Shipping Production Control Engineering
  10. 10. Four terms you will be hearing often
  11. 11. Bill of Materials (BOM) A bill of materials or product structure (sometimes bill of material, BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub- components, parts and the quantities of each needed to manufacture an end product. - Wikipedia Finished Product Product’s Component Parts Bill of Materials
  12. 12. Multi-level BOM Bicycle Frame Wheel Transmission Control Accessories Wheel RimsWheel TiresSpokes Level 0 Level 1 Level 2
  13. 13. Material Requirements Planning (MRP) And MRPII Material Requirements Planning (MRP) is a computer-based production planning and inventory control system. MRP is concerned with both production scheduling and inventory control. It is a material control system that attempts to keep adequate inventory levels to assure that required materials are available when needed. - Columbia University Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning, and has a simulation capability to answer "what- if" questions and extension of closed-loop MRP. - Wikipedia
  14. 14. MRP Illustrated  Work Orders (Production Control)  Purchase Requisitions (Material Control)  Purchase Orders (Purchasing)  Receiving, Inventory, Shipping = ‘Closed Loop MRP’  A/R, A/P, G/L (Finance) and Sales Order Management  Std. or avg. costing (Cost Accounting) BOM (Engineering) MRP Engine Sales Orders (Sales) MRP MRPII Finance Sales Administration Marketing ITHR Support/Servic e Purchasing Material Control Cost Accounting Receiving/Shipp ing Production Control Engineering
  15. 15. Enterprise Resource Planning Enterprise Resource Planning (ERP) is a category of business-management software— typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities, including: product planning, purchase. manufacturing or service delivery. - Wikipedia Administration Finance Marketing Sales ITHR Support/Servic e Purchasing Material Control Cost Accounting Shipping/Recei ving Production Control Engineering
  16. 16. A Brief History of Time: From BOMP to MRP to ERP
  17. 17. 1960s: IBM Releases BOMP • “Bill of Materials Processor” • Pre-mainframe • Adapted existing BOMs for manufacturing projects and adjusted them for production amounts 1960s BOMP
  18. 18. 1970s: MRP Goes Mainstream • Built on Mainframes • COTS (Commercial Off-the-Shelf) • MRP, Payroll, A/R, A/P, G/L, Sales Orders • Each of these was standalone and did not work with each other 1960s/70s MRP 1960s BOMP
  19. 19. 1980s: MRP Evolves Into MRPII • Built on Mini- and Micro-computers • Initial integration between MRP, A/R, A/P, G/L, Cost Accounting, Sales Orders • Payroll still not hooked into MRPII 1980s MRPII 1960s BOMP 1970s MRP
  20. 20. 1990s: MRPII Evolves Into ERP • Gartner coins the term “Enterprise Resource Planning” (early ‘90s) • Client-Server • MRPII integrated with payroll and HR • “ERP” starts to go outside manufacturing • Massive investments driven partly by Y2K 1990s ERP 1960s BOMP 1980s MRPII 1970s MRP
  21. 21. 2000+: ERP Expands, Goes Into Cloud • Cloud deployment • CRM, HR, Finance, Professional Services, Supply Chain, Project Management • Increasingly integrated modules • New trends: Mobile 2000s Cloud ERP 1960s BOMP 1980s MRPII 1990s ERP 1970s MRP
  22. 22. Now, let’s get into a little more detail about MRP & ERP
  23. 23. ERP: More Than Just MRP • Enterprise Resource Planning – The ability to plan the resources required to meet the needs of your customers and internal demands. – This is not simply a new term for MRP. What are the differences between ERP and MRP? Let’s see.
  24. 24. MRP – A Key Part of the ERP System • MRP is Material Requirements Planning. • It focuses on material, while ERP broadens the focus to the resources of the entire Enterprise. • MRP balances supplies and demands to keep inventory at the correct level. • Critical for manufacturing and distribution
  25. 25. Key Considerations • Considerations when planning component levels include: – Planning material in the correct quantity and time frame. But… – How do you calculate the correct quantity?
  26. 26. Calculating the Correct Quantity Bicycle (1) Frame (1) Wheel (2) Transmission (1) Control (2) Accessories Wheel Rims (2)Wheel Tires (2)Spokes (256) Level 0 Level 1 Level 2
  27. 27. Key Considerations • Considerations when planning component levels include: – Planning material in the correct quantity and time frame. But… – How do you calculate the correct quantity? – How do you calculate the correct time frame for material availability? – Are there other considerations: EOQ, cash flow, inventory turns? – What about shop floor capacity, scheduling, handling outside operations? Now we are moving outside the parameters of an MRP algorithm which is what material control deals with into what Production Control deals with
  28. 28. How Does ERP Help With Overlapping Issues? • Break each problem down into manageable functions that mimic human reasoning. • Let’s see how this works when planning a quantity of material to order. – Besides the immediate demand, are there other requirements to consider? – Will any quantity be lost in production for setup, scrap, etc? – Are there economic order quantities to be considered? – What about inventory turns or scrap in stores? • All of these issues could affect the quantity to be ordered. But there is more….
  29. 29. How Does ERP Help With Overlapping Issues?... Cont’d • Break each problem down into manageable functions that mimic human reasoning. • What factors besides Order Quantity could affect Production? – Shop Floor Capacity – Shipping/Receiving Schedules – Cash Flow The ERP System will help planners keep all of these factors in view, providing a complete picture of the manufacturing process and associated factors to be considered.
  30. 30. So, what goes into a modern, end-to-end ERP?
  31. 31. Human Resources PLM, PDM, CAD Quality Management Financial Consolidation to Corporate Transportation Management Payroll Configure-Price- Quote Forecasting & Planning MRP, DRP Purchasing & Receiving Manufacturing, Production, Capacity Scheduling Engineering, Product Marketing Inventory, Warehouse Project, Cost Accounting Order Fulfilment, Invoicing General Ledger, Financial Reporting Accounts Receivable Accounts Payable Service, RMA, Repair, Field MPS, Long Term Forecasting WMS Time & Attendance Subscription Billing Sales Order, ATP CRM Case, SLA ERP for Manufacturing & Distribution
  32. 32. Q&A www.rootstock.com 888.524.0123 marketing@rootstock.com
  33. 33. The ERP 101 Webinar Series Date Topic Aug 2, 2016 An Introduction to ERP for Manufacturing Aug 16, 2016 Engineering Basics– The Importance of Part Numbers and Bills of Material TBA Engineering – Learn how Change Orders and/or Revisions ensures that ERP system data is accurate and up-to-date TBA Shop Floor – Explore how ERP is used to create and maintain Work Centers, Routings and Procedures TBA Shop Floor – See how scheduling the Shop Floor through ERP controls Labor and Machines TBA Procurement – Link your Vendors and Purchased Parts via ERP TBA MRP – Step though an overview of this vital ERP subset TBA Sales – See how you can link your Customers and Products via ERP TBA Manufacturing Accounting – An overview using standard cost TBA Manufacturing Accounting – An overview using weighted cost Sign Up Now

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