Planning functionality of an erp system

Planning Functionality of an ERP
System
In customer centric business environment, it is critical to have an effective plan to manage
production capacity, materials availability and shipment schedules.
The planning functionality of an ERP system provides organizations the means of meeting such
customer centric approach. Planners are able to simulate alternate scenario planning wherefrom
they determine which assemblies and components to make, which to buy and when to
manufacture or procure.
Planning Functionality - General Perspective
The figure below depicts Enterprise planning functions and their interface with the execution
level

Having set up master data for enterprise planning to plan material requirements, the Demand
Planning is used to generate forecast, based on historical sales data. The Master Planning
performs the supply planning for independent demand items (end items). The Order Planning is
used to perform the supply planning for dependent demand item(s) (components, raw materials).
The supply plan for items is generated and transferred to the execution level. The execution level
are the supply sources, such as purchase, production and distribution
Setting up of planning engine: This requires, inter alia, two important inputs:
1. Forecast methods.
2. Scenario parameters for the purpose of simulation.
Forecast methods: Following forecasting methods are available under enterprise planning
1. Moving Average - the demand forecast is calculated as follows:

Demand + actual item issue/seasonal factor [for the relevant periods]
--------------------------------------------------------------------------------------------
Number of periods
In essence, Moving average is an average of the past periods. Each time the moving average
is calculated, the most recent period is added to the calculation and the oldest period is
dropped.
2. Exponential Smoothing - the demand forecast is calculated as follows:
Average demand (current period) + trend factor (current period) * seasonal factor (current
period)
Where:
i. Average Demand is calculated as: forecast demand (previous period) + Smoothing
Factor for Demand Forecast (current period) * actual usage(previous period) -
forecast demand(previous period))/seasonal factor(previous period)
ii. Trend Factor is calculated as: trend factor(previous period) + Smoothing Factor for
Demand Forecast (current period) * [average demand(current period) - average
demand(previous period) - trend factor(previous period)]
iii. Seasonal Factors are defined.
iv. The Smoothing Factor is defined, in some cases corrected for Critical Tracking
Signal Factor in the Forecast Methods.
In essence, a single exponential smoothing is a moving average with weighting factors
applied. The greatest smoothing weight is applied to the most recent period and the least
weight is applied to the oldest period.
3. Previous Year’s Calculation - the demand forecast is identical to Moving Average, except
that the number of periods to take into account is different.
4. Last Period’s Demand - the demand forecast is calculated as follows:
Average demand (current period) * Seasonal factor (current period)
Where: Average Demand is calculated as: actual item issue (previous period) / seasonal
factor (previous period)
A recommendation of various forecasting methods is described in the following table:
Moving
Average
Exponential
Smoothing
Previous year
calculation
Demand Last
period
Understanding Good Neutral Good Very Good

Trend Unsuitable Very Good Unsuitable Neutral
Season Neutral Very Good Very Good Neutral
Unstable Demand /
Supply
Neutral Very Good Neutral Neutral
Scenarios - Scenario is an identification of one out of various possible planning solutions. Each
scenario represents one overall planning solution, and involves particular settings for the
planning of items and resources. Scenarios are used to analyze and compare various planning
options and to find the best planning solution. For example, demand forecasts or sourcing
strategies can be varied for different scenarios. One of the scenarios is the actual scenario, which
corresponds to the actual planning situation. Planned orders and production plans from the actual
scenario are transferred to the execution level of the system.
Rolling Scenario
This represents a particular type of scenario that is shifted forward in time on a regular basis. In
the course of time, the current date will reach or exceed a certain reference date plus the rolling
frequency. When this is the case, the scenario’s start date and finish date, the plan period
division, and the reference date itself are shifted forward
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 Demand Planning & Master Planning
 Supply Chain & Distribution Planning
 Order based Planning
 Setting Up Service Module
 ERP Package - Sales Module
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Enterprise Resource Planning - II
 Planning Functionality of an ERP System
 Demand Planning & MasterPlanning
 Planning, Warranties and Contracts
 Call Handling & Service Orders Control
 Installation & License Management
 Users Interface & Users Management
 ERP - System-Auditing
 HR and Quality Management
 Project & Engineering Change Control
 Enterprise Application Integration
 ERP Add on Products
 Turbo Charging ERP with BI and CPM
 Repetitive and Process Manufacturing
 Past and Current Directions in ERP
 Use of ERP in Finance and HRM
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4. Enterprise Resource Planning - II
5. Demand Planning and Master based Planning
Demand Planning and Master based
Planning
Demand Planning: The objective of this function is to create a demand plan, based on historical
sales data. The demand plan resulting from this function is the starting point for Supply
Planning. The demand plan contains forecasted demand for an item, using standard forecasting
methods. If the past data is inappropriate or insufficient, the forecast is entered manually.
As a rule, the demand plan is gradually filled in (consumed) by actual customer orders.
Dependent demand (resulting from the explosion of requirements for manufactured or distributed
items) are also be used to consume the demand plan.
Procedure for demand planning - as explained in the following diagram:

As may be seen from the above, there are three options to generate the demand for an item /
range of items.
1. To enter forecast manually or enter additional demand
2. To generate demand and inventory plan, using demand planning & forecasting algorithms
3. To maintain special demand by item

Master Based Planning
Next step of demand planning is Master-based planning which is largely comparable to
traditional Master Production Scheduling functionality. Master based planning is a time-phased
planning concept where demand, supply, and inventory for an item are maintained over a
planning horizon which is divided into time buckets or plan periods. The length of these plan
periods can vary. Periods with a fixed length throughout the planning horizon can be used, but it
is also possible to use shorter periods (for example, days or weeks) for the immediate future and
longer periods (for example, months) for longer-term planning. The time-phased demand,
supply, and inventory information for an item is generated through master based planning:.
1. Inventory planning: the inventory plan indicates how much inventory is intended to have
at the end of a plan period. The desired inventory levels during a plan period are based on
linear interpolation. This means that an increase of planned inventory level from one plan
period to the next does not result in a production overload at the start of each plan period,
but the inventory can be built up gradually during the plan period.
2. Demand planning: for each plan period, a demand plan indicates how much is expected to
be sold. Moreover, the actual demand is retrieved from the execution level.
3. Supply planning: to meet the (forecast and actual) demand, and to reach the intended
inventory levels, a supply plan is generated.
For the supply plan, three sources of supply are used: production, purchase, and distribution
(from another warehouse location in the same company or from a related company).
Masterplanning algorithms: For master-based production planning, two different planning
algorithms are available:
1. Infinite planning - Where, it is assumed that there are no serious constraints on the
availability of components and capacity. Therefore, no constraints are taken into account
2. Workload control (WLC) - Where material and/or capacity constraints do play a role.
Based on the idea that the workload on the shop floor significantly affects the order lead
time, this method aims at controlling and leveling the amount of workload.
Some Important Terminology of Master Based Planning Functionality
Time Fence: The date until which an item’s supply plan and planned orders are frozen. The time
fence is expressed as a number of working days from the date the simulation is carried out. The
time fence is meant to prevent:
 Disturbance of orders that have already started (at the shop-floor level).
 Generation of planned orders with start dates in the past (that is, orders that are late).
Planning Horizon: Time period for which Enterprise Planning maintains planning data for an
item. The planning horizon is expressed as a number of working days from the date the
simulation for future demand is carried out. Enterprise Planning does not generate supply plans
or planned orders beyond an item’s planning horizon.

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5. Supply Chain and Distribution Requirement Planning
Supply Chain and Distribution
Requirement Planning

One important function of Enterprise Planning is logistic planning of items which are acquired
from elsewhere within the organization. In Enterprise Planning, this type of supply is known as
distribution. The distribution volume / quantity are planned in the form of planned distribution
orders. Within the master-planning horizon, these planned distribution orders serve as a
distribution plan. When a distribution quantity is planned, the related requirement of the item is
passed on at the appropriate level of depot / warehouse, so that system can take this dependent
demand into account.
Setting up a structure for distribution planning is done by defining clusters and by modeling the
goods flow through supply chain by supplying relationships and sourcing strategies.
Clusters: Enterprise Planning uses clusters to model distribution structures within a site and/or
between related sites. A cluster is a group of entities such as warehouses/ work centers. A cluster
normally represents a geographical location, consisting of one or more warehouses (usually non-
nettable warehouses) that are considered as one unit for planning purposes.
Clusters are used to specify groupings of entities so that relationships between entities can
be defined. Entities belonging to a cluster do not have to belong to the same financial and / or
logistic company of an organization. The notion of a clustered item is comparable to that of an
item/warehouse combination under inventory module. The major difference is that a cluster can
be an aggregate several warehouses.
The concept of cluster is best illustrated by the following Example. Suppose distribution centers
of a large retail organization are grouped into i) north, ii) south iii) east and iv) west clusters. All
of them, in addition to getting some local supplies, are largely supplied by distribution orders
from a central warehouse.
The distribution requirement planning for north cluster, where supply chain comprises of one
regional depot and three divisional depots, are shown in the following diagram:
Cluster and Warehouse Hierarchy

It may be noted that the flow of demand is upward and the flow of goods can be in any direction.
Supply Planning - Supply planning is the next important element of distribution requirement
planning, which comprises of following:
Supply Sources
Material requirements can be covered with three types of orders:
1. Production orders.
2. Distribution orders.
3. Purchase orders.
Distribution orders move the goods between clusters. Distribution orders are especially suitable
for the situation where depots/ sales channels of an organization are spread throughout a large
area.
Goods Flow Strategies

Sources of supply are optimized with:
1. Supply chain strategies
2. Sourcing strategies
3. Supply strategies
The sourcing strategy determines whether a requirement is covered by production orders,
distribution orders, or purchase orders. A combination of these sources is also possible. If the
source is distribution, the system selects the suppliers (depots) on the basis of
1. Supply strategies for internal suppliers.
2. Supplying relationships which define extent of aggregation at cluster and item group level.
If the source is purchase, system selects the suppliers on the basis of supply strategy for external
suppliers.
Supply Strategy: refers to the method by which the supply of plan items is divided over
multiple suppliers. The supply strategy defines the priority rules and allocation rules that direct
the planning engines in the choice of suppliers. There are separate supply strategies for external
suppliers (planned purchase orders) and for internal suppliers (planned distribution orders)
Supply Chain Strategy: The sourcing strategies and supply strategies are grouped in supply
chain strategies. Supply chain strategies can be linked to scenarios and remains valid during a
certain time period within that scenario. This functionality enables to flexibly change business
strategy over time such as percentage of items to make, buy or distribute.
The following figure shows how the concepts are related.

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5. Order based Planning and Order Promising
Order based Planning and Order
Promising
Order based Planning: Order-based planning is the functionality that plans planned orders to
cover components and end items. This functionality largely corresponds to Materials
Requirement Planning (MRP) and uses BOMs (Bill of Materials) to explode material
requirements and the routings to calculate lead-time of planned production orders.
Differences between Master and Order based Planning
1. When production is planned in order-based planning, all necessary components and
required production capacity is taken into account. This information is retrieved from the
item’s BOM and routing, respectively. When production is planned in master-based
planning, only those components and production facilities are considered which have been
labeled as critical.
2. Order-based planning is for short-term supply planning where planning data is recorded on
a second by second basis. Master-based planning is used for long-term supply planning,
where planning data is recorded on time bucket. Control of this combination of planning
methods is done by setting an item’s order horizon.
3. Planned supply order is generated in order based planning where as supply plan for the
period of planning horizon is created by master based planning.
A combined overview of order based planning and master based planning

If order horizon is set to zero, the system plans supply through master based planning only. If
order horizon is equal to planning horizon, the system plans all supply through order based
planning
Procedure for Order based Planning
1. Time phased overview: This functionality is used to get a time-phased overview of order
planning, which lists overview values for demand and forecasted consumption on the one
hand, and scheduled receipts and planned supply on the other hand. It is possible to
simulate the above values under various scenarios to see resultant projected inventory.
2. Rolling and updating of actual scenario: A rolling plan is a scenario of which the
planning horizon and plan period division is regularly shifted in time. The goods flow
transactions are updated here for all components of the plan items.
3. Order Simulation: This functionality is used to carry out an order-based-planning run to
generate orders of the following order types. Planned supply orders are created within
planned items order horizon for both main and component level items if the top down
option is selected. In case of adoption of bottom up option, the item selection is extended to
parent items.
a. Planned production order.
b. Planned procurement order.
c. Planned distribution order.
4. Review and analyzing order plan: Orders are reviewed and analyzed particularly in
respect of goods flow mismatch between demand and supply, which can be further drilled
down to various regions and sales channel. The system provides various graphical tools and
planning board for this purpose. After taking corrective measure regarding materials
availability and capacity constrain, planned orders are transferred to execution modules.
Order Promising - ATP & CTP: Demand forecasts are gradually consumed by actual customer
orders. The calculated item quantity that is available (to sell or consume) on a certain future date,
based on the current supply planning is known as Available to promise (ATP). ATP is an
indicator of inventory availability that is specifically geared to the process of order acceptance.
ATP may be for one period or may be cumulative over a number of periods. When it comes to

accepting customer orders, a plan period’s cumulative ATP is a clear indicator of the order
quantity that can still be promised to deliver in that plan period.
The functionality behind the notion of cumulative ATP is further enhanced by Enterprise
Planning’s extended capable-to-promise (CTP) checking techniques. These techniques not only
consider what can be promised on the basis of the planned supply, but also explore the
possibility of producing more than what the current supply planning indicates. There are various
dimensions of checking CTP such as:
1. Capacity CTP - If ATP does not provide sufficient quantity, capacity CTP checks if critic
resources needed to produce extra quantity are available.
2. Component CTP - If ATP does not provide sufficient quantity, Component CTP checks if
critical components needed to produce extra quantity are available.
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3. Operations
5. Service Module - Setting Up and Configuration Control
Service Module - Setting Up and
Configuration Control
It is of utmost importance for any business enterprise to maintain their existing customers. A
proper after sales service through quick response prompt delivery is needed for enhancing
customer satisfaction. Service need may encompass scheduled as well as unscheduled
maintenance, warranty management, defect identification etc.
Salient feature of a service related module:
1. Proper and Systematic Maintenance of records
2. Proper records of Product and component details customer wise with classifications
customer wise.
3. History of servicing done, and an analysis of the same
4. Facility to provide for Contract’s and Warranties to improve customer satisfaction.
5. Preventive Maintenance planning
6. Unscheduled Maintenance Handling
Overview of ERP service module - This is best illustrated by the following schematic diagram:

It may be seen from the above that an ERP service module constitutes of following major
components
1. Master Data Management.
2. Configuration Control (Installations).
3. Call Handling - To be detailed in subsequent paper.
4. Service Orders - To be detailed in subsequent paper.
5. Planning and Concepts (Preventive Maintenance) - To be detailed in subsequent paper.
6. Warranty and Contracts - To be detailed in subsequent paper.
MasterData Management: Master data management is used to set up service module and
broadly consists of maintaining general service data, service organization data and service items
data as per following details:
General Service data:
1. Labor rates used across the organization for carrying out different tasks
2. Defining Various kinds of Tasks that are carried out by the organization
3. Hourly Labor Types such as normal hours, overtime hours.
4. Service Types such as whether the service relates to external maintenance, internal
maintenance, help desk.

Service organization data: Service Centers
1. Service Areas
2. Areas can be further classified into zones to determine travelling costs
3. Linking Service Areas to Service Centers and Warehouses
4. Service Employee knowledge, skills and experience.
5. Service Cars can be also be defined and linked to service employees
A typical service organization is depicted by the following schematic diagram:
Service item data: Following details are recorded under service item data:
1. All the default data for the item to be used in service is defined which may include cost of
activities to be subcontracted, price list for service activities etc.
2. Maintenance concepts such as classification of an installation, part of an installation or a
product/ component (under warranty terms).
3. Service Bills of Material uses data for estimating materials required for a service order.
Configuration Control (Installations) - Service bill of materials is used for maintenance of a
standard product. For customized items a configuration which define product structure and

consists of various objects, is needed to be defined. The concept is best illustrated by the
following schematic diagram:
With the Item data of a delivered product and the customer (location) data, a Configuration is
generated by entering a Configuration Code. Object is a component of a configuration which is
an item sold plus its serial number. Warranty, replacement, and history of repairs are directly
associated with objects. Objects are controlled by versions and version control is used to keep
structural changes of a configuration.
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5. ERP Package - Sales Module
ERP Package - Sales Module
In the context of growing market competition, organizations are focusing more on closer
partnership across supply chain. Increasing efficiency in sales and distribution process facilitates
an organization to maintain its competitive edge. Best practice processes, embedded in an ERP
package, are an enabler in this direction.
The important components of sales modules:
1. Sales inquiry handling.
2. Sales pricing control.
3. Sales contract handling.
4. Sales order control.
5. Sales invoicing.
Integration with other modules: Sales module is a highly integrated execution module. It
draws most of its input from the following modules:
1. Inventory module for verifying available and projected stock.

2. Production module for production schedules and lead time of delivery.
3. Purchasing module for generation of direct delivery purchase order.
4. Warehousing module for issuing order and shipment.
5. Accounts receivable module where sales invoices are recorded.
6. Distribution requirement planning under planning module for just in time delivery and
supplying to channels partners.
Sales enquiry handling functionality
1. Margin Control: Margin control is based on cost price, standard sales price or retail price.
The system verifies if the price quoted is as per allowable margin. Allowable margin may
be configured to vary from user to user, whereby an user with higher level of authorization
may confirm a transaction which was disallowed by the system for a user with lower level
of authorization.
2. Quotation is made in response to enquiry from a customer. Quotation may be created for a
standard or customized item. Terms of payment is suggested by the system from the credit
rating of the customer and delivery date is obtained from the Available to Promise (ATP)
data of inventory module. Price and discount amount for each item of the quotation may be
obtained automatically from price book. If the quotation is successful, it is processed for
generation of sales order. If the quotation is unsuccessful, the reason of failure and name of
successful vendor are recorded in the system for future reference.
Sale Pricing Control
Sales pricing control helps to maintain prices for items, details of discount structure and special
discount given to some category of customers such as Original Equipment Manufacturer (OEM).
A price book originates with base price for the item. A single level discount rule with a minimum
or maximum quantity or pricing break, is attached to price book. Additional pricing conditions
such as category of suppler, delivery schedule etc. may be formulated in a matrix format, for
attaching to the price book.
Sales Contract Handling: This process relates to recording long term agreement with customer
for price, discount, delivery etc. Normally, a validity period and minimum committed quantity
forms part of the contract. Cumulative called quantity by the customer, delivered quantity and
invoiced quantity are maintained in the system for control purpose. The easy way of making a
contract for existing customer is by copying an old contract and doing modification in the
system. For a new customer, data related to header and lines are entered in the requisite session.
The system helps in evaluating the contract at any given time, and customer may be reminded for
any failure to meet their part of commitment.
Sales Order handling: This process allows a company to manage sales operations quickly and
efficiently. This process handles regular sales order, cost order, customer return and collect
order. Through use of templates, the system allows quick data entry process to manage products
ranging from standard to Engineering to Order (ETO). On time ATP helps in identifying when a
product is available for delivery and making necessary commitment/allocation for the same.
Rebate and commission process enables automatic calculation of commission to be paid to sales
employees and channel partners.

Sales invoicing: This process facilitate billing functions such as issuing of invoices based on
goods / services provided, generating proforma invoices, issuing credit notes resulting
corresponding entries in accounts receivable and control account of general ledger.
Conclusion
Functions of sales module is now augmented by various extended ERP products such as
Customer Relationship Management (CRM) and several collaborative tools. E- Commerce has
created a new channel for sales and distribution. Sales functionality now looks beyond ERP.
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5. Service Module - Planning, Warranties and Contracts
Service Module - Planning, Warranties
and Contracts
Service Planning - Attending of unscheduled maintenance tasks arising out of breakdown and
faults both for internal and external customer is an important service activity of any organization.
However, bulk of service activities arise out of planned service activities. For internal customers,
this may be routine maintenance of plant and equipments, arising out of preventive maintenance
schedule. For external customers also, majority of service activities arising out of service
contracts and warranties, are regular in nature. Service module of ERP software enables proper
planning and monitoring of such a routine service activities.
Maintenance Planning Procedure: This is best illustrated by the following diagram:
1. Reference Activities
a. These are the basic elements which are used to create a maintenance prediction or a
maintenance plan. Reference activity data consists of information about the
reference activities performed on the objects/ component. These reference activities
are used while creating the service orders. For example toner replacement. The

materials and labor requirements for the service orders are attached to reference
activities
b. The reference activity is always linked to a service type such as external, internal,
help desk.
2. Maintenance Concepts
a. Here the activities that must be carried out and the number of times the reference
activity must be carried out are specified.
3. Generate Predictions - This is the plan of activities that have to be carried out for the
entire maintenance life cycle.
Warranties - Manufacturers often provide warranties to their customers that cover the correct
quality and functioning of their product. A warranty is structured to contain warranty term and
warranty period. This structure may be simple for a home appliance such as carry on/ on site full
warranty for one year. But for situation such as supply of plant of equipment, this structure may
be complex where extensive warranty term is needed to be in place and to be acted upon
periodically, as shown in the following example:
Warranty functionality of service module provides configurable template for capturing complex
warranty structure which can be fully tailored to meet the requirement of customers. This
warranty structure links cost term, coverage terms as well as phasing of coverage terms. On
attaching the warranty structure to an object, predictable service activities for the entire life cycle

of the object is generated. The planned service order, thus generated, is subsequently converted
to actual service orders.
Service contracts - Service contracts should be administered as professionally as possible. This
is facilitated by contracts functionality of service module which specifically does the following:
1. Making service contract quotations with price simulation tools which help in arriving at a
correct gross margin for the service quotation.
2. Generating service contracts out of various configurable templates which incorporate
service types, pricing structure and validity.
3. Maintaining and working with service contracts which include monitoring of cost of
material, labor, travel, subcontracting and help desk. All activities related to a service
contract are tracked and logged in the system.
4. Creating contract installment which is used for phasing the service activities and
progressive invoicing.
Contract Management procedure: This is best illustrated by the following diagram:

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5. ERP Service Module - Call Handling and Service Orders Control
ERP Service Module - Call Handling
and Service Orders Control
Call Handling
Proper operation of a help desk is an essential component of proper servicing and resolution of
problems. Service module of an ERP system assists organization to respond promptly both in
respect of internal and external customers and gain valuable management data which helps in
retaining customers as well as improve internal operation of the organization. Service module
normally provides an useful call handling system, which often offers a link to field force
automation.

Process of call handling:
1. Providing a fast Telephone Screen for call handling.
2. Problem solving passes through the Following Stages
a. The call is assigned to a service Center and support engineer.
b. The support engineer either solves the call
c. Or the support engineer Reassign the call to another service center or support
engineer
3. A solved call can
a. Be accepted by the business partner and can be archived
b. Become a bad Fix which must be resolved (this occurs if the customer comes back
with the same problem on the same configuration and Object within a stipulated
time frame)
The concept is best illustrated by the following diagram:
Call handling sub module also provides a diagnostic component. This helps in creating a fault
analysis tree of questions, answers, problems and solutions. It can be used by the support
engineer to get answer s for problems that have been reported earlier.
Service Order Control: A service order is a schedule of service activities. These activities
involve external field service arising out of customer call and external preventive maintenance
activities. These activities also involve internal preventive maintenance as well as well as
internal field services. Return material processing and tools repair are also part of service order
control. The activities of service order control sub module is best illustrated by the following
diagram:

Service Order Processing: Service order control is the focal point of a service module and uses
data from the following interconnected modules:
1. Item Base Data module and the Master Data set up of service module.
2. The configuration structure Data from the Configuration Control sub module.
3. The Cost Accounting Data.
4. The calendar data for availability / absence of service resources.
5. The contract management part of service module
6. The history sub module which collects past service time data and provide information such
as mean time to repair (MTTR) and mean time between failures (MTBF).
7. The general ledger module.
8. The sales Invoicing module (To generate Invoices)
9. The purchase control module (To handle the subcontracting activities).
Service Order control uses following procedures:
1. Service Orders can be created from:
a. The Service Planning and Concepts (SPC) sub module when Planned activities are
transferred to service order control.
b. The Call Management sub module when Calls are transferred to this module.
c. Field Change Orders, also known as call back orders where changes are to be made
to the same object (such as replacement of a particular component belonging to this
object) for all the customers.
d. Service order quotation which is similar to the sales order quotations and provides a
cost to prospective customer. On acceptance by the customer, a manual service
order is created.
2. Service Order Execution:

a. Assigning of engineers/ technicians to the service order (depending upon service
area, availability, skill set and priority of order) and provisioning of time for the
resource allocated (including travel time, obtained through distance zone mapping
from the system).
b. Maintain various activities related to service order such as estimated materials,
physical issue of materials from warehouse/ service cars/ service kits.
c. On completion of service order activities, actual hour spent and materials consumed
is recorder in the system. Excess materials are deposited back in the warehouse.
d. The system generates actual costing of the service orders, variances with estimated
cost and invoices. It also makes necessary entry to general ledger.
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3. Operations
5. ERP - Technical Modules - Installation and License Management
ERP - Technical Modules - Installation
and License Management
Kernel of an ERP system comprises of a technical module (set of tools) which provides a
foundation to various application modules. These tools provide application installation and
system administrations functionalities which enables efficient running of applications, within a
secured environment. The technical module also provides high level COBOL and 4 GL
programming languages (such as ABAP by SAP) which enable application customization and
development. The important functions of analytic, report writing, queries, text management and
integration with other systems such as office suite are administered through various tools
contained in this module. Handling of logs and audit trails of system generated transactions is
another functionality which is growing in importance, due to various regulatory requirements
such as Sarbanes-Oxley, IFRC and Basel II.
Positioning of Technical modules: In addition to provide a base to various application modules,
tools contained in the technical module deal with the hosting environment of the ERP system,
namely RDBMS and Operating system. This is clarified in the following diagram:

Installation of an ERP system: The procedure for installation broadly comprises the following:
1. Pre installation steps: There are various hardware and software configurations that can be
used to install an ERP system of particular type and size. It is to be ensured that minimum
hardware capacity, needed to install the system is available. Factors such as disk capacity,
number of concurrent users, number of companies, and expected disk space usage are
important considerations to avoid future performance issues. It is also to be ensured that
requisite RDBMS and operating system appropriate for the chosen system is available for
installation.
2. Creating environment for installation: Very briefly this constitutes configuring TCP/ IP
(connectivity), allocating disk space for system tables, application tables, indices, roll
forward data, creating OS (operating system) directories, creation of various OS users,
installing and configuring RDBMS.
3. The next step is loading (either locally or remotely) and installing the ERP software.
It may be mentioned that the job of installing an ERP system is done by competent tools experts
with the help of detailed installation guides provided by the ERP vendor.
License Management: There are various types of licensing scheme offered by product vendors
such as i) named users ii) package based users iii) concurrent users and iv) module based users v)
power user (having access to development tools). The license management process is embedded

in ERP systems for the purpose of copy protection mechanism and to regulate the commercial
use of the system. However, for testing and demonstration purposes, vendors normally provides
unprotected software with limited validity, which is needed to be validated and patched before a
specified expiration date. The copy protection mechanism is also used by dealers to protect their
customizations on the standard ERP software. The license management monitor is implemented
by license daemon program.
Validation Process of License: After installation of ERP system under production environment,
the software is permitted to be used for a limited period, which is counted from the date of the
installation. After this period, the application software is blocked, unless it is validated by
product developer.
The validation procedure begins when the requested system configuration is defined by the user
immediately after the installation. A report of this configuration and a system generated security
key is sent to product developer. Upon receiving the report, validation keys are sent by them
which must be entered in the system by the user. The system is then initialized by setting the
parameters and is ready for use.
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3. Operations
5. Users Interface and Users Management in ERP System
Users Interface and Users
Management in ERP System
Users interface directly impact usability of an ERP system. A properly designed user interface
provides proper accessibility to the intended functions of the system and enables execution of
transactions. Earlier users accessed the system with dumb terminals (ASCII) which had lot of
usability deficiencies and this led to subsequent adoption of Graphical Users Interface (often
with look and feel of MS Windows) during 1990s. With the advent of internet technology, user
interface further evolved to enterprise portal, which provides easy access between internet client
and application server.
Internet based User Interface: This is the most popular type of users interface at present due to
convenience in accessing the ERP applications even from a remote location. Maintenance by
system administrator is also easier, as they need not go to individual desktop or use any
additional software distribution software, for the purpose of maintenance. The Internet server
application is used as a gateway between the Internet client (IC) and the application server in
order to expose the ERP functionality to the Internet domain.
The internet user interface architecture is depicted in the following diagram:

The HTTP-server security mechanisms are used to offer secure access to the HTML-page that
contains the Java applet.
User Management: User management functionality is used to create user, provide user login
and password and to give authorizations to the users. The user’s authorizations are dependent on
their role in a company. To be able to work with ERP applications, users must have some sort of
session authorization, database authorization, and library authorization. During installation of
ERP, some default roles are automatically created. The default roles make sure that users can use
the menu browser and its associated functions and commands.
Users Type: There are various types of users for an ERP package which can be broadly
classified as under:
1. Normal users, who have restricted authorizations to start sessions, access table fields, work
with data that pertains to specific company (database) numbers and so on.
2. Super users, who have unrestricted authorizations. A system administrator is a good
example of a super user.
Role dependent users’ authorization: From a user point of view, a role represents a function in
an organization. In ERP, a role represents a set of authorizations for a function in a company
(database). User authorizations that are defined per role instead of per user significantly reduce
the redundant data. The authorizations for normal users are therefore defined in roles to which

they can be linked. The role concept provides a user-friendly method to quickly add new users or
to update user authorizations.
Because an employee can have more than one function in a company, more than one role may be
assigned to the user. A role can also contain more than one sub-role, which can also have sub-
roles. All these roles and sub-roles form a role tree, which can be viewed with a role browser.
The role browser shows the role tree in a graphical user interface.
Role-dependent authorizations can be defined at the following component levels in an ERP
system:
1. Sessionauthorizations - The session authorizations define which sessions the users can
start and what they can do with these sessions.
2. Database authorizations - The database authorizations define the actions the users can
perform on specified database tables and the associated fields in the database table.
3. Library authorizations - ERP system uses various type interfaces to integrate external
programs which communicate with ERP environment through Dynamic-link libraries
(DLLs). The Library authorizations define whether the users, who are linked to the role, can
access the functions that are defined in DLLs.
The non-role-dependent authorizations: In addition to these role-dependent authorizations,
some additional authorizations can be specified that are not defined by the employee’s role, for
example, the development parameters, device preferences, and so on. These non-role-dependent
authorizations are defined in templates to reduce redundant data, which then can be linked to the
user profile.
These templates pertaining to non role dependent authorization can be divided into the following
categories:
1. Development-related templates.
2. Text-related templates.
3. Device-related templates.
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5. ERP - System-Auditing, Device, Text and Job Management
ERP - System-Auditing, Device, Text
and Job Management
IN addition to functions covered by technical modules such as user’s management, License
management, installation (as discussed in earlier papers), ERP technical module provides several
other important functionalities. Some of these functionalities, as given below, will be very briefly
discussed in this paper:
1. Audit management
2. Device management
3. Text management
4. Job management
Audit management: Large organizations depend on ERP system for financial reporting which
involves dealing with statutory and regulatory authorities. ERP, thus, has become an integral part
of corporate governance and compliance framework. In this context, audit management
functionality plays an important role to authenticate if data integrity is being maintained by the
system and sensitive transactions are traceable to their origin at a latter date.

First step of audit management is to decide for which transaction type/ tables, the audit trail
should be activated. This should be done on a trade off basis as enabling too many transaction
type will effect the overall performance of the system. These activated tables normally contain
sensitive financial data requiring restriction of access to audit data. This is done by defining a
security level per table/ company (database) combination. Audit data is normally kept in a set of
sequential files. Depending upon security level, the user can or can not access some or all of
these files.
For each transaction, with activated audit trail, a transaction notification is generated by the
auditing system, which contains following information:
1. Transaction ID number.
2. User name.
3. Session name.
4. The commit time of transaction.
5. List of tables updated by the transaction.
Table level command such as creating/ deleting tables, direct correction of data at database level
by system administrator(for rectification of erroneous entry } are also logged by auditing system.
When the audit data is written, information of original data is also maintained in audit files.
Device Management: One of the major task of ERP system is to generate output from raw data,
such as reports, purchase orders, sales invoice. These outputs may be appended to a file or send
to a printer. For the purpose of printing, an appropriate printer, compatible with operating
system, must be available.
Device management of an ERP system supports various output types such as:
1. Physical printer.
2. Logical printer where printers are organized under groups and print jobs are sent to a queue
from a temporary file.
3. An append file in which system stores output of the process.
4. A terminal screen on which the output is viewed.
Under authorization management, this template can group devices and define an order of
preferences for these devices. For example, a range of printers can be defined as well as given
highest priority is given to the printer closest to the user. The template data is dumped for each
individual user to the Device Preferences table. These templates can also be used to define a
number of terminals from which the ERP users can start their sessions.
Text Management: Text management provides tools to write and maintain text in the system.
Text management system provides text editor which is used to write on line help and queries.
This facility helps in linking additional information to a record such appending special
contractual terms to a purchase order. Text management facility helps in creating text related
templates which are attached to users as a part of authorization. This authorization can be of
following types:

1. Read: The user can only read text.
2. Use: The user can read as well as link the text to a particular record.
3. Update: The user is authorized to read, link, create, change and delete a text.
Job Management: This functionality is used to schedule a job involving large scale processing /
printing at non-peak hours, which improves performance of the system. Some examples are year
end processing or printing ledger account involving hundreds of pages. The jobs can be
scheduled to activate process periodically, at a defined interval or repeatedly at a specified time.
The jobs get activated even if the user is not logged in the system.
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5. HR and Quality Management in ERP System
HR and Quality Management in ERP
System
Human Resource (HR): Though the pay rolls preparation through bespoke systems is one of the
early adoptions of application software in many organizations, HR module was mostly left out
by them, during their early phase of implementation of ERP system, apparently due to routine
nature of HR functions, involving mostly some staffing activities. However, need of a human
resource department has changed dramatically from payroll and document management to
organizational management and personnel development, during the course of last decades and
necessity of adoption of an ERP system evolved. Now, the functionality of HR modules is more
and more used for the management of human capital and human resources.
Some of the basic functionalities of a HR module are listed below:
1. Personnel Management: This basically comprise a common database of all personnel
master data. The system, often, comprises workflow tools which assist in administering
various HR functions. Personnel management facilitate recruitment process which involves
notification of vacant jobs including job description, internal job posting, external job
advertisement, matching of applicant qualification with requirement of jobs and selection of
candidates. The travel management segment of this functionality, helps to control the
process from initial travel request right through to posting of final expenditure in financial
ledger. Benefit administration component provides capability and flexibility to administer
employees’ participation in various benefit programmes such as health insurance, annual
bonus, performance bonus, gratuity, and other compensations.
2. Personnel Management: This basically comprise a common database of all personnel
master data. The system, often, comprises workflow tools which assist in administering
various HR functions. Personnel management facilitate recruitment process which involves
notification of vacant jobs including job description, internal job posting, external job
advertisement, matching of applicant qualification with requirement of jobs and selection of
candidates. The travel management segment of this functionality, helps to control the
process from initial travel request right through to posting of final expenditure in financial
ledger. Benefit administration component provides capability and flexibility to administer
employees’ participation in various benefit programmes such as health insurance, annual
bonus, performance bonus, gratuity, and other compensations.
3. Payroll management: The basic function of this component is to generate pay checks
periodically, produce related reports and posting to relevant financial ledgers. Attendance
records of the employees are entered in the system (often through an access control system).
The system provides facility to record overtime data and generate reports involving leave,
attendance and absenteeism.

4. Time Management: This component enables analysing of data related to the time spent by
employees on their jobs. Management of work schedule by automating schedule generation
is done by this functionality. Time management schedule also enables individual and group
piecework calculation for employees’ incentive wages.
Quality Management - In every organization, raw material, work in progress and end products
are regularly inspected. This is basically to ensure that nothing goes wrong during the process of
procurement, production or distribution. Thus, quality management module engages entire
supply chain quality operations. As a part of logistics application, quality management module
handles the traditional task of quality planning, inspection and quality control.
Quality Planning - Before a quality inspection is carried out, it is necessary to define
prerequisite information of which product is needed to be inspected. The inspection of selected
product is done based on some of its characteristic, of which method of inspection/ testing is to
be determined in advance. Quality inspections are not always a simple measurement of
characteristics but may involve complex calculations, for which requisite algorithm is entered in
the system for automatic calculation of quality score during inspection. The effect the inspection
will have on the product and location where inspection is done is also entered in the system.
Inspection Process - Inspection orders may be order specific and can be created for a sales,
purchase or production order. However, there may be standard inspection procedure where
inspection orders are triggered both for moving products as well as products held in storage.
Standard inspection orders are automatically generated for purchase order, sales order and
production order as per a pre defined quality grouping.
Quality Control - This functionality helps in determining sample sizes and adoption of
Statistical Quality Control (SQC) techniques. The controlling tools such as quality control charts,
quality scores for inspection lots, are part of this process. This procedure also helps in generating
quality notifications for external and internal problems and initiating corrective action. The
inspection results are also archived for future analysis through this process.
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5. Project Control and Engineering Change Control in ERP
Project Control and Engineering
Change Control in ERP
Project control module is used for organizing long term projects such as building a ship or power
plant. The production environment resembles make to order situation where customer order
driven purchasing, production, estimating, engineering, planning and control is done. This
module also enables in setting up, analyzing and amending the budget for the project undertaken
by the organization. A project can be standard one involving standard Bill of Materials, routing
and costing structures. However, in most of the cases the project is specific to order, involving
customized BOM, routing and costing structure.
Procedure for a Project Control: Following are the activities related to project control module:
1. Creating a project: A project is a collection of manufacturing and purchasing actions,
arising out of a customer order. Thus, a project, part of a project or a project t structure is
created by a customer order that have to order policy. A project may constitute various
subprojects. The project structure defines relationship between main projects and sub
projects.
2. Project Planning: The purpose of project planning is to maintain various project activities
and to maintain relationship between various activities. It also creates a rough cut material
planning and capacity planning of the project in order to estimate project lead time and

required capacity. The co-ordination of main project with sub projects, planning of material
based activities; booking of non order related time to a project is also done through this
functionality.
3. Project Engineering: This functionality is used to customize standard items to the
customer’s requirement where project specific variant of standard objects such as
customized bill of materials and routing is created.
4. Making and controlling budget for the project: The purpose of budgeting is to estimate
project cost and revenue to be generated, with the help of cost structures, involved with
project activities. The method of invoicing (progressive payment) is also defined. Other
details related to administration of budget is incorporated under various broad categories
and cost grouping. As for example, a construction project may be broadly categorized under
site preparation, foundation, construction and finishing. The costing for the same project
may also be grouped under material, labor, equipments, subcontracting and sundry
expenditure.
5. Execution of the project: As the project advances, various work in progress (WIP)
transactions are generated such as issue of materials, workmen’s hour deployed for project
activities, completion and signing off sub projects. Such WIP transactions are monitored,
invoiced as well as posted to related ledger by this functionality.
Engineering Change Control (ECC): Through engineering change control module,
organizations get effective control over engineering change orders. An end items may have
hundreds of components. When improvement is done or a new model is launched, a number of
components are changed or replaced. This module provides tools to carry out the procedure to
manage this change/development. If a changed component is used in a number of end products,
these tools make a where use list and globally replace the component in all the end products.
ECC essentially creates an engineering item from a purchased or manufactured item. This
engineering item can be taken through various revisions/versions, such as prototype, previous
models, production model, and obsolete model. Next, the revised item is copied to a new or
existing manufactured or purchased item. ECC also maintains engineering drawing and
documentation through graphic files for each model.
ECC also maintains engineering BOM which unlike production BOM, does not use sequence
number but uses revisions to deal with alternate components. After creating Engineering BOM,
namely Engineering Change Order functionality is used to change a group of engineering
items/BOM to production items/BOM.
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5. Enterprise Application Integration & Service Oriented Architecture
Enterprise Application Integration &
Service Oriented Architecture
ERP represents a wide suite of applications covering various enterprise functionalities. It also
links together departments and business units. Whereas an ERP system provides a perfect back
end system, the organization still needs to interact and collaborate with its suppliers and vendors,
where an ERP system plays only a limited role.
Extended ERP: The business functions of an organization are depicted in the diagram below:
Functions depicted in the diagram within the dashed rectangular, represents backend business
functions of an organization, which are adequately dealt by an ERP system. But an ERP system
can only play a limited role for collaborating with suppliers’ and customers (as depicted outside
the dashed rectangular).

The organizations need to collaborate with web customers and suppliers for carrying out
activities such as bidding, ordering, payment, sharing inventory information and catalogues,
electronically and in real time. This is not possible through traditional Electronic Data Exchange
(EDI) functionality of an ERP system. It is, therefore, incumbent on the organizations to invest in
collaborative tools such as customer relationship management (CRM), supplier relationship
management (SRM), and e-commerce. To drive down cost of supply chain, across vendors,
distribution network and customers, various supply chain, warehouse management and transport
solutions are deployed.
A limitation of an ERP system is that it provides current status only, such as open order, open
entry and it does not depict past instances of data. Decision makers often need to look past
current status to find trends and patterns that aid better decision making process. Hence the
corporate are also investing in solutions providing business intelligence (BI), corporate
performance management (CPM and knowledge management).
Enterprise Application Integration (EAI): Linking of an ERP system with new breed
enterprise collaborative and intelligence suites is a cumbersome process, involving many hours
of hand coding, due to rigid architecture and coding system of an ERP system. Enterprise
Application Integration which provides integration suite to existing ERP system promises to
speed the work of linking applications and minimizing the role of custom built code.
Approach to EAI: From a business perspective, it is imperative that ERP and various other
applications which an organization deploys should behave as one integrated whole. The popular
way of creating such integration is through massage oriented middleware, which is designed to
handle all inter programme communications logic by means of message queues. The middleware
takes a message such as a transaction and intelligently routes and reformats that message for one
or more target systems. These middleware are built over existing parent middleware products/
open standard such as IBM MQSeries for message transport and DCOM/ CORBA for
connectivity standard.
Application of Service Oriented architecture (SOA) - SOA has gained popularity in recent
years due to its enabling functionality or services to upgrade and extend existing software
applications. SOA is an architectural approach to build and deploy software applications that is
interoperable by design say generation of a XML document based on a common open standard.
The importance of SOA has grown in recent years due to number of mergers and acquisitions in
software industry, particularly by Oracle, Microsoft and Infosys, where companies endeavor to
leverage their existing client base and to integrate their acquired software (mostly extended ERP
products) with their clients’ existing ERP system. The netweaver from SAP or Fusion from
Oracle, are examples of these organizations’ SOA initiative whereas Infor is incorporating SOA
capabilities in their product lines.
The main advantage of SOA is that software capabilities are connected easily. Unlike EAI no
middleware is needed as adoptions of standards enable services to interact directly. It also
enhances reusability capacity of software, resulting longer life of existing assets. A successful
SOA implementation makes it easier to customize and upgrade existing applications thereby

reducing total cost of ownership. In brief SOA application connects seamlessly ERP modules,
customization part of ERP modules, industry specific solutions and extended applications such
as SCM, CRM and BI.
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5. ERP Add on Products - SCM, SRM and WMS

ERP Add on Products - SCM, SRM
and WMS
Supply Chain Management (SCM): Improvement of supply chain is one of the last frontiers
for improving productivity and supply chain visibility is the most important challenge faced by
supply chain professionals. This is more relevant in the context of retail, consumer electrical and
electronics industries where organizations are challenged by an environment of distributed
operations, high demand volatility and rapid product evaluation. A properly implemented supply
chain solution enables an organization to quickly respond to supply chain aberrations, and
provides following benefits:
1. Accurately anticipate customer demand and respond quickly and efficiently. Quickly sense
and respond to any changes in the marketplace.
2. Improving extended supply chain visibility and better collaboration encompassing vendors,
customers, distributors, transporters and even competitors. Better order promising through
increased Work in progress (WIP) and end item inventory visibility
3. Closed loop planning and execution, resulting increased factory throughput.
4. Co-ordinate marketing of end products through active collaboration with business partners.
SCM tools: Considering the importance of SCM, the reputed ERP vendors such as SAP, Oracle,
and Infor started to add SCM solutions to their ERP offerings. Also best of breed offering from
niche vendors e.g. Manugistic also started to appear in the marketplace. The product suite
offered by theses solution providers broadly comprise of following components:
1. Demand Planner: Provides tools to integrate demand and supply plan. Demand planner
comes with collaborative tools where everyone with a stake (including business partners) on
demand plan, are brought together. It provides various forecasting algorithm with lifecycle
modeling ability which gives an accurate understanding of rising/ dying (obsolescence)
cycles of an item.
2. Advanced Planner: Provides strong scenario based tools for Sales and Operational
Planning(S& OP), where any change in supply chain, such as breakdown of a
manufacturing capacity, is accounted for in real time.
3. Advanced scheduler: Provides, in harmony with supply chain demand projections, multi
site production schedules in most efficient manner so as to minimize set up time, reduce
cycle time and maximize throughput.
4. Event management: Provides response to unusual event which may have an impact on
supply chain such as new product launch, unusual weather, natural disaster etc.
Supplier Relationship Management (SRM): In the context of restructuring of extended supply
chain, more and more organizations are asking their suppliers to integrate their business system
for real time collaboration. Sharing information with suppliers now goes beyond the realm of
EDI. SRM facilitates information integration and tracking in real time in respect of several
aspects such as delivery schedules, delivery information, inventory, capacity planning, quotation,
RFP, quality and credit. However, the extent of integration depends upon the criticality of

supplier in the business context of the organizational need. SRM provides maximum value for
integrating suppliers that have strategic stake such as an automobile ancillary, contract
manufacturer for a retail chain.
SRM tools are mostly used to complement existing functionality of ERP system. Some of the
specific functionalities of SRM are as follows:
 Collaborative planning and scheduling.
 Web based private trade exchange.
 Monitoring of incoming goods through GPS tracking.
 Dashboard providing real time suppliers’ performance.
Warehouse Management System (WMS): Like warehousing module of an ERP system, the
primary purpose of WMS is to control, storage and movement of goods. However, in the context
of recent setting up of huge automated warehouse and advent of tracking technologies such as
RFID (Radio Frequency ID), the limited warehousing functionality of an ERP system is not
often adequate. WMS helps to organize work including allocation of resources and optimize
storage and distribution network.
Very briefly, WMS comprises of following functionalities:
1. Marinating multiple Stock Keeping Units (SKU) for thousands o items.
2. Supports high volume wave picking/ zone picking.
3. Supports assigning, scheduling and monitoring of labor performance.
4. Increase inventory speed through cross docking (unloading incoming goods and
immediately loading in an outbound vehicle).
5. Automated data collection through RFID and bar code technology.
6. Integration with materials handling equipments deployed in the warehouse, such as
conveyors, fork lift truck, within the automated warehouse,
7. Generation of electronic advanced shipping notification (ASN).
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5. Turbo Charging ERP with BI and CPM
Turbo Charging ERP with BI and CPM
Business Intelligence (BI) - An ERP product provides hundreds of standard reports, generated
weekly or monthly or year end basis which acted as a hardcopy dashboards within the
organization. In order to improve report generation functionality, an ERP system provides
various report writing tools (such as crystal report writer, safari report writer) as well as SQL
query functions. A few ERP vendors also attempted to provide hyper relational interface to
provide direct logical link to database. But these functionalities are having limited utilization due
to complexities of their usability. The user has to still depend on IT department for generation of
custom built reports. As a consequence, the “export to excel” is still the most popular mode of
creating a customized report from an ERP system.
The need for corporate management is for an analytics which provides an insight to current trend
and future direction of the organization, assisting proactive and predictive business management.
For the common user, getting simple drag and drop reports, which supports their current decision
making process on operational issues, without the help of IT department, is also an imperative.
Advent of BI - A number of product developers have currently come with their offering of BI
tools to meet this business need. This includes more generic products offered by SAS and
Cognos as well as products targeted to specific business segments such as BI for procurement
offered by Informatica. ERP product developer also started to embed their products with BI
suite.

Functioning of BI: BI tools are database independent and provides access to ERP data, legacy
data and off line data. It also interacts with data warehouse to access instances of data. It
encompasses and pull information from various ERP modules and other installed software and
presenting it in real time. It provides a dashboard with drill down capacity that gives a single and
consolidated view of relevant information without forcing the end users to switch between
several windows and applications. End users create tailored view of data involving their
operation through simple drag and drop operation. BI comes with strong analytic tools which
facilitate sorting, calculation, analysis of data and provides different graphical representation to
identify critical key trend and opportunities.
Corporate Performance Management: The corporate performance management systems are
built over the platform of business intelligence. It provides a bi-directional integration of
strategic, operational and tactical business process metrics where strategy is broken down into
operational targets and the execution is monitored and adjusted to achieve the set targets. CPM
builds on a number of methodologies and system solutions to achieve this objective and ensures
the drive for performance is coordinated and becomes the responsibility of each person in the
organization.
Approach to CPM: The approach to CPM, based on the principal of predictability, visibility,
accountability and confidence emanating in the eyes of investors, other stakeholders and
regulatory authority for an organization, is comprised of the following:
1. Enterprise risk management which requires predictive risk analysis capability.
2. More stringent corporate governance to meet legislation accountability.
3. Formation of executable strategy.
4. Goals and rewards linked to strategy.
5. Becoming an agile and real time enterprise.
6. Management process improvement beyond ERP.
Structure of CPM: CPM solutions are built over existing ERP and BI systems, as per the
following diagram:

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5. Repetitive and Process Manufacturing
Repetitive and Process Manufacturing
Conventional shop floor control functionality of an ERP system, for the most part, is suitable for
discrete manufacturing. However, during last two decades, interest surged for Just in Time
manufacturing technique which is suitable for high volume repetitive manufacturing. New
functionalities in the ERP system were developed to support repetitive manufacturing so as to
maximize throughput, minimize waste and reduction of set up time.
Although majority of manufacturing is discrete, process industries, consisting of chemicals, food
processing, paint, pharmaceutical, biotechnology etc., comprises an important segment of
manufacturing. Functional requirements for both process and discrete industries for various
financial and distribution modules are similar. However, functionality needed for production and
operational control is widely different. Under discreet manufacturing distinct items are produced
using BOM and routing whereas under process manufacturing, end product, produced out of
continuous process, can not be distinguished from each other.
Repetitive manufacturing: Important element of repetitive manufacturing is where schedules,
where production orders are consolidated into schedules. Another important consideration for
generation of schedule is capacity of bottleneck work center. On completion of schedule run,
completed units are moved to inventory and lot/serial number is assigned. Pull notes are used to
transfer material between work centers.
A repetitive type of manufacturing environment has the following characteristics:
1. Mass production with speed and high throughput.
2. Item produced are generic in nature.
3. Item produced are not linked to a particular production order and are normally made to
stock for distribution through warehouses and sales channels.

Planning functionality of an erp system

Planning functionality of an erp system

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