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ERP( enterprise resource planning)


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ERP( enterprise resource planning)

  1. 1. Enterprise Resource PlanningEnterprise Resource Planning (ERP)(ERP) & Transportation& Transportation By: Omer Maroof MBA: 3rd Sem…….Enroll: 110130
  2. 2. What is Enterprise ResourceWhat is Enterprise Resource Planning (ERP)?Planning (ERP)?  ERP is an enterprise-wide information systemERP is an enterprise-wide information system designed to coordinate all thedesigned to coordinate all the  resourceresources,s,  information,information,  activities neededactivities needed to complete business processes such asto complete business processes such as;;  orderorder fulfillmentfulfillment  billing.billing.
  3. 3. ERPERP  A typical ERP system would use multipleA typical ERP system would use multiple component of computer software andcomponent of computer software and hardware to achieve integrationhardware to achieve integration  ERP delivers aERP delivers a single databasesingle database that containsthat contains all data for the software moduleall data for the software module
  4. 4.  Some organizations - typically those with sufficient in-house IT skills to integrate multiple software products - choose to only implement portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs.
  5. 5.  This is very common in the retail sector, where even a mid-sized retailer will have a discrete Point-of-Sale (POS) product and financials application, then a series of specialized applications to handle business requirements such as warehouse management, staff rostering, merchandising and logistics.
  6. 6.  Ideally, ERP delivers a single database that contains all data for the software modules, which would include:  Manufacturing: Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow  Supply Chain Management: Inventory, Order Entry, Purchasing, Product Configuration, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation  Data Warehouse: and various Self-Service interfaces for Customers, Suppliers, and Employees
  7. 7.  ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and Information Technology, this would include accounting, human resources, marketing, and strategic management.
  8. 8. n r a e n r a e D c e s d D c e s d n r a e n r a e
  9. 9. Solutions of ERPSolutions of ERP  Financial ManagementFinancial Management  Inventory ManagementInventory Management  PurchasingPurchasing  Sales ManagementSales Management  Production PlanningProduction Planning  Advanced Visual PlanningAdvanced Visual Planning  Manufacturing ManagementManufacturing Management
  10. 10. How ERP systems are implementedHow ERP systems are implemented within companies?within companies?  ERP Software Companies start analysing theERP Software Companies start analysing the prospective company(s), identifing theirprospective company(s), identifing their individual needs.individual needs.  Setup of ERP systemsSetup of ERP systems  For Mid-size companies 5-12 monthsFor Mid-size companies 5-12 months  Large Companies 6-18 monthsLarge Companies 6-18 months
  11. 11. Companies before ERP SystemsCompanies before ERP Systems
  12. 12. ExampleExample  Industrial Engineering Faculty wants to buy aIndustrial Engineering Faculty wants to buy a new Printer.  For this reason Secretary gives a purchasingFor this reason Secretary gives a purchasing order by filling purchasing order forms.order by filling purchasing order forms.  Next slide shows how this purchasing requestNext slide shows how this purchasing request process flow was working before ERPprocess flow was working before ERP
  13. 13. New Printer Purchasing ProcessNew Printer Purchasing Process 1. Purchase order form for a new printer 2. Head of Department Confirmation- Faculty Head 3. Purchase order document sent to E.M.U. Account Office 4. Account Office Secretary sents the purchase order to the Responsibles 5. Purchase order- Responsible personal Confirmation 6. Purchasing department- Manager Confirmation 7. Transfer to Finance Department Secretary for processing 8. Finance Department Responsible’s Confirmation 9. Transfer to Secretary Office 10.Secretary- Confirmation 11.Confirmation Transfer, to Purchase Department Secretary 12.Purchase Responsible personal commends with Purchase:
  14. 14. Secretary’s New printer application Transfer to Finance Departmen Transfer to Accounting Office Transfer to Manager Transfer to Accounting Office Example: Before ERP Systems
  15. 15. Companies after ERP SystemsCompanies after ERP Systems
  16. 16. E.M.U. After ERP SystemsE.M.U. After ERP Systems
  17. 17.  Online Data Flow decreases the process timeOnline Data Flow decreases the process time  Fast & Online ConfirmationFast & Online Confirmation  Less PaperworkLess Paperwork  No need for folder storageNo need for folder storage  Database SecurityDatabase Security  Less Employee neededLess Employee needed  Easy Financial ManagementEasy Financial Management  Better Inventory ManagementBetter Inventory Management In this real case there the benefits of the ERP systems
  18. 18. What is SAPMM?What is SAPMM? SAPMM(Materials Management)SAPMM(Materials Management)  SAP MM iSAP MM is a module is used for Procurement Handling ands a module is used for Procurement Handling and Inventory Management.Inventory Management.  The module has two important master data -The module has two important master data - materialmaterial andand vendorvendor..  Broadly, the various levels that can be defined for a SAP MMBroadly, the various levels that can be defined for a SAP MM implementation are:implementation are:  Client,Client,  Company Code,Company Code,  Plant,Plant,  Storage LocationStorage Location,,  Purchase Organization.Purchase Organization.
  19. 19. Material ManagementMaterial Management ((MMMM)) LOGICAL STRUCTURELOGICAL STRUCTURE  vendor  supplier  production  Distribution  customer
  20. 20. SAP FICOSAP FICO Financial AccountingFinancial Accounting (FI) Module(FI) Module  The SAP FICO module includes 2 major categoriesThe SAP FICO module includes 2 major categories;;  Financials (FI)Financials (FI)  Controlling (CO)Controlling (CO) FIFI (Financial Accounting) module(Financial Accounting) module includesincludes;;  AAccounts payableccounts payable  AAccounts receivableccounts receivable  GGeneral ledgereneral ledger
  21. 21. ControllingControlling (CO) Module(CO) Module TheThe COCO (Controlling) Module has multiple configuration steps that(Controlling) Module has multiple configuration steps that must be followed for complete implementation of this module.must be followed for complete implementation of this module.  Cost CenterCost Center  Order ManagementOrder Management  Commitment MgtCommitment Mgt  Profit AnalysisProfit Analysis  ActActivityivity-Based Costing-Based Costing
  22. 22. Mail Fax Telex Teletext Printe r EDI OUTPUTS of ERP Systems DOCUMENTS Proposal Orders approval Delivery plans Shipping papers Warehouse check list Material document Accounting document Delivery/shipping document Invoice Dept & credit doc.
  23. 23. ERP Software CompaniesERP Software Companies & Marketshares& Marketshares SAP; 15,6 Peoplesoft; 4,9 Oracle ; 4,8 Baan; 3 CA; 3 JDE; 2,2 SSA; 2,1 GEAC; 2 IBM; 1,8 JBA; 1,7 Others ; 59 Software Market Share SAP 15.6 Peoplesoft 4.9 Oracle 4.8 Baan 3.0 CA 3.0 JDE 2.2 SSA 2.1 GEAC 2.0 IBM 1.8 JBA 1.7 Others 59.0
  24. 24. SAP Packet Providers
  25. 25. SAP Packet Providers
  26. 26. Advantages  ERP delivers a single database that contains all data for the software modules across an entire company. People in different departments all see the same information and can update it.  Computer security is included within an ERP system to protect against both outsider and insider crime
  27. 27. Advantages  ERP systems tie together varied processes using data from across the company. For instance, a typical ERP system manages functions and activities as different as the bills of materials, order entry, purchasing, accounts payable, human resources, and inventory control, to name just a few of the modules.
  28. 28. Advantages  ERP software combined the data of formerly separate applications. This made the worry of keeping information in synchronization across multiple systems disappear. It standardized and reduced the number of software specialties previously required.
  29. 29. Advantages  ERP systems allow companies to replace multiple complex computer applications with a single integrated system.  ERP systems replace two or more independent applications and eliminate the need for external interfaces previously required between systems and provide additional benefits that range from standardization and lower maintenance to make reporting capabilities easier.
  30. 30. Disadvantages  There are several disadvantages to enterprise resource planning:  Cost  Implementing ERP is very expensive, price can range from $30,000 - $500,000, depending on the size of the company.  ERP vendors can charge a license renewal fee annually which can also be costly for any business.  Consultants may need to be used for installation or to maintain the ERP.  Employees may need to be trained in ERP so they can fully utilize the system. Training times takes away from work time and can also cost additional funds.
  31. 31. Disadvantages  Expertise  Success of ERP depends on the skill level and experience of the company’s work force.  Enterprises view cutting training funds as a way to cut costs.  Smaller companies may even need to under fund training this means their ERP system is often operated by personnel with inadequate education in ERP and the ERP vendor package being used.  Proper training of the workforce is dependent to success with ERP.  New employees must be trained before they can properly start working because of the ERP system
  32. 32. Disadvantages  Flexibility  ERP’s can be very rigid and may not fit the business flow of the company trying to use it.  Company’s may need to customize their ERP package which isn’t allowed by most ERP vendors.
  33. 33. Disadvantages  Change  Employees may be needed to change the way they work to become more efficient. They may feel resistant to change which can be a negative.  Bugs!
  34. 34. Technical  It is difficult and expensive to tailor an ERP system to the way a specific company does business.    Part of the challenge of building an ERP system for a company is training. The ERP system is going to drastically change the way many employees perform their jobs. This means they must be trained to use the software efficiently and this will not occur overnight.
  35. 35. Transport Fundamentals  Transport involves  equipment (trucks, planes, trains, boats, pipeline),  people (drivers, loaders & un-loaders), and  decisions (routing, timing, quantities, equipment size, transport mode). When deciding the transport mode for a given product there are several things to consider:  price  Transit time and variability (reliability)  Potential for loss or damage. NOTE: In developing countries we often find it necessary to locate production close to both markets and resources, while in countries with developed distribution systems people can live in places far from production and resources. Most important component of logistics cost. Usually 1/3 - 2/3 of total cost.
  36. 36. Routes of Goods Goods at shippers Freight forwarder warehouse Air terminal plane air Freight forwarder warehouse Goods at consignees Container terminal vessel sea May change transpor- tation modes truck land railway land barge mid-streampier bulk goodssea
  37. 37. Air •Rapidly growing segment of transportation industry •Lightweight, small items [Products: Perishable and time sensitive goods: Flowers, produce, electronics, mail, emergency shipments, documents, etc.] •Quick, reliable, expensive •Often combined with trucking operations Rail •Low cost, high-volume [Products: Heavy industry, minerals, chemicals, agricultural products, autos, etc.] •Improving flexibility •internodal service Truck •Most used mode •Flexible, small loads [Products: Medium and light manufacturing, food, clothing, all retail goods] •Trucks can go door-to-door as opposed to planes and trains. Single-mode Service Choices and Issues
  38. 38. Water •One of oldest means of transport •Low-cost, high-volume, slow •Bulky, heavy and/or large items (Products: Nonperishable bulk cargo - Liquids, minerals, grain, petroleum, lumber, etc )] •Standardized shipping containers improve service •Combined with trucking & rail for complete systems •International trade Pipeline •Primarily for oil & refined oil products •Slurry lines carry coal or kaolin •High capital investment •Low operating costs •Can cross difficult terrain •Highly reliable; Low product losses Single-mode Service Choices and Issues (Contd.)
  39. 39. Transport Cost Characteristics  Fixed costs:  Terminal facilities  Transport equipment  Carrier administration  Roadway acquisition and maintenance [Infrastructure (road, rail, pipeline, navigation, etc.)]  Variable costs:  Fuel  Labor  Equipment maintenance  Handling, pickup & delivery, taxes NOTE: Cost structure varies by mode
  40. 40. Transport Cost Characteristics  Rail  High fixed costs, low variable costs  High volumes result in lower per unit (variable) costs  Highway  Lower fixed costs (don’t need to own or maintain roads)  Higher unit costs than rail due to lower capacity per truck  Terminal expenses and line-haul expenses  Water  High terminal (port) costs and high equipment costs (both fixed)  Very low unit costs  Air  Substantial fixed costs  Variable costs depend highly on distance traveled  Pipeline  Highest proportion of fixed cost of any mode due to pipeline ownership and maintenance and extremely low variable costs