ERP

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What is Enterprise resource planning (ERP)

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ERP

  1. 1. Enterprise Resource Planning (ERP) 1 David O Campbell, Jr Business Transformation Solutions
  2. 2. What is ERP? ERP is a multi-module application software that helps a company manage the important parts of its business. 2 David O Campbell, Jr Business Transformation Solutions
  3. 3. The Evolution of ERP ERP Enterprise 1 Resource 9 Planning 9 0 s MRP II Manufacturing 1 Resource 9 Planning 8 0 s MRP 1 Material 9 Integrated Requirements Planning 7 Closed Loop 0 Closed Loop Planning s Planning Linear Planning 3 David O Campbell, Jr Business Transformation Solutions
  4. 4. What does ERP do? ERP helps businesses with: • Product Planning • Providing Customer • Parts Purchasing Service • Managing Inventories • Tracking Orders • Interacting with • Company Finances Suppliers • Human Resource Management 4 David O Campbell, Jr Business Transformation Solutions
  5. 5. How does ERP work? • ERP centralizes all of the Enterprise information • It eases the exchange of data among corporate divisions • Unites all major business practices • Runs on multiple platforms – AS/400, Unix, client/ server networks • PC’s are connected to more powerful computers that feed them data • Each module works separately performing specific data-processing functions 5 David O Campbell, Jr Business Transformation Solutions
  6. 6. ERP Module Examples 1. Order Entry modules converts a customer’s purchasing requirement into terms that allows ERP to track it through the sales order fulfillment process. 2. Master Schedule modules provides visibility of future load, inventory investment, production, and delivery commitments. ERP (via MRP) checks the 3. BOM module for each part's specific characteristics necessary for planning, scheduling, and purchasing. 6 David O Campbell, Jr Business Transformation Solutions
  7. 7. ERP Module Examples (cont’d) 4. Inventory-management module captures information needed to provide analysis of inventory as it pertains to turnover ratios, accuracy, excess and obsolescence and transaction activity for inventory investment. 5. Shop floor module uses production work orders, manages the input of the workload to the shop floor. This application includes the flexibility to change a production work order's start date, due date, bill of material, routing, and quantity. 7 David O Campbell, Jr Business Transformation Solutions
  8. 8. ERP by Example (cont’d) 6. Cost Accounting module provides the cost calculations and summary information for accurate manufacturing and accounting management for product costs. 5. Purchasing module provides control of requisitioning, purchase order issuance, and receipts tracking. Purchase Order’s manages critical purchasing information necessary to make important management decisions. 8 David O Campbell, Jr Business Transformation Solutions
  9. 9. What’s the big deal? • Cuts production and inventory costs • Improves customer service • Plans and forecasts product demand • Improves cost allocation • Measures and accounts for product waste • Ensures the required materials are available when needed 9 David O Campbell, Jr Business Transformation Solutions
  10. 10. Investment Justification • Plants become more efficient • Increased delivery/performance • Reduced lead times • Increased inventory accuracy • Reduced work-in-process inventory 10 David O Campbell, Jr Business Transformation Solutions
  11. 11. Business Risks • High initial investment ($100M for large companies is common) • Uncertainties (software) • Employees are given much greater responsibilities 11 David O Campbell, Jr Business Transformation Solutions
  12. 12. Long-term/Short-term Cost Factors • Implementation costs • Consultant and internal costs • Maintenance costs 12 David O Campbell, Jr Business Transformation Solutions
  13. 13. ERP’s Impact on Industry • Lowers total costs in complete supply chain • Shortens throughput times • Reduces stock to a minimum • Enlarges product assortment • Improves overall product quality • Increases reliability of delivery dates • Improves customer service • Coordinates demand, supply and production 13 David O Campbell, Jr Business Transformation Solutions
  14. 14. Where do you get ERP? Some of the sources of ERP software are: • SAP • J.D.Edwards • ERPLX • Microsoft • ERP/LN • IBM • Oracle • Many smaller • People-Soft companies 14 David O Campbell, Jr Business Transformation Solutions
  15. 15. How is ERP implemented? Who is responsible? When can it be done? Where are we now? Where are we going? Where do we start? 15 David O Campbell, Jr Business Transformation Solutions
  16. 16. Who’s responsible for implementation? Implementation Team Leaders/Members •Project leader (IS Department) •Module/Phase leaders (subject area experts) •Individual team members 16 David O Campbell, Jr Business Transformation Solutions
  17. 17. When can implementation be done? • Establishing a Project Plan – Designs the implementation process. – Resources are identified. – Implementation team is selected and task allocated. – Special arrangement for contingencies. 17 David O Campbell, Jr Business Transformation Solutions
  18. 18. Where are we now? (pre-ERP) Software Hardware Personnel –MRP/MRPII –Mainframe –Other –Client server 18 David O Campbell, Jr Business Transformation Solutions
  19. 19. Where are we going? (post-ERP) Expected Benefits –Improved process flow –Reduced Inventories –Better data and analysis –Better customer information –Improved margins –Others 19 David O Campbell, Jr Business Transformation Solutions
  20. 20. What is really needed? • Module Selection/Priority • Full or Partial Implementation? – Must have – Want – Do not need 20 David O Campbell, Jr Business Transformation Solutions
  21. 21. Where do we start? • Pre evaluation Screening • Evaluation Package • Project Planning • GAP analysis • Reengineering • Team training • Testing • Post implementation 21 David O Campbell, Jr Business Transformation Solutions
  22. 22. Pre-selection Process Package Evaluation Project Planning Gap Analysis Reengineering Configuration Implementation Team Testing End- user Training Training Going Live Post – implementation Phase ERP implementation Life Cycle 22 David O Campbell, Jr Business Transformation Solutions
  23. 23. Pre evaluation screening • Decision for perfect package • Number of ERP vendors • Screening eliminates the packages that are not at all suitable for the company’s business processes. • Selection is done on best few package available. 23 David O Campbell, Jr Business Transformation Solutions
  24. 24. Package Evaluation • Package is selected on the basis of different parameter. • Test and certify the package and also check the coordination with different department • Selected package will determine the success or failure of the project. 24 David O Campbell, Jr Business Transformation Solutions
  25. 25. Cont. • Package must be user friendly • Regular up gradation should available. • Cost 25 David O Campbell, Jr Business Transformation Solutions
  26. 26. Project planning • Designs the implementation process. • Resources are identified. • Implementation team is selected and task allocated. • Special arrangement for contingencies. 26 David O Campbell, Jr Business Transformation Solutions
  27. 27. Gap analysis • Most crucial phase. • Process through which company can create a model of where they are standing now and where they want to go. • Model help the company to cover the functional gap 27 David O Campbell, Jr Business Transformation Solutions
  28. 28. Reengineering • Implementation is going to involve a significant change in number of employees and their job responsibilities. • Process become more automated and efficient. • New procedures are established as need. 28 David O Campbell, Jr Business Transformation Solutions
  29. 29. Team Training • Takes place along with the process of implementation. • Company team members are trained to become the trainer’s. • Employee become self sufficient to maintain system the consultant have left. 29 David O Campbell, Jr Business Transformation Solutions
  30. 30. Testing/Prototyping • This phase is performed to find the weak links so that it can be rectified before its implementation. 30 David O Campbell, Jr Business Transformation Solutions
  31. 31. ERP Implementation Factors (cont’d) • System Links – Resource Linking – Customer Satisfaction • Limitations – Policies and Procedures – Pay Back Period 31 David O Campbell, Jr Business Transformation Solutions
  32. 32. Management Requirements • Commitment • Global Readiness • Project Plan • Clear Milestones • Training 32 David O Campbell, Jr Business Transformation Solutions
  33. 33. What’s the catch? • High cost of implementation • Difficult to measure return • “Betting the company” • Political & sociological impact • Over dependence on vendors or consultants • Success is highly dependent on commitment from upper management 33 David O Campbell, Jr Business Transformation Solutions
  34. 34. Measuring ERP’s Performance • Decrease data entry • Decrease IS overhead - one system vs. many • Centralize information for decisions • Decrease WIP inventory • Decrease delivery cycle • Increase profit margin • Increase customer satisfaction and loyalty 34 David O Campbell, Jr Business Transformation Solutions
  35. 35. Measuring ERP’s Performance • Average transaction time • Interface complexity - “number of screens” • Availability (uptime) • Performance metrics - “on time delivery” 35 David O Campbell, Jr Business Transformation Solutions
  36. 36. How does ERP affect the customer? • Reduces errors in ordering, billing, shipping • Decreases lead time • Increases quality • Includes the customer in the process - “Extranets” 36 David O Campbell, Jr Business Transformation Solutions
  37. 37. The Big IF for ERP IF you have... • ERP solvable process efficiency problems • Commitment of Upper Management • Commitment of Middle Management • Solid Strategy & Thorough Design • Financial, Technological & Human Resources …then ERP may pay off big for your organization. 37 David O Campbell, Jr Business Transformation Solutions
  38. 38. About Presenter Dave is the founder of Business Transformation Solutions and has more than 35 years of practical experience in manufacturing, supply chain (23 yrs) and ERP consulting (12 yrs). He has worked in Ecuador, Venezuela, American Samoa, Canada, as well as in the United States in a variety of industries: Aerospace & Defense, Food & Beverage, Pharmaceutical, Consumer Packaging Products, Welding Consumables Products, Wire/Cable (Consumer & industrial), and Rail-Related Products in high-volume, make to order, and job-shop environments. As an industry expert he has spoken on Business Process Improvement, Change Management, Business Process Redesign, and Operations Revitalization and has published articles on these topics. During his career in manufacturing and supply chain he has worked closely with many educational intuitions. In 1994 he participated in a case study conducted by the Massachusetts Institute of Technology (MIT) called Lean Aircraft Initiative. Dave received his B.S. in Business Management from the New York State University at Old Westbury. As an active member of the NYC-LI Chapter of APICS since 1978. He has served on the Board of Directors in multiple positions and two terms as its president. 38 David O Campbell, Jr Business Transformation Solutions

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