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  1. 1. Enterprise Resource Planning
  2. 2. Concept <ul><li>ERP is a set of tools and processes that integrates department and functions across a company into one computer system. </li></ul><ul><li>ERP runs off a single database, enabling various deptts to share information and communicate with each other. </li></ul><ul><li>ERP system comprise function specific modules designed to interact with other modules, e.g. accounts receivable, accounts payable purchasing etc. </li></ul><ul><li>ERP is an enterprise reengg. solutions that uses new business computing paradigms to integrate IT processes across co’s divisions and departments. </li></ul>
  3. 3. Evolution of ERP Timeline System Description 1960s Inventory Mgmt & control It’s a combination of infr. tech, and bus processes of maintaining the appropriate level of stock in a warehouse. 1970s Material Req. Planning Utilizes s/w applications for scheduling production processes. 1980s MRP II Utilizes S/w applications for coordinating mfg processes. 1990s Enterprise Resource Planning Uses multi module application s/w foe improving the performance of internal bus, processes.
  4. 4. What drives ERP ? <ul><li>Business </li></ul><ul><li>Customer satisfaction </li></ul><ul><li>Business development </li></ul><ul><li>Face competition </li></ul><ul><li>Efficient processes </li></ul>
  5. 5. Cross functional approach of ERP Customer/ Employee Production Planning Integrated Logistics Accounting and Finance Sales, Distribution, order Management Human Resources
  6. 6. Components of ERP <ul><li>ERP system is consists of two types of components Core components and Extended components. </li></ul><ul><li>CORE ERP COMPONENTS : CEC are the traditional components included in most ERP systems and they primarily focus on internal operations . </li></ul><ul><li>EXTENDED ERP COMPONENTS : EEC are the extra components that meet the organizational needs not covered by the core components and primarily focus on external operations. </li></ul>
  7. 7. CORE & EXTENDED COMPONENTS OF ERP Enterprise Resource Planning S/W Accounting & FINANCE Production & Materials Management Human Resource Business Intelligence Customer Relationship Management Supply Chain Management E- Business Core ERP Components Extended ERP Components
  8. 8. <ul><li>Core ERP Components:- </li></ul><ul><li>Accounting and Finance: A/cng and Finance components manage a/cng data and manage financial processes within the enterprise with functions as accounts payable, accounts receivable, assets management, credit management etc. </li></ul><ul><li>Production and material management : handles the various aspects of production planning and execution such as demand forecasting, product scheduling, quality control. </li></ul>
  9. 9. <ul><li>Example of Production planning process of Grupo Farmanova Intermed, in Costa Rica… </li></ul>Sales Forecasting Operations Planning Detailed Scheduling Materials requirement planning Production Purchasing
  10. 10. <ul><li>Human Resource Components: Tracks employee’s information including payroll benefits, compensation, performance assessment, and assume compliance with legal requirements of multiple jurisdictions and tax authorities. </li></ul><ul><li>Extended ERP Components:- </li></ul><ul><li>Business Intelligence: ERP system offers powerful tools to measure and control organizational operations. BI describes the information people used to support their decision making efforts. </li></ul>
  11. 11. <ul><li>Customer Relationship Management Component: involves managing all the aspects of customer’s relation with an organization to increase customer loyalty and retention and organization’s profitability. </li></ul><ul><li>Supply Chain Management Components : involves the management of information flows b/w and among stages in a supply chain to maximize total supply chain effectiveness and profitability. </li></ul><ul><li>E-Business Components: means conducting business on the internet, not only buying and selling, but also </li></ul><ul><li>serving customer and collabrating with business </li></ul><ul><li>partners. Two primary functions of E-Bus is E-Procurement and E-Logistics. </li></ul>
  12. 12. <ul><li>Example of E-Business as ERP component of Orbis Corp. , Australia. </li></ul>Retailer Supplier (Sony) Courier AD Agency Scanning House Digital Image Catalog User Linear Process model Followed By Orbis Corp.
  13. 13. <ul><li>After Introducing E-bus,the Orbis Business model is like </li></ul> Hub Printer Sony Nokia Other AD Agency 1 AD Agency 2 Other Retailer 2 Retailer 1
  14. 14. Basic advantages of ERP <ul><li>. The Direct advantages include improved </li></ul><ul><li>Business Integration </li></ul><ul><li>Efficiency </li></ul><ul><li>Faster response </li></ul><ul><li>Flexibility </li></ul><ul><li>Better analysis and planning capabilities </li></ul><ul><li>Use of latest technology </li></ul><ul><li>The Indirect benefits includes better corporate image, improved customer goodwill, customer satisfaction etc. </li></ul>
  15. 15. <ul><li>Some of the quantitative benefits are: </li></ul><ul><li>Reduced Inventory and inventory carrying cost. </li></ul><ul><li>Reduced manpower costs. </li></ul><ul><li>Improved sales and customer service. </li></ul><ul><li>Efficient financial management. </li></ul><ul><li>Some of the qualitative benefits are: </li></ul><ul><li>Accounting </li></ul><ul><li>Product and process design </li></ul><ul><li>Production and material management </li></ul><ul><li>Sales </li></ul><ul><li>MIS Function </li></ul>
  16. 16. Why ERP is Important in a company?
  17. 17. ERP in A company results <ul><li>ERP effects almost all the organizations- irrespective of their size and nation. </li></ul><ul><li>Forces the competition to change their strategies. </li></ul><ul><li>Influence bus partners to become more competitive. </li></ul><ul><li>Improves the Profits. </li></ul><ul><li>Fully utilize the true potential client-server computing to deliver an enterprise product. </li></ul><ul><li>Changes the nature of information systems functions. </li></ul>
  18. 18. ERP Benefits <ul><li>Integrate Financial Information </li></ul><ul><li>Integrate Customer Order Information </li></ul><ul><li>Standardize & Speed up manufacturing Processes </li></ul><ul><li>Reduce Inventory </li></ul><ul><li>Standardize human resource information </li></ul>
  19. 19. Benefits to Colgate Pamolive <ul><li>Order acquisition & processing reduced from 2 days to 4 hrs </li></ul><ul><li>On-time deliveries increased to 97.5% from 91.5% </li></ul><ul><li>Domestic inventories dropped by one -third </li></ul><ul><li>Receivables outstanding dropped to 22.4 days from 31.4 </li></ul><ul><li>Total delivery cost per case reduced by 10% </li></ul>
  20. 20. Risks of ERP
  21. 21. Data <ul><li>In 1999,Hershey missed customers( walmart) as 3 mths behind schedule, trying to fix glitches in order-processing, shipping functions </li></ul><ul><li>Warehouses piled up with undelivered goods </li></ul><ul><li>III quarter sales dropped by 12.4% </li></ul><ul><li>Earnings were off 18.6% </li></ul>
  22. 22. Case study-Ambuja cements <ul><li>Launched Connect India Plus, which has proved to be one of the most significant, large scale IT deployment. Connecting 200 locations , training 2,500 end-users , and migrating data from 8 different legacy systems onto the ERP all in 14 months flat </li></ul><ul><li>manufacturing plants are located in remote areas where the scope of connectivity was minimal, the resources, namely hardware, software and people were located at plant sites </li></ul>
  23. 23. Reasons to implement <ul><li>uniform, standard, and ubiquitous system across the organization(globally also) </li></ul><ul><li>reduction in cost of operations and maintenance of the IT system </li></ul><ul><li>respond quickly to changes in the business environment . </li></ul>
  24. 24. Challenges faced <ul><li>Tech -multiple plants, each with their own computer systems and processes, there was a need to create a single business blueprint across the organization. </li></ul><ul><li>People -integrate individuals with diverse background to be able to work as a focused team. </li></ul><ul><li>Processes - Infrastructure refreshes, Data migration </li></ul>
  25. 25. After the successful implementation <ul><li>improve operational efficiency in terms of cycle-time monitoring </li></ul><ul><li>fleet management </li></ul><ul><li>The information is dispatched to customers via SMS </li></ul>
  26. 26. Conclusion <ul><li>It is the right combination of technology, architecture, functionality, active customer support that provides max payback potential </li></ul><ul><li>For successful implementation it is imp to anticipate, handle & mitigate risks </li></ul><ul><li>Introduce new business processes, eliminate redundant practices </li></ul>