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Introduction to ERP (Enterprise Resource Planning)
The document provides an overview of Enterprise Resource Planning (ERP) systems, which integrate various business functions such as manufacturing, finance, and human resources into a cohesive framework. It discusses the historical evolution of ERP, key concepts, and the importance of adopting an integrated systems approach for improved operational efficiency. Additionally, it outlines the stages of ERP maturity and different implementation strategies for organizations.
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Introduction to ERP (Enterprise Resource Planning)
- 1. ERP & WEBBASED SUPPLY Chain Management Chapter 1 Introduction to ERP
- 2. Introduction to ERP Concept ERPis short of Enterprise Resource Planning,which is business management system that integrates all facets of the business such as manufacturing operations,supply chain, customers, human resource & finance.
- 3. Introduction to ERPConcept
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- 6. Introduction to ERPConcept
- 7. ERP’s Full potential Manufacturing Customers units Corporate Office Vendors Regional Office
- 8. Introduction to ERPConcept The salient features of above definition is that ERP refers to in house developed or commercially available software solutions which provide an integrated suit of IT applications.that support the activities of the organization as a whole. ERP Systems are the information backbone of the company.It serves as central nervous system & termed as digital nervous system of the company.
- 9. Introduction to ERPConcept ERP (enterprise resource planning) is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business.
- 10. Introduction to ERPConcept ERP in manufacturing sector was primarily to address to know : 1) Stock of finished goods 2) Understand material movement In 1970 the focus of manufacturing systems shifted to MRP MRP Software applications have emerged to translate the Master Schedule built for the end products into Time phased net requirement
- 11. Introduction to ERPConcept In 1980 the concept of MRPII was evolved All the resources such as People, Infrastructure, Process to various user group necessitate planning & utilization of such resources MRP was further extended to cover areas like Engineering,Projects ,Management etc & led to what is known as ERP
- 12. Introduction to ERPConcept
- 13. Introduction to ERPConcept Key Terms Integration: Integration of operations with accounting result in converting the physical units into rupee value.ERP integrates all facets of business including 1) Planning 2)Manufacturing 3) Sales Software applications have emerged to help business managers implement ERP in business activities such as Inventory Control, Order tracking, Customer service
- 14. Introduction to ERPConcept Key Terms ERP finds useful application in human resource management ,warehousing. ERP implies the use of the Shelf packed Software rather than proprietary software written for one customer The cost of developing & maintaining ERP modules become cost prohibitive & Time Consuming
- 15. Introduction to ERPConcept Key Terms ERP modules are generally expected to have the capability to interface with organizations own software Depending upon business requirement, ERP modules may be altered using vendor’s Proprietary tools ,Programming languages A good business strategy drives everything that comes in its way including its IT & IS resource
- 16. Introduction to ERPConcept Key Terms Systems: The systems view of business or enterprise is a holistic view. A system consists of Input,Process , Output & feedback For example production system has input of Men(labor),material,money(finance).The output is goods and or services. The processing converts input to value added outputs
- 17. ERP Across BusinessSystem Financial Systems Operational logistics Accounts receivables & payable Inventory Management Cash planning & Management MRP Cost accountancy Plant management General ledger Production Planning Product Cost accounting Project management Profit center analysis Purchasing Profitability analysis Quality management Executive Information system Routing Asset accounting Dispatching Standard costing vendor analysis Human Resources Sales & Marketing Payroll,Manpower planning Sales Order,Pricing Travel Expenses,HR accounting Sales planning Sales management
- 18. Process view/ Modelof Business Process Model defines entity or a set of activities that together respond to a set of inputs to produce desired output The process of converting input to desired output is governed by factors such as performance standards,knowledge,procedures,material,machine,,constraints,& control points Material Machines Input Processing Output Knowledge & Training Methods & procedures
- 19. Process view/ Modelof Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed”. process innovation, ”encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”.
- 20. Process view/ Modelof Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed”. process innovation, ”encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”.
- 21. Process view/ Modelof Business Diagram illustrate basic philosophy of business process reengineering Understand Simplifying Processes by Automate Existing Eliminating The process Processes wastes Methods Methods Methods Diagramming Elimination EDI Story boarding Combination ERP Brainstorming Rearrangement
- 22. Preparing for theERP Inter Company Integration To begin with ,an enterprise has framed departments,with some minimum interface with one another.organizations then adopt systems approach where the output of one system became input for other system and so on to form integrated system. The isolated systems of yester years were called management systems(MIS) later DSS or decision support systems were developed.Executive Support system is a step beyond both MIS & DSS that collates information from different sources
- 23. Preparing for theERP Before implementing ERP ,an organization has to decide where it is right now,where it would like to be,& what methods could be used to get there. The data captured is of immense value in ERP in Finance,HR,SCM and enables such as data warehousing,EIS,workflow ERP is not just an IT project.It changes the organization in terms of authority responsibility relationship It brings discipline to the organization.
- 24. Preparing for theERP Business process reengineering focuses on transformation of business process to make them more efficient whereas ERP focuses on automating The business process using & some objective in mind. A project team is drawn from IT,Sales, Purchase, Production & Finance. The outside consultant can be hired. ERP being an enabling tool help us to do things better
- 25. Journey of ERP SYSTEM DESCRIPTION MIS Management Information Systems.No decision support IIS Integrated Information Systems.No decision support EIS Executive Information Systems.Decision support CIS Corporate Information Systems.Decision support EWS Enterprise Wide System. No decision support Logistics are considered as part of system EDI,JIT, Electronic Data Interchange,Just in Time, EFT Electronic fund transfer inter company integration
- 26. ERP maturity Levels ERPlike living organization passes through different stages of development & maturity.a the business grows,ERP has to adopt itself to the changing processes,organizational structure & demand patterns to deliver effectively. The ERP team takes a lot of effort after the “Go-Live”at three different stages of growth & maturity.
- 27. ERP maturity Levels Stage1 Chaos The organization takes the ‘Go-Live’ decision. It requires streamlining of the processes In stage 1,the attention is focused on administration and information stability.Roles and responsibilities are fixed.The organization starts utilizing the information generated through ERP It has to cope with change in organization culture. It is likely that alignment between the ERP and the process prevailing is lost.
- 28. ERP maturity Levels Stage2 Stagnancy After the Implementation of the ERP organization expects a whole lot of benefit from it. However it does not happen immediately. Organizations expect higher ROI. There two ways to improve situation First manual activities are eliminated and are replaced by automated ERP system.This results in overall transaction complexity.Secondly ,the intelligence of the system is enhanced by using Advanced planning engines& schedules
- 29. ERP maturity Levels Stage3 Growth At this stage ,Management seeks strategic support from the ERP.The system is aligned with the overall Corporates vision & strategies. The focus is on profit and Working Capital Management.The organization is committed to growth of human resources. This improves the value chain.Capital management becomes becomes better.There is optimization between customer product mix.
- 30. ERP maturity Levels StreamingOperations Strategic transformation Chaos Chaos Optimization Optimization Stage1 Stage2 Stagnancy Stagnancy Enhancement Enhancement Operational Improvements Stage3
- 31. Organization of ERPProjects There are three common ways to implement ERP projects. Big Bang is an approach that casts off all the legacy system in one go & installs a single ERP system across the company. Franchising approach believes in implementing independent ERP system in each unit while linking common processes across the enterprise.It is one of most common method to install ERP. Slam dunk is an approach where the ERP dictates the process.A few key processes are selected for focus
- 32. Introduction to ERP End of Chapter 1
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