an overview on erp - chapter 1

8/2/2019 An Overview on ERP - Chapter 1

1/26

3/7/2012

ERP : An Overview

By:-

Ankit Mahindroo

(Lecturer)

1


2/26

CONTENTS

3/7/2012

What is ERP?

Evolution of ERP

Components of ERP

Information Integration through ERP systems

Core ERP Components

Extended ERP Components

Reasons for growth of ERP Market

Advantages / Disadvantages of ERP

Why ERP over conventional apps?

ERP Implementation : Problem areas

Roadmap for successful ERP implementation

Feedback??

2


3/26

WHAT IS ERP?

3/7/2012

y ERP integrates all departments and functions

throughout an organization into a single IT system (or

integrated set of IT systems) so that employees can

make enterprise wide decisions by viewing enterprise

wide information on all business operations.

3


4/26

EVOLUTION OF ERP

3/7/2012

Types of Systems Time Purpose Systems

Reorder point systems 1960s Used historical data to forecast futureinventory demand; when an item falls

below a predetermined level additionalinventory is ordered.

Designed to manage high volumeproduction of a few products, with

constant demand; focus on cost.

Materials requirementplanning (MRP) systems

1970s Offered a demand-based approach forplanning manufacture of products andordering inventory.

Focused on marketing; emphasison grater production integrationand planning.

Manufacturing resourceplanning (MRP-II) systems

1980 Added capacity planning; couldschedule and monitor the execution ofproduction plans

Focus on quality; manufacturingstrategy focused on processcontrol, reduced overhead costsand detailed cost reporting.

MRP-II with manufacturingexecution (MES)systems

1990s Provide ability to adapt productionschedules to meet customers needs;provide additional feedback with respect

to shop floor activities.

Focus on the ability to create andadapt new pre-cuts and serviceson a timely basis to meet

customers specific needs

ERP(Enterprise Re-source

Planning Systems)

Late1990andonward

Integrate manufacturing with supply

chain processes across the firm;designed to integrate the firmsbusiness processes to create aseamless information flow fromsuppliers, through manufacturing todistribution to the customer.

Integrates supplier manufacturing

and customer data throughout thesup-ply chain.

4


5/26

COMPONENTS OF ERP

3/7/2012

y Core ERP c omponent traditional components

included in most ERP systems and they primarily

focus on internal operations

y ExtendedERP component extra components that

meet the organizational needs not covered by the

core components and primarily focus on external

operations

5


6/26

COMPONENTS OF ERP

3/7/20126


7/26

INFORMATION INTEGRATION THROUGH ERP SYSTEMS3/7/2012

Strategic & OperationalPlanning

Finance

Human Resources

Logistics Management

Maintenance Management

Sales & Distribution

Quality Management

Materials Management

Manufacturing

ERP

System

7


8/26

CORE ERP COMPONENTS

3/7/2012

Three most common core ERP components

1. Accounting and finance

2. Production and materials management

3. Human resource

8


9/26

Accounting and Finance ERP Components

3/7/2012

y Accounting and finance ERPcomponent

manages accounting data and financial

processes within the enterprise with functions

such as Journal ledger, accounts payable,

accounts receivable, budgeting, and asset

management

9


10/26

Production and Materials

Management ERP ComponentsProduction and

materials management

ERPcomponent

handles the variousaspects of production

planning and execution

such as demand

forecasting, production

scheduling, job cost

accounting, and quality

control

3/7/201210


11/26

EXTENDED ERP COMPONENTS

3/7/2012

y Extended ERP components include:

yBusiness intelligence

yCustomer relationship management

ySupply chain management

yE-business

11


12/26

BUSINESS INTELLIGENCE

3/7/2012

Business intelligence (BI) refers to skills,

technologies, applications and practices used to

help a business acquire a better understanding of

its commercial context.

BI applications include the activities of

decision support systems,

query and reporting,

online analytical processing (OLAP),

Forecasting

Data Mining

12


13/26

CUSTOMER RELATIONSHIP MANAGEMENT

3/7/2012

y CRM consists of the processes a company uses to

track and organize its contacts with its current and

prospective customers.

y CRM software is used to support these processesy Typical CRM goals are:-

y to improve services provided to customers, and

y to use customer contact information for targeted

marketing.

13


14/26

SUPPY CHAIN MANAGEMENT

3/7/2012

y SCM is the management of a network of

interconnected businesses involved in the ultimate

provision of product and service packages required by

end customers.

y It involves :-

y all movement and storage of raw materials,

y work-in-process inventory, and

y finished goods from point of origin to point of

consumption (supply chain).

14


15/26

e-BUSINESS

3/7/2012

y E-business (electronic business), derived from such

terms as "e-mail" and "e-commerce," is the conduct of

business on the Internet, not only buying and selling

but also servicing customers and collaborating with

business partners.y Companies are using the Web to :-

y buy parts and supplies from other companies,

y to collaborate on sales promotions

y and to do joint research.

15


16/26

REASONS FOR GROWTH OF ERP MARKET

3/7/2012

y To enable improved business performancey Cycle time reduction

y Increased business utility

y Inventory reduction

y

Order fulfillment improvementy To support business growth requirements

y New products/product lines, new customers

y Global requirements including multiple languages and

currencies

y To provide flexible, integrated, real-time decisionsupport

y Improve responsiveness across the organization

16


17/26

REASONS FOR GROWTH OF ERP MARKET

3/7/2012

y To eliminate limitation in legacy systemsy Century dating issues

y Fragmenting of data and processing

y Inflexibility to change

y

Insupportable technologiesy To take advantage of the untapped mid-market

y Increased functionality at a reasonable cost

y Client server/open systems technology

y Vertical market solutions

17


18/26

ADVANTAGES OF ERP

3/7/2012

BUSINESSINTEGRATION Automatic data updating is possible among related

business related components.

Communication and integration of information is strong

hence no obstacle in introducing new products or shifting to

new business classification.

FLEXIBILITY Different languages, currencies, accounting standards and

so on can be covered in one system.

Also helps to cope with company globalization and system

unification.

18


19/26

ADVANTAGES OF ERP

3/7/2012

y BETTER ANALYSIS AND PLANNING CAPABILITIES

y It becomes possible to fully utilise decision support systems and

simulation functions due to comprehensive data integration.

y USE OFLATESTTECHNOLOGY

y Utilisation of the latest developments in Information Technology (IT)

enables ERP vendors to grow and also sustain the growth.

y Latest technologies include open systems, client/server technology,

Internet/Intranet, CALS (Computer-Aided Acquisition and Logistics

Support), electronic-commerce etc.

19


20/26

ADVANTAGES OF ERP

3/7/2012

What benefit How

Reliable information access Common DBMS, consistent and accuratedata, improved reports.

Avoid data and operations redundancy Modules access same data from the centraldatabase, avoids multiple data input andupdate operations.

Delivery and cycle time reduction Minimizes retrieving and reporting delays

Cost reduction Time savings, improved control byenterprise-wide analysis of organizationaldecisions.

Easy adaptability Changes in business processes easy to

adapt and restructure.

Improved scalability Structured and modular design with add-ons.

Improved maintenance Vendor-supported long-term contract aspart of the system procurement.

Global outreach Extended modules such as CRM and SCM

E-Commerce, e-business Internet commerce, collaborative culture.

20


21/26

DISADVANTAGES OF ERP

3/7/2012

DISADVANTAGES HOWTO OVERCOME?

Time-consuming Minimize sensitive issues, internal politics and raise general

consensus.

Expensive Cost may vary from thousands of dollars to millions. Businessprocess reengineering cost may be extremely high.

Conformity of the modules The architecture and components of the selected system shouldconform to the business processes, culture and strategic

goals of the organization.

Vendor dependence Single vendor vs. multi-vendor consideration, options for best of breeds, long-term committed support.

Features and complexity ERP system may have too many features and modules so the user needs to consider carefully and implement the needful only.

Scalability and global outreach Look for vendor investment in R&D, long term commitment to productand services, consider Internet-enabled systems.

Extended ERP capability Consider middle-ware add-on facilities and extended modules suchas CRM and SCM.

21


22/26

WHY ERP OVER CONVENTIONAL APPS?

3/7/2012

y ERP handles individual business functions such as

yAccounts

y Inventory

y Sales and Distribution

y and also the entire range of business functions

y ERPpackages are targeted at everything from small

businesses to the largest organizations, and they can

be composed of a highly flexible decentralized

database and an information system cluster linked bya network.

y ERP packages have the ability to adapt globally since

it has multilingual and multi-currency

22


23/26

ERP IMPLEMENTATION: PROBLEM AREAS

3/7/2012

y Attitude reform of the employees at all levels

y Companies not having time schedules and deadlines

do not succeed.

y Companies should be able to answer questions like

By when in what way can such-and-such thing be

achieved?, How should we do such-and-such

thing? etc

y Cost estimations should be done in an effective

manner for ERP implementation,y consultation,

y customisation,

y training and

yeducation.23


24/26

ROADMAP FOR SUCCESSFUL ERP

IMPLEMENTATION

3/7/2012

y Most important step is the GAP ANALYSIS.

y What is GAP ANALYSIS?

y

It is the step of negotiation between the companyrequirements and the functions a package

possesses.

24


25/26

STEPS IN GAP ANALYSIS

3/7/2012

y To make a note of the existing business system and list out the flaws andpositive aspects.

y Evaluate and decide the additions that need to be made to the business in

view of ERP implementation.

y Rating the existing level of performance to set a benchmark or standards for

the business as on date.

y Having an in-depth study of the regulations and statements in the

organizations and suggesting modifications.

y Clearly defining the roles of individuals in the organization.

25


26/26

STEPS IN GAP ANALYSIS

3/7/2012

y Checking if the objective in discharging duties are met because it is theultimate solution to any issue.

y Ensuring that functions are executed properly and if need be personnel can

be rewarded to boost up and encourage performance.

y Gap Analysis either recommends the implementation of an ERPsystem or

rejects the idea in totality by taking all possible factors into consideration.

26

an overview on erp - chapter 1

Documents