ERP & WEB BASED SUPPLY
Chain Management
Chapter 1
Introduction to ERP
Concept
ERP is 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.
ERP’s Full potential
Corporate Office Regional Office Customers Vendors Manufacturing unitsIntroduction to ERP Concept
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.
Introduction to ERP Concept
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
Introduction to ERP Concept
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
Introduction to ERP Concept
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
Introduction to ERP Concept
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
Introduction to ERP Concept
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
Introduction to ERP Concept
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
Introduction to ERP Concept
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
ERP Across Business System
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
Process view/ Model of 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
Processing
Input Output
Knowledge & Training Methods & procedures Machines
Process view/ Model of 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
Process view/ Model of 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
Process view/ Model of Business Methods Methods Methods Understand Existing Processes Simplifying Processes by Eliminating wastes Automate The process Diagramming Story boarding Brainstorming Elimination Combination Rearrangement EDI ERP
Diagram illustrate basic philosophy of business process reengineering
Preparing for the ERP
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
Preparing for the ERP
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.
Preparing for the ERP
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
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,
EFT
Electronic Data Interchange,Just in Time,
ERP maturity Levels
ERP like 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.
ERP maturity Levels
Stage 1 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
ERP maturity Levels
Stage 2 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
ERP maturity Levels
Stage 3 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
ERP maturity Levels
ChaosChaos Enhancement Enhancement Stagnancy Stagnancy Optimization Optimization Stage2 Stage3 Stage1 Streaming Operations Operational Improvements Strategic transformationOrganization of ERP Projects
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
