What is Enterprise Resource Planning?

Enterprise Resource Planning

The practice of consolidating an enterprise's planning, manufacturing, sales and marketing efforts into one management system.Combines all databases across departments into a single database that can be accessed by all employees.

Evolution of ERP

• 1960s: software packages with inventory control
• 1970s: MRP systems (Production schedule with materials management)
• 1980s: MRPII systems (Adds financial accounting system)
• 1990s: MRPII (Integrated systems for manufacturing execution)
• Late 1990s: ERP (Integrated manufacturing with supply chain)

• Integrate financial information
• Integrate customer order information
• Standardize and speed up operations processes
• Reduce inventory

Components of ERP System

• Finance:

Finance modules for book keeping and making sure the bills are paid on time.
Examples: General ledger,Accounts receivable,Accounts payable

• HR

HR software for handling personnel-related tasks for corporate managers and individual employees.
Examples:HR Administration,Payroll,Self-Service HR

Potential Benefits of ERP

Internal Benefits

• Integration of a single source of data
• Common data definition
• A real time system
• Increased productivity
• Reduced operating costs
• Improved internal communication
• Foundation for future improvement

External Benefits

• Improved customer service and order fulfillment
• Improved communication with suppliers and customers
• Enhanced competitive position
• Increased sales and profits

Direct benefits include:

• improved efficiency
• information integration for better decision making
• Faster response time to customer queries

Indirect benefits include:

• Better corporate image
• Improved customer goodwill
• Customer satisfaction

Potential Benefits are

• Reduction of Lead-Time
• On-Time Shipment
• Reduction in cycle time
• Better customer satisfaction
• Improved supplier performance
• Increased Flexibility
• Reduction in quality costs
• Improved resource utility
• Improve information accuracy and decision making ability

Risks with ERP Implementation

• Expensive (can costs 100 thousands to millions of dollars)
• Time-consuming (can take months to years)
• Great risk for the organization
• Transfer to knowledge
• Acceptance with the company

Before ERP & After ERP

Before ERP	After ERP
Stand alone System.	Integrated System.
Lack of coordination among business function(Manufacturing & sales)	Support coordination among business functions.Integrated Data: Data have the same meaning across multiple functions.
Non Integrated data: Data have different meanings	Changes affect multiple functions or Systems
System are maintained on a procedural basis	Common interfaces across systems.
Redundant data and inconsistent information.	Common interfaces across systems.

Modules of ERP

• Finance
• Material
• Sales
• Marketing
• Personnel

ERP Finance Module

In This Data is collected From various functional departments and generate financial reports ledger, Trail Balance, Balance Sheets etc.

ERP HR(Human Resource) Module

• HR Module routinely maintain a complete employee database including contact information,Salary details Attendance, Promotions of all employees.
• Produce pay check Reports
• Maintain personnel Record
• Training
• Time and Attendance Benefits

ERP Purchasing Module

Purchasing module is tightly integrated with the inventory control and production planning Modules.

ERP Inventory Module

Inventory Module facilitates processes of maintaining the appropriate level of stock in a warehouse.

ERP Implementation Approaches

• The big bang — install a single ERP system across the entire organization
• Franchising — Independent ERP systems are installed in different units linked by common processes, e.g., bookkeeping.
• Slam dunk — install one or several ERP modules for phased implementation of key business processes

Major Phases of ERP Implementation

• Initiation
  develop business case, project scope,and implementation strategy
• Planning
  establish implementation team, determine goals and objectives, establish metrics
• Analysis and process design
  analyze and improve existing processes, map new processes to be adopted by the system
• Realization install a base system, customization, and test the system
• Transition replace the formal system with the new system, data conversion
• Operation monitor and improve system performance, provide continued training and technical support
• Limitations of ERP technical capabilities
• Inconsistency with existing business processes
• Costsimplementation (hardware, software,training, consulting) and maintenance
• Changes in employee responsibilities
• Flexibility of software system upgrades
• Implementation timelines
• Availability of internal technical knowledge and resources
• Education and training
• Implementation strategy and execution
• Resistance to change

New Developments In ERP

• Availability of web-based and wireless ERP systems
• Adoption of easy-to-install ERP systems
• Linkage to other software systems, e.g., supply chain management system, ecommerce, customer relationship management system

Advantages of ERP

• Quicker completion of Processes
• Single system
• Modular software
• Database
• Easier to track various tasks
• Manage globally Data

Disadvantages of ERP

• Cost
• Time Consuming
• Training to employees

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