Business Modules Of An ERP Package

What is Business?y Not just buildings, machinery or money. y Business is people who voluntarily come together because

they can do much more working together than they could work alone. y There are also people who work on their own known as Entrepreneurs. y Land, labor and capital when combined in a rational way becomes productive. y ERP Systems help the management by making the planning process more productive and efficient.

Chapter Objectivesy ERP packages contain different modules. y In this chapter we will see some of the most common

available in almost all packages. y ERP is different and capable of producing dramatic results in the integration and automation of various business functions. y They send and receive data across departmental barriers. y ERP reduces response and reaction times which is automation of various procedures and tasks.

Management combines the Business Resource to produce goodsNatural Resources + Human Resources+ Financial Resources

Management Production Process Product And Services

In a non ERP situation!y Company receives a purchase order y Order entry clerk enter the order details y Order details passed on to the finished goods inventory

section y Inventory clerk will check whether the items ordered are available or not. y If items are available, the distribution department is notified, they will pack the item and send it to the customer. y If the item is not in stock then the production planning department is notified, which in turn schedules the item for production.

y The manufacturing department receives the production plan

and checks whether all the items required to make the in the inventory. y If not, the purchasing department is asked to procure raw materials. y If the materials are available, then the production department in association with the plant maintenance sets up the machines for production.

IN AN ERP SITUATIONOrder processing in an ERP System

ERP Modules

Figure 12.1

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ERP Systemy Same activities happens differently in an ERP System. y As soon as order entry clerk, enters the order into the

system, the system clerk checks the inventory records, and finds out whether the items are availaible or not. y If the items are available, procedures are triggered automatically that will inform the people in the sales and distribution department and finance department. y The information will contain the details of the items shipped, the most economic route to the customer and so on. y System will trigger the procedures in the financial module so that invoices are sent to the customer.

y The information is transferred electronically through

electronic data transfer and payments received through Electronic Funds transfer. y If items are not available, then the production planning module makes a production schedule which is available to the production, material management and plant maintenance so that everybody is prepared to start the production schedule.

Functional Modules of ERP Software

ERP Systems Business EnvironmentHR Management Financial Management Production Planning

Manufacturing

ERP System

Plant Maintenance

Quality management Materials Management

Sales and Distribution

ERP Modulesy All ERP packages contain many modules. The number and

y y y y y y y

features of the modules vary with the ERP packages. Some of the most common modules available in almost all packages are: 1. Finance 2. Plant Maintenance 3. Quality Management 4. Material Management, etc 5. Inventory Management 6. Manufacturing and production planning 7. Sales and distribution

1. FINANCE MODULEy The entire concept of information technology is based on the premise that

providing the right information, to the right people, at the right time can make a critical difference to the organization. Much of this key information could be taken from the financial data. But merely having the financial data is not enough. y You need a set of processes and views of your data that provided up-to-the minute financial information in exactly the form you need it to make that critical difference and help with that critical decision. y Accounting software needs access to information in each area of organization, from R&D and market research through manufacturing, distribution and sales. Financial solution must provide the management with information that can be leveraged for strategic decisions, in order to achieve comprehensive advantage. y This section provides an overview of the financial solutions in most the ERP packages. In todays business enterprise, you need to know that your financial decisions are based on todays data, not numbers from records closed a month ago, or even a week ago.

y And you need to know that this same todays data represents every segment of

your organization's activities, whether your enterprise stretches across a room or around the globe. This is essential, because the most efficient way to get our enterprise to where you want it tomorrow is to know exactly where it is today. y What ever be the financial goals of the organization, the financial application components of the ERP solutions work hand-in-hand to improve the bottom line. y This is true because the financial functioning is tightly integrated across all business areas and all geographic areas. This tight integration includes all the other different modules, from materials management to human recourses to logistics. y The Finance modules of the most ERP systems provide financial functionality and analysis support to thousands of businesses in many countries across the globe. These ERP systems include not only financial application components, but also Human resources, Logistics, Business workflow and links to the internet.

Plant Maintenance Moduley The achievement of world class performance demands

delivery of quality products expeditiously and economically. Organizations simply cannot achieve excellence with unreliable equipment. The attitude towards maintenance management has changed as a result of quick response manufacturing, Just-in-time reduction of work in process inventory and the elimination of wasteful manufacturing practices. y Machine breakdown and idle time for repair was once an accepted practice. Times have changed. Today when a machine breaks down, it can shut down the production line and the customers entire plant.

y The preventive Maintenance module provides an integrated

solution for supporting the operational needs of an enterprisewide system. The plant Maintenance module includes an entire family of products covering all aspects of plant/equipment maintenance and becomes integral to the achievement of process improvement. The major subsystems of a plant Maintenance module are: y Preventive Maintenance Control y Equipment Tracking y Component Tracking y Plant Maintenance Calibration Tracking y Plant Maintenance Warranty Claims Tracking

Materials Management Moduley The Material Management module optimizes all purchasing processes

with workflow-driven processing functions, enables automated supplier evaluations, lower procurement and warehousing costs with accurate inventory and warehouse management and integrates invoice verification. The main modules of the Material Management module are:y 1. Pre-purchasing Activities y 2. Purchasing y 3. Vendor Evaluation y 4. Inventory Management y 5. Invoice Verification and Material Inspection. y Pre-purchasing Activities

y This system supports the complete cycle of bid invitation,

award of contract and acceptance of services. The prepurchasing activities include maintaining a service master database, in which the descriptions of all services that are to be procured can be stored. The system also keeps a separate set of service specifications that can be created for each concrete procurement project or proposed procurement in the purchasing document. Sets of service specifications may include both items with services and items with materials. y When creating such specifications, the user does not have to list individual services manually. Instead, the data is simply copied from the master data. Use of this technique means that data only has to be entered once. The manual entry effort is reduced to a minimum.

y There are two ways of entering service specifications-planned

and unplanned. Planned service specifications mean that service whose precise nature and intended scope are already known at the beginning of a procurement project. y Purchasing - Purchasing is a very important component of the Material Management module. The Material Management module is fully integrated with other modules in the system. It supports all phases of material management: materials planning and control, purchasing, goods receiving, inventory management and invoice verification. Good communication between all participants in the procurement process is necessary for purchasing to function smoothly. y Purchasing communicates with other modules in the system to ensure a constant flow of information.

Human resource management: (HRM)y Human resource management is an essential factor of any

successful business. The competitive environment of the next millennium, with its economic and technological challenges, with effect the HR department in the same way it wills all the other areas of your enterprise. In short HR manager must continually review and optimize their business process. y The human resource management system has to be adaptable to company specific requirements, and should constantly grow with increasing HR requirement. It should cover all the function required in business practice.

SALES AND DISTRIBUTION MODULEy Increased efficiency in sales and distribution is a key factor to

ensure that companies retain a competitive edge and improve both profit margins and customer service. In helping business to beat them on delivery, the sales and distribution module of many ERP vendors offer a comprehensive set of best-of breed components for both order and logistics management. y Many of these systems are tightly integrated with the Distribution Requirement Planning (DPR) engine of the for just-in-time. deliveries. This integration enables the mapping and supply of single-site or multi-site organizations and the definition of relationships in a companys internal supply chains. y Developing precise logistics planning for just-in-time deliveries, this system can also generate replenishment orders by using defined warehouse requirements.

Purchasing Moduley It enables a company to make the correct purchase decision about

quality and price, where quality refers to supply lead-time as well as to the (to be purchased) product itself. Purchase Order Management, includes on-line requisitioning, Centralized contract management, just-in-time schedules and vendor management. y The purchase contract information is made available to the people in the purchasing department. This information will help in supplier selection and provide an insight as to which suppliers can supply items with the right specifications, in the shortest period of time. The system will have facility to generate purchase contracts. Sophisticated vendor management tools allow companies to check the reliability and performances of vendors.

Integration of ERP, Supply Chain Management, customer relationship applicationsCustomer Relationship Management Supply chain management Supply chain execution

Service Management

ERP SystemsBusiness Analytics Business Intelligence

Supplier relationship

Project Management

Extended Financial Management

SAP, THE MARKET LEADERy SAP offers the various functions as shown in the diagram. y Similarly almost all the major vendors offer the host of

technologies of the organization to their ERP offerings.