Chapter 1

Business justifications for an ERP systems:There are variety of business justifications for implementing an ERP system and they are as follows:1) Replacing legacy systems2) Reducing cycle times3) Lowering operating costs4) Enabling better management decisions whether its real time or online.

ERP definition: is business management softwaretypically a suite of integrated applicationsthat a company can use to collect, store, manage and interpret data from many business activities, including: Product planning, cost. Manufacturing or service delivery. Marketing and sales. (From google).It is a set of software tools that manages business systems such as supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR. Moreover, it allows automation and integration of business processes and enables data and information sharing. It is considered an enterprise wide system and is introduced as best practices.

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.

Before and after ERP systems:

Business benefits:The overall business benefits are: Information Maximizes information throughput Provides timely information Integrates information throughout supply chain

Minimizes response time

Pushes decision making down to lowest levels

Reduces costs

Cuts inventory

Improves operating performance.

Whereas the department benefits are: Sales Increased efficiency Lower quotes, reduced lead time, improved responsiveness

Manufacturing Concurrent engineering Faster design and production

Data Service Accurate customer service history and warranty information

Accounts Payable Suppliers paid accurately

Design alternatives: Vanilla implementation Complete vendor package Benefits Total integration across all functional areas Re-engineering of all business processes Deficits Expensive Time-consuming

Selected ERP modules Benefits Less costly and time-consuming Deficits Lacks total integration of data Limited applicability and use

Build in-house Benefits Can create system based on its needs Competitors will not have access to similar system Deficits Time- and resource-consuming Expensive Risky May not provide competitive advantage

Maintain concurrent legacy systems Benefits Familiarity Deficits May be a competitive disadvantage

Terms to be aware of:

Legacy systems: 1) Obsolete computer system that may still be in use because its data cannot be changed to newer or standard formats, or its application programs cannot be upgraded.

2) A legacy system is an old method, technology, computer system, or application program, "of, relating to, or being a previous or outdated computer system

Standardization: 1) Formulation, publication, and implementation of guidelines, rules, and specifications for common and repeated use, aimed at achieving optimum degree of order or uniformity in a given context, discipline, or field.

2) Standardization is the process of developing and implementing technical standards. Standardization can help to maximize compatibility, interoperability, safety, repeatability, or quality. It can also facilitate commoditization of formerly custom processes

Real-time: Response that appears to take place instantaneously or in the same timeframe as its real world counterpart action.

Online: 1) Operating under the direct control of, or connected to, a main computer.

2) Connected by computer to one or more other computers or networks, as through a commercial electronic information service or the Internet.

Best practices: A best practice is an industry-wide agreement that standardizes the most efficient and effective way to accomplish a desired outcome. A best practice generally consists of a technique, method, or process. The concept implies that if an organization follows best practices, a delivered outcome with minimal problems or complications will be ensured. Best practices are often used for benchmarking and represent an outcome of repeated and contextual user actions. MRP: Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes.An MRP system is intended to simultaneously meet three objectives: Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities.

MRP II: Successor to the material requirements planning (MRP), it integrates planning of all aspects (not just production) of a manufacturing firm. MRP-II includes functions such as business planning, production planning and scheduling, capacity requirement planning, job costing, financial management and forecasting, order processing, shop floor control, time and attendance, performance measurement, and sales and operations planning. See also optimized production technology.

Re-engineering: 1) Systematic starting over and reinventing the way a firm, or a business process, gets its work done.

2) Rethinking and radical redesign of business process to achieve dramatic improvements in critical measures of performance such as cost, service, and speed."

Customization: To modify (something) according to a customer's individual requirements Vanilla implementation: Computer software, and sometimes also other computing-related systems like computer hardware or algorithms, is called vanilla when not customized from its original form, meaning that it is used without any customizations or updates applied to it.

Selected ERP modules: ERP (Enterprise Resource Planning) software typically consists of multiple enterprise software modules that are individually purchased, based on what best meets the specific needs and technical capabilities of the organization.Each ERP module is focused on one area of business processes, such as product development or marketing. Some of the more common ERP modules include those for product planning, material purchasing, inventory control, distribution, accounting, marketing, finance and HR.

Build-in house: This is the process whereby the company uses their own workers (in-house team) to develop or implement an IT system that fits the specific needs of the company. This process allows for the creation of a more customized system that can have an exact fit in the company. This is because, there is direct contact between the software team and thepeople that would be using the system and so they can tailor the system in a way that it could incorporate some or most of the wishes of the users.

This approach allows you to have complete control over the functionality and gives you an in-depth knowledge of how the system works and how they interface with the other business areas.