Enterprise Resource Planning0

8/2/2019 Enterprise Resource Planning0

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ACKNOWLEDGEMENT

At the outset, we thank God almighty for making our endeavor a success.

I express my sincere gratitude to my project report Guide Ms. Gunjan Kotwani

Head of the Department of, M.B.A. Division for his constant support and valuable

suggestions without which the successful completion of this report would not have

been possible.

I express my immense pleasure and thanks to all the teachers and staff of the

Department of, M.B.A for their cooperation and support.

Last but not the least, I thank all others, and especially our classmates and our

family members who in one way or another helped me in the successful

completion of this work.



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ERP stands for: Enterprise Resource Planning systems

This is what it does: attempts to integrate all data and processes of an organization into

a unified system. A typical ERP system will use multiple components of computer

software and hardware to achieve the integration. A key ingredient of most ERPsystems is the use of a unified database to store data for the various system modules.

ERPs are cross-functional and enterprise wide. All functional departments that are

involved in operations or production are integrated in one system. In addition to

manufacturing, warehousing, logistics, and Information Technology, this would

include accounting, human resources, marketing, and strategic management.

Enterprise Resource Planning (ERP) is a business management system that integrates

all facets of the business, including planning, manufacturing, sales and marketing.

An ERP is a company-wide computer software system, and functions of a business

from shared data stores.

An ERP system has a service-oriented architecture with MODULAR hardware and

software units and "services" that communicate on a local area network.

Enterprise Resource Planning software, or ERP, doesn't live up to its acronym.

Definition of an ERP system

ERP or Enterprise Resource Planning systems are software systems for businesses

management encompassing modules supporting functional areas such as sales and

marketing, finance, production, distribution accounting, human resource management,

maintenance, inventory management, project management, transportation and e-

business etc.

Business strategy and set of industry-domain-specific applications that build customer

and shareholder communities value network system by enabling and optimizing

enterprise and inter-enterprise collaborative operational and financial processes.

Software solution that addresses the Enterprise needs, taking a process view of the

overall organization to meet the goals, by tightly integrating all functions.

ERP is a commodity -- product in the form of software.



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BEFORE ERP

Figure 1

AFTER ERP

Figure 2

ERP TODAY



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• Today’s focus seem more to be external as organizations look for ways to support and

improve relationships and interactions with customers, suppliers, partners and other

stakeholders.

• The focus of ERP in increasingly on Front-Office Applications and inter-

organizational business processes, thus making it visible to “OUTSIDERS”

• The increasing importance of E-Commerce and Globalization of business makes

support of inter-organizational processes more important.

• ERP Vendors

– SAP

– PeopleSoft

– Oracle

– Microsoft Business Solutions

– SSA Global



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• ERP vendor products reflect the evolving business needs of clients and the capabilities

of IT, perhaps most notably internet related technologies.

• ERP helps Organization to

– improve competitiveness

– increase profits

– Prosper in the global economy.

ERP Modules

Figure 3

There are many ERP modules in ERP software solution. Each ERP software module

corresponds to a major functional area of an organization. Generally it includes, modules for

material purchasing, inventory control, product planning, product distribution, tracking the

order, financial ERP module, accounting, marketing, and human resource. Organizations

implement the modules in ERP that are both economically and technically feasible and

profitable. This document of SOSE! (Site Open Source ERP) will focus on each ERP

software modules in detail. To know more about ERP systems refer other pages of this site.

http://www.open-source-erp-site.com/index.html






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ERP Finance Module

Figure 4

All kind of organizations small scale, large scale organizations benefit from the

implementation of ERP finance module. The financial module is the core of many ERP

software systems. It can gather financial data from various functional departments, andgenerates valuable financial reports such general ledger, trail balance, as balance sheet and

quarterly financial statements.

This module of the ERP software will take care of all accounts related entries and their

impact on the whole system. How the finance comes and how it is been utilized. Total flow

of money (Cash/Bank) and total expenditures will be reflected here. As an after effect of this,

the management will be able to take their important financial decision, Budgeting etc. They

can come to know about company financial position at any point of time. All sorts of

important financial reports i.e. Trial Balance, Trading A/c, Profit & Loss A/c, Balance Sheet,

Debtors Balance, Creditors Balance, Cash/Bank Fund position and many more are covered

in this module.

General Ledger The General Ledger module is the foundation of your accounting system, with flexibility that

meets the current and future financial management requirements of organizations of all typesand sizes. It provides a robust feature set designed to handle your most demanding budgeting

and processing needs. General Ledger fully integrates with all modules and is the key to

maximizing the efficiency and accuracy of your financial data.



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G/L Security The G/L Security module enables organizations to control which users can view or use

certain general ledger accounts based on segment validation in G/L Security settings.

G/L ConsolidationsG/L Consolidations lets you transfer and merge General Ledger account and transaction

information between separate company and branch office locations. It is also designed to

enable subsidiaries and holding companies to run without being on the same network or

accounting database. G/L Consolidations provides a feature set that allows your company to

define the level of detail to consolidate and provides a comprehensive audit trail.

Intercompany Transactions The Intercompany Transactions module lets you enter General Ledger and Accounts Payable

transactions that affect more than one company by automatically distributing transactions

across two or more companies. In addition, its built-in flexibility automatically generates

intercompany loan account entries according to user-defined relationship tables called routes.

Intercompany Transactions simplifies and significantly reduces the amount of work required

for intercompany accounting.

The Accounting Module is completely Transaction based unlike journal based. This implies

most of the accounting functions are handled through relevant transactions in other Modules

there by saving lot of time. The Module contains complete functionality required for any

Accounting Department right from vouchers to the Balance Sheet and Profit and Loss

Account.

Budgeting and Variance Analysis between Budgeted and Actual figures helps in controlling

the Enterprise Expenses and Income efficiently. The Module also includes Cost Centre’s,

which is completely flexible in terms of defining Cost Centre’s and their components. Cost

Allocations for General Overheads can also be done on a pre-defined basis and required

outputs could be generated for analysis purposes. Outstanding of Payables and Receivables

with Ageing Analysis of both debtors and creditors are some the features of this module.

Overall the module takes care of complete functions of any Accounting department.

The function of this module starts with accounts creation. External departments like

marketing or purchase will create some of those accounts. Apart from regular voucher entries

this module will help the authority as well as other departments by providing financial

figures. Final accounts will be generated from this module. Documents like Receivable and



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Payable statements are generated from this module. This module bridges between Sales &

Procurement processes. All figures will be protected under password. Only authorized

person will be eligible to access information from this module.

Funds manipulations for a concern are important factor and some times it is treated as blood

for an organization. So in this regard, sources of funds and application of funds are to be

taken care of, by defining Balance sheets, Schedules, General and Sub-Ledger, party and

customer masters etc. Also the various input transaction such as Voucher Entry, Credit/Debit

entry, Cash/Bank receipts, Cash/Bank Payment, Bank Reconciliation statements, Bill

verification etc. Then finally different types of financial reports, which can be of various

types according to specified company standard.

ERP HR ModuleHuman Resources are another widely implemented ERP module. ERP HR module

streamlines the management of human resources and human capitals. HR modules routinely

maintain a complete employee database including contact information, salary details,

attendance, performance evaluation and promotion of all employees. Advanced HR module

is integrated with knowledge management systems to optimally utilize the expertise of all

employees.

ERP HR modules refers to the systems and processes at the intersection between human

resource management (HRM) and information technology. On the whole, these ERP systems

have their origin on software that integrates information from different applications into one

universal database. The linkage of its financial and human resource modules through one

database is the most important distinction to the individually and proprietary developed

predecessors, which makes this software application both rigid and flexible.

The HR management module is a component covering many other HR aspects from

application to retirement. The system records basic demographic and address data, selection,training and development, capabilities and skills management, compensation planning

records and other related activities. Leading edge systems provide the ability to "read"

applications and enter relevant data to applicable database fields, notify employers and

provide position management and position control. Human resource management function

involves the recruitment, placement, evaluation, compensation and development of the

employees of an organization. Initially, businesses used computer based information system

to:

•

produce pay checks and payroll reports;• maintain personnel records;

• Pursue Talent Management.



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In the transactions of the payroll module the user is allowed entering the daily attendance

data of all the employees of the company on the payroll. The user can mark the entire

employee’s data as present or absent. Also if the operator of the company has done any

overtime then the user of the software can enter the data relating to the operators overtime.

Also the processing of the pay roll and the attendance can be done in this module. The

reports will correctly specify the leaves and the attendance taken of the employee after the

processing of the attendance has been done.

The Work Time gathers standardized time and work related efforts. The most advanced

modules provide broad flexibility in data collection methods, labor distribution capabilities

and data analysis features. Cost analysis and efficiency metrics are the primary functions.

The Benefits Administration module provides a system for organizations to administer and

track employee participation in benefits programs. These typically encompass insurance,

compensation, profit sharing and retirement.

ERP Production Planning Module, ERPProduction Module

In the process of evolution of manufacturing requirements planning (MRP) II into ERP,

while vendors have developed more robust software for production planning, consulting

firms have accumulated vast knowledge of implementing ERP production planning module.

Production planning optimizes the utilization of manufacturing capacity, parts, components

and material resources using historical production data and sales forecasting.

ERP production module will just handle a tiny portion of production. The module begins

with Product creation. There will be a component master and stage master. This module is

mainly designed to monitor day-to-day production progress. On completion of any work

order information will be passed on to dispatch for delivery.

Production Planning helps an organization plan production with the optimum utilization of

all available resources. Material Requirement Planning is done based on the production

advice generated by the sales department. Feasibility of production is evaluated using detailslike raw material availability and procurement time, machine availability and capacity. A



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production schedule is generated for all machines where the scheduling is done in an

optimized fashion based on the priorities of production.

Main features of Production and Production

planning module:

Production module:

• Process definition with inputs, outputs, by-products and overheads

• Definition of Bill of Material for all products up to any number of levels

• Planning based on customer wise production advice and sales forecast

• Material requirement planning: MRP based on machine capacity and availability,

machine efficiency, raw material availability, lead time - giving feasible quantity for production

• Production plan for machines with optimum utilization of all available resources like

raw materials and machines

• Option to revoke production plan to change input parameters/ production priority/

quantity using fresh production advice

• Generation of production schedule for machines detailing inputs and outputs

• Analysis of machine efficiency and utilization

• Automatic generation of MRS and purchase requisitions on finalization of plan

•

Generation of process requisition for processes that have to be subcontracted• Reserving quantity for production

• Automatic generation of job orders for production

• Option to make daily plans for production

Production planning module:

• Process definition with inputs, outputs, by-products and overheads

• Definition of Bill of Material for all products up to any number of levels

• Planning based on customer wise production advice and sales forecast

• Material requirement planning: MRP based on machine capacity and availability,

machine efficiency, raw material availability, lead time - giving feasible quantity for

production

• Production plan for machines with optimum utilization of all available resources like

raw materials and machines

• Option to revoke production plan to change input parameters/ production priority/

quantity using fresh production advice

• Generation of production schedule for machines detailing inputs and outputs

• Analysis of machine efficiency and utilization

• Automatic generation of MRS and purchase requisitions on finalization of plan• Generation of process requisition for processes that have to be subcontracted

• Reserving quantity for production

• Automatic generation of job orders for production



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• Option to make daily plans for production

Production Planning helps an organization plan production with the optimum

utilization of all available resources. Material Requirement Planning is done based on

the production advice generated by the sales department. Feasibility of production isevaluated using details like raw material availability and procurement time, machine

availability and capacity. A production schedule is generated for all machines where

the scheduling is done in an optimized fashion based on the priorities of production.

ERP Purchasing ModuleERP purchasing module streamlines procurement of required raw materials. It automates the

processes of identifying potential suppliers, negotiating price, awarding purchase order to the

supplier, and billing processes. Purchase module is tightly integrated with the inventory

control and production planning modules. Purchasing module is often integrated with supply

chain management software.

Features of purchasing module:

• Streamlines purchase and process cycles

• Detailed Supplier/Subcontractor/Service Provider database

• Capturing materials requirement

• Automatic firing of purchase requisitions based on MRS• Quotations from various suppliers

• Recording Payment terms in PO

• Excise consideration in Purchase and Process Orders

• PO authorization

• PO amendments with complete amendment history

• Order cancellation and order closing

• Multiple delivery schedules

• Quality inspection of goods

•

Quotation validity• MIS for vendor evaluation based on quality, price & delivery time

• Subcontracting – generation of process orders

• Multiple indents for multiple items in a single PO

• Purchase order processing

• Purchase order entry with item details and other details like taxes, discounts, extra

charges like freight, P&F, octroi etc.

• Flexibility to generate Purchase Order in domestic and foreign currency

• Advance adjustments

• Purchase bill with updating of GL and purchase book

• Service contracts, Service Bills, Service indents and PO

• Value based approval of indents

• Bill of Entry



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• Complete import functionality with handling of custom details - Purchase Bill for

import, Excise consideration in imports

• Reports for Order tracking for complete control on the procurement cycle

ERP Purchasing module aims at making available the required materials of the right quality,in the right quantity, at the right time and at the right price, for the smooth functioning of the

organization. All purchasing and subcontracting activities such as inviting quotations,

supplier evaluation, placing purchase order, order scheduling and billing are covered in this

module. Import of goods is also handled by the system.

ERP Sales Module, ERP Marketing Module

ERP Sales module implements functions of order placement, order scheduling, shipping andinvoicing. Sales module is closely integrated with organizations' ecommerce websites. Many

ERP vendors offer online store front as part of the sales module. ERP marketing module

along with CRP supports lead generation, direct mailing campaign and other marketing

works. Scheduling of the promotion is possible using this.

Features of sales and marketing module:

• Handles pre-sales and sales activities of the organization

• Complete stock-to-dock tracking of sales order processing cycle

• Sales Force Automation – Prospect tracking through various stages, detailed

competitor products information location-wise, scheduling marketing executives’

visits, tracking expenses

• Marketing surveys for estimating demand for various products to prepare an effective

marketing strategy

• Detailed Customers/ Business Partners/ Dealers database including bank details, TDS

details, contact details and credit limit

• Target setting for executives

• Order amendment history

• Authorization of orders and invoices• Order scheduling over a period of time and tracking delivery schedule

• Order tracking through status and transaction reports

• Generation of production advice to plan for production based on sales orders

• Order processing based on MRP

• Preparation of dispatch advice

• Multiple dispatches against single Sales Order

• Invoice generation with advance adjustments – sales voucher automatically generated

in Finance

• Tracking sales returns• Association of customers to Marketing Executives and Business Partners for tracking

• Flexibility to define customer-specific prices for products and reference to customer

part no.



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• Multiple dispatch location for customers/dealers

• Complete export documentation for export oriented companies

• Excise details (chapter no. associated with excisable products)

• Enquiries from potential and existing customers

• Quotations and amendments to quotations with complete history• Analyzing lost jobs

• Different types of orders can be generated to suit varied needs of customers

• Order entry for direct/scheduled/open/D3/sample orders with details for Dealers,

incentive % and competition

• Order calculation based on price offered, discounts (line and total), excise, taxes,

freight etc.

• Letter of credit details for association with sales orders

• Rejection invoice for rejections made against purchases with excise consideration

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MIS for analyzing sales trends to project and forecast sales• Stock Transfer between warehouses for multi-location companies

• Service invoice for services given to customers

• Variance reports

• Enables top view - consolidation of sales data for all child companies

• CRM integration through Internet – posting enquiries and sales orders on web by

customers. Importing the same into ERP after validations.

ERP Sales module is the most important and essential function for the existence of an

organization. Sales handle all the activities for domestic and export sales of an

organization. The customer and product database is maintained. Capturing enquiries,

order placement, order scheduling and then dispatching and invoicing form the broad

steps of the sales cycle. Stock transfer between warehouses is also covered. Besides all

this, important analysis reports are provided to guide decision making and strategy

planning. Export documents are also generated.

ERP Inventory ModuleERP Inventory module facilitates processes of maintaining the appropriate level of stock in a

warehouse. The activities of inventory control involves in identifying inventoryrequirements, setting targets, providing replenishment techniques and options, monitoring

item usages, reconciling the inventory balances, and reporting inventory status. Integration of

inventory control module with sales, purchase, finance modules allows ERP systems to

generate vigilant executive level reports.

Features of Inventory Module:



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• Online status of item quantity in terms of on-hand, on-hand, available, reserved,

ordered, to order, rejected, defective and rework able quantities.

• Complete excise functionality and generation of excise registers

• Multiple levels of classification of items

• Quality Control based on QC parameters• Handling Material Rejections

• Rejected Material dispatch to subcontractors

• Linking of GRN to PO and Invoice

• Gate pass – returnable/non returnable

• Cenvat claim for capital goods

• Analysis which help in maintaining optimum stock levels

• Physical verification of stock

• Reallocation of rework able stock

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Multiple warehouses/branches/regional offices• Stock transfer – receipts from other warehouse

• Excisable items – Definition and Chapter allocation

• Multiple units of measurement

• Alternate items for Production Planning

• Handling of non-stock low value items like stationery

• Lot wise tracking of inventory at shop floor and main stores

• Stock Valuation – LIFO/FIFO/weighted average

• Material Requisition from different requirement areas

• Purchasing and subcontracting

• Receiving material against sales order processing, material requirement,

subcontracting, gate pass and production requisition

• Landed Rate of Items

• Consolidation of all warehouses

• Consolidation at any level of company hierarchy

ERP inventory module covers all stock related functions of an organization. Stock

management and valuation activities, which form the backbone of any organization

generally, take a lot of time and resources. M- wan Inventory handles all the store activities

of issues, dispatches, receipts and quality control. The lot wise stock of each item is

maintained and various MIS are provided for tracking stock movement.



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Example ERP for Chemical Industry in India

In order to survive in highly competitive business environment, companies have to change

their business processes and the right investments in technology can deliver a significantcompetitive advantage.

The chemical industry includes companies involved in the production of chemicals with high

economic impact. These include petrochemicals, agrochemicals, paints, pharmaceuticals,

polymers and oleo chemicals. ”Like other industry Chemical Industry is also possesses

many departments like Purchase department, Sales department, Production

department, Financial Accounting etc”. The industry has unique manufacturing needs and

managing the operational process is tedious. Tougher competition in the marketplace is

generating the need to better optimize resources, improve productivity, improve profitability

and keep customers satisfied. Companies are increasingly implementing ERP software

solutions to improve operations ad provide faster customer responses.

Important Modules in an ERP for ChemicalIndustry

Formulation And Lab

ERP for chemical industry provides comprehensive formulation

management with version tracking and rollback capabilities. Formulas are scalable

and materials can be measured in any defined unit.

Inventory Management

It helps defines raw materials, work-in-process, and finished goods in terms

of any unit of measure with automatic conversion from one unit to another.

Production

It supports the simultaneous launch of a series of production projects for all

components within a batch. You can size a batch based upon a finished weight or volume, or

on the availability of component materials. Raw Materials are issued while the finished goods

are posted in real-time on batch closure.

ComplianceIt eases the complexity of compliance reporting. Material Safety Data Sheets can be

entirely automated. All standard processes are documented, and all operations and results aretracked and logged to support your detailed reporting requirements.

http://d/erp/ERP%20for%20Chemical%20Industry%20in%20India_files/ERP%20for%20Chemical%20Industry%20in%20India.htm


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Serial/Lot Tracking It provides complete traceability you can follow an item from incoming raw material

through multiple bins to the finished good sent to a specific customer.

Purchasing And Order Management - It supports the entire purchasing process, from securing

quotations to receiving and issuing vouchers for materials, to updating inventories. It canallow you to enter Sales Orders, ship from finished goods, generate an invoice and transfer a

transaction to Accounts Receivable.

Costing

An ERP system has complete costing capabilities, from labor and material costs through

overheads burden, all properly reflected in finished goods.

Master Production Scheduling & MaterialsRequirement Planning

It provides the versatility of planning materials and resources across an extended

timeline. MPS transform your business plan into an efficient product-

manufacturing schedule; while MRP integrally plans raw material requirements to meet

commitments.

Decision Support System

The Dashboards can provide the top and middle management the ability they require to

make right decisions efficiently.

A well implemented ERP system will help a chemical company Improve the Ability to

Achieve Operational Excellence as it provides the visibility you need to better understand

the relationships among orders, production, inventory and distribution. You can expect

to increase margins from improved utilization, improved customer service and fewer

lost sales; reduce costs by lowering operating and raw material expenses; and cut

inventories by reducing raw materials, intermediates and finished products. It also

helps them respond Faster to Opportunities and Disruptions and empowers you to quickly

address any situation with the best course of action.

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BIBLIOGRAPHY

• www.erpwire.com

• www.en.wikipedia.org

• www.icai.org

• www.teamtechnology.co.uk

• ICAI – Reference Books & Study Material.

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