ERP Software Solutions

• Option for building ERP– MAKE a new Software• MAKE – Using External Resources• MAKE – Using Internal Resources

– BUY a Software

Building using Internal Resources

• Lack of Qualified Manpower• No clear Focus on Expectations, Time & Cost• Poor S/S Project Execution• Lack of Seriousness• High Employee Turnover• Lot of Schedule Gaps during Project Execution• Project Life• Frequent Changes – Approval of the Management

Buying Tailor –Made ERP Solutions• Generalised off the shelf applications S/W

Packages• Modules based on rich functionalities• User tested with lot of installations• No lead Time requirement• Tuned for more users/networks• Parameterized for flexibility• Use of Latest H/W & S/W• Upgradation of functionalities with version

control

Building Using External Resources• Whole package is designed & built.• Very economical • Less Prone for hidden Cost• The comapnay and the S/W vendor have direct

relationship during the project execution• IT dept. have good control over project• Maintenance & improvements are easy & less

costlier• IT team can maintain setup after getting the

source code.

Build or Buy

• The idea of Build or Buy can be decided by :– Custom Development and Maintenance cost– Low risk of Failure– Business Functions

ERP: Small, Medium & Large Enterprise Vendor Solutions

Small & Medium Enterprise

• Net Fixed Assets of more than 15 million Singapore Dollar(SGD) in manufacturing and non-manufacturing companies with employee base of less than 200 staff.

• From April 2011, annual sales turnover of not more than SGD 100 million (or) have employee base of less than 200 staff.

• SMEs are further broken up in definition as small enterprise and medium enterprise.

Contd..

• ERP established for 4 decades with the introduction of SAP, Oracle & Microsoft.

• Big companies implemented ERP from any one of the companies.

• The solid reason for ERP vendors to move in the direction of SMEs is due to the fact of growing number of SMEs.

• ERP S/W got tailored and suits for small sized companies & increasing productivity.

Contd..

• Effective Data Management helped in streamlining the business process effectively.

• Flexibility & real time control over the price and the jobs are the key features for a small sized company customers.

ERP Systems implementation Barriers for SME

• Cost• Time• People• User Trainings & System Friendliness• Business Process Management• IT Department & IT Infrastructure.

FUNCTIONAL MODULES

INTRODUCTION

• The number of modules vary from one ERP package to another.

• Generally for any ERP system, the modules are– Financial Module– HR Management Module– Production Planning Module– Plant Maintenance Module– Sales & Distribution Module

Contd..

– Materials Management Module– Quality Management Module– Manufacturing Module

Reasons for Selecting ERP Module• Cost reduction• Specialized module• Reduced Project Duration• Less Risk• Reduced Resistance to change• Purchasing different modules from different

vendors• More features, less training and easy

maintenance

FINANCIAL MODULES• Financial Management is concerned with not

only the adequate acquistion of funds at the appropriate time but also its proper utilisation

• Subsystems of Financial Management– Financial Accounting– Controlling System– Investment Management– Treasury Application– Enterprise Controlling.

1. FINANCIAL ACCOUNTING

• Objective of a good accounting system is to provide company wide control and integration of financial information that is essential to strategic decision making.

• Elements of Financial Accounting– General Ledger– Account Receivables and Payable– Asset Accounting– Legal Consolidation

General Ledger

• It is essential both to the financial accounting system and to strategic decision making.

• Some of the features of GL module are– Automatic and simultaneous posting of all sub-

ledger– Simultaneous updating of general ledger and cost

accounting areas– Inter-company transactions

Accounts Receivables and Payables• ERP system offer a financial overview of global

business partner relationships, in the accounts receivable and payable functions.

• Accounts Receivable and payable transactions are performed automatically, when related processes take place in other modules.

• Transactions are– Down Payments– Bill of Exchange– Credit Management

Asset Accounting

• Manages Company’s Fixed assets.• It serves as a sub-ledger to the general ledger,

providing detailed information on asset related transactions

Legal Consolidation

• Consolidated financial statements need to be integrated effectively with operational data the individual company level.

• By using different valuation methods, Plan balance sheet strategies to suit customer requirements.

2. CONTROLLING SYSTEM

• Gathers the function required for effective internal cost accounting. It include– Overhead Cost Controlling– Cost centre Accounting– Overhead Orders– Activity Based Costing– Product Cost Controlling– Cost Object Controlling– Profitability Analysis.

3. TREASURY APPLICATION

• It includes– Cash Management– Treasury Management– Market Risk Management– Funds Management

4. ENTERPRISE CONTROLLING

• Optimizes shareholders value, while meeting internal objectives for growth & investment.

• It contains– Executive Information Systems– Business Planning & Budgeting– Consolidation– Profit Centre Accounting

MANUFACTURING & PRODUCTION MODULE

• The term Production or Operations are used interchangeably with manufacturing.

• Manufacturing Module should enable an enterprise to include technology with business processes to create an integrated solutions.

Manufacturing Response to Customers

• Manufacturers must respond quickly and effectively to customer demands.

• The heart of an enterprise manufacturing system centres on its integrated planning, business process and execution capabilities.

Subsystems• Material and capacity planning• Shop Floor Control• Quality Management• Just-in-time/Repetitive Manufacturing• Cost Management• Engineering Data Management• Engineering Change Control• Configuration Management• Serialisation• Tooling

HUMAN RESOURCE MODULE

INTRODUCTION

• HR management is an essential factor for any successful business.

• It will seamlessly integrate with other modules and improves productivity.

• A flexible structure enables quick and easy customisation of the system to suit your requirements.

NEED…

• Recruitment, training, and retention of sales force is difficult

• HR records inadequate• HR paperwork and compliance requirements

increase steadily• Management of compensation packages

difficult• Needs to create a strategy for controlling the

cost of various employee benefits

Subsystems

• Personnel Management• Personnel Administration• Employee Master Data• Recruitment Management• Travel Management• Benefits Management• Salary Adminstration• Organisational Management

Contd..

• Payroll Accounting• Time Management• Shift Planning• Personnel Development• Training and Event Management

PLANT MAINTENANCE

INTRODUCTION

• The Plant Maintenance – provides integrated solution for supporting the operational needs of an enterprise-wide systems.

• The modules includes an entire family of products covering all aspects of plant/equipment maintenance and becomes integral to the achievement of process improvement.

SubSystems

• Preventive Maintenance Control• Equipment Tracking• Component Tracking• Plant Maintenance Calibration Tracking• Plant Maintenance Warranty Claims Tracking

Purchase-to-Pay Process

Order-to-Cash Process

IS 630 : Lecture 2 37

MATERIALS MANAGEMENT

INTRODUCTION

• This Module optimises all purchasing processes with workflow driven processing functions, enables automated supplier evaluation, lowers procurement and warehousing cost with accurate inventory.

Subsystems

• Pre-Purchasing Activities• Purchasing• Vendor Evaluation• Inventory Management• Invoice Verification and Material inspections

QUALITY MANAGEMENT

INTRODUCTION

• ISO 9000 series and a host of other intenational standards define the functions of quality management and the elements of a quality management system.

• In the area of production, quality assurance is no longer viewed in terms of inspection and the elimination of defects alone.

• Production process itself becomes the focus of attention.

Contd..

• CAQ-Computer Aided Quality Management• CIQ-Computer Integrated Quality

Management– The Quality Management Module integrates with

master data and processes of the following applications.• Materials Management• Production• Sales & Districution

QUALITY MANAGEMENT MODULE-FUNCTIONS

• Quality Planning• Quality Inspections(triggers inspection,

inspection processing with inspection plan, etc)

• Quality Control