What is ERP?

ERP – AN OVERVIEW

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The Market Drivers

Global competition

Distribution networks

New Product Launches

Market specialization

Customer Demand

Integration with Partners

Current market scenario


Industry Demands

Aggressive cost control initiatives

Customer acquisition cost vs

revenue

Flexibility to adapt to the

changing business environment

Informed decision making by the

management

New trends in business processes


Key Challenges

Accurate and timely information

Applications mimicking existing

business practices

Modifications are low and painful

Complicated interfaces


Evolution of business

applications

MIS : Management Information System

IIS : Integrated Information System

EIS : Executive Information System

CIS : Corporate Information System

EWS : Enterprise Wide System

So how can ERP help ?


Evolution of Planning

Systems

MRP : Materials Requirement

Planning

MRP : Manufacturing Resource

Planning

ERP : Enterprise Resource Planning


ERP is a software solution that

addresses the enterprise needs

taking the process view of an

organization to meet the organizational

goals tightly integrating all

functions of an enterprise.

Definition of ERP


ERP – Enterprise

Resource Planning

ERP facilitates company wide integration of information systems covering all functional areas

ERP performs core corporate activities and improves customer service augmenting the corporate image

ERP integrates

Database

Applications

Interfaces

Tools

BPR


IT bridges the

Information Gap

Manufacturing

UnitsCustomers

Suppliers

Regional

Operations

Set Ups

Corporate Office


Why ERP ?

Complete integration of systems across

the departments in a company as well

as across the enterprise as a whole

Only solution for better project

management

Better customer service

Automatic introduction of latest

technologies

Expertise database


ERP – the drivers Business

Customer satisfaction

Business development – new areas, products, services

Ability to face competition

Efficient processes required to push the company to top gear

IT

Present software does not meet business needs

Legacy systems difficult to maintain

Obsolete hardware/software difficult to maintain


Problems tackled by

ERP systems

Material shortages

Productivity Enhancements

Customer Service

Cash Management

Inventory Problems

Quality Problems


Definition of Business

Intelligence

Any tools enabling people to make better decisions and thus improve their business processes

Examples

Decision support systems (DSS)

Executive Information systems (EIS)

Reporting

Data Mining

Early Warning Systems (robots)

Understanding ERP


Core subsystems of

ERP

Sales and marketing

Master scheduling

Materials requirement planning

Capacity requirement planning

Bill of materials /purchasing

Shop floor control

Accounts payable/receivable

Logistics


Manufacturing

Local Purchasing

Invoice Verification

Inventory management

Internal sales, shipping & billing

Profit/loss

Capacity Utilization

Headquarters

Information Systems:

Inventory

Purchasing

Sales

Budget

Cash Collection

Marketing/Sales

Sales, shipping and billing

Purchasing of trading goods

Inventory management

Customer Service

Integration of Information Systems


Enabling Best Business Practices

THE CUSTOMER

SUPPLIER’S REFERENCE MODEL

New business

concepts

BUSINESS

ENGINEERING

WORKBENCH

BEST BUSINESS PRACTICES

New

Technologies

CUSTOMER

REQUIREMENTS


Changes in Customer Information

Customer Representative

Credit Manager

Product Manager

Sales Manager

Client

Places New Order

Launch

Workflow

Change Customer

Master Data

Schedule

Customer Visit

Prepare

Production

Increase Credit

Limit


Technology Update and Strategy

InventoryCustomer

Order Mgmt.

Manufacturing

Managing within the

enterprise

Executing within the

enterprise

Interfaces/APIs

between competing

products

Interfaces/APIs to

complimentary

external products

Special Applications

Plant

Mainte

nance

Shop

floor

Control

Enterprise

Accounting

System

Bank

System

Outside the Enterprise

External Systems


Reference Model Tailored Customer Satisfaction

Function Hierarchy

Customer Specific Function Hierarchy

Customer

Specific

IMGBOM BPM Training Documentation

Customer specific

menuCustomizing

Simplify/Preset

Organizational Hierarchy

Runtime System


The Integrated Supply Chain

Procurement Market

Purchasing Production SalesSales

Market

Finance Capital Costs Profit/Loss Balance Sheet

Machines

Operating

Resources

Human

Resources

Managing Resources

Control


Process Automation & Lead Time Reduction

EDISales order

entryDelivery Billing EDI

EDI Entry Blocked Limit Exceeded EDI note Scan log Loading List

Workflow for exception handling, trigger for mail, transactions, EDI

ATP

Pricing

Credit

Limit

Allocation

Picking

Transport

Adaptable standard function


Re-engineering steps

Study the current system and

processes

Design and develop new systems

Define process, organization structure

and procedures

Develop/Customize the software

Train people

Implement new system

How do we go ahead ?


Re-engineering

without ERP

Advantages

Functionality and solutions may not undergo

changes

Can be completed within timeframe

Cost will be within control

Level of integration is moderate

Impact on organization will be moderate

Disadvantages

Stability of the system is known only in the

long term

Long term process change are not addressed

Best business practices may not be in practice

May not achieve corporate wide systems

integration

New technologies have to be studies yourself


ERP and BPR

In depth Business Process Re-engineering

(BPR)study to be done before taking up ERP

BPR brings out deficiencies of the existing

system

BPR attempts to maximize productivity

through re-structuring and re-organizing the

human resources as well as the divisions and

departments in the organization


If it is a big change,

don’t do it !

If the modifications are small and really

important to the business, you may go

ahead to customize and implement.

Else think of alternatives.


The Integrated Supply Chain

ERP Application

Objects

Automatic Functions

BPR

Vision/Best Practices

Process Re-Design

Workflow Execution

Business Procedures

Task management

Workflow Management

Planning/Scheduling

Monitoring

Dynamic Enterprise Modeling

A Model Design


The USA Principle

● Understand ● Simplify ● Automate

UNDERSTAND

existing practices

Methods

SIMPLIFY

processes by

eliminating waste

Methods

AUTOMATE the process

Methods

• Diagramming

• Storyboarding

• Brainstorming

• Eliminating

• Combining

• Rearranging

• EDI

• ERP


How do we start

Ensure total management buy-in

Ensure adequate fund allocation

Identify the Core Team

Project Manager

Analysts

Functional Specialists

Evaluate and select ERP package

Evaluate the Implementation Partner

Jointly make an implementation plan

Present plan to management committee for

sanctions

Present plan to employee groups for feedback


ERP selection

Are all the functional aspects of the

business are duly covered ?

Are all the business functions and

processes are fully integrated ?

Are all the latest IT trends are covered >

Does the vendor has customizing and

implementing capabilities ?

Check your budgets and calculate ROI


ERP Implementation

Commitment from the Management

Form a task force with personnel

from all functional areas

Take care of hardware requirements

Step by step rather than big bang

introduction

Be patient. ERP implementation takes

time


ERP Involves

Project Planning

Business and Operational Analysis, including gap analysis.

Business Process Re-engineering (BPR)

Installation and configuration

Project team training

Business Requirements mapping to software

Module configuration

System modifications and interfaces

Data Conversion

Custom Documentation

End User Training

Conference room pilot

Acceptance testing

Production

Post-Implementation Audit/Support


Implementation Approach

PHASE TASKS DELIVERABLES

Detailed Discussions

Project Initialization Accepted norms and conditions

Evaluation of current processes, business practices, requirements Project organization chart

Set up project organization Identify work teams

Design and

Customization

Map the organization Organization structure

Map business processes Design specification

Define functions and processes Process flow diagrams

ERP s/w configuration Function Model

Build ERP system modifications Configuration recording

Systems modification

Implementation/

Prepare to Go Live

Create Go Live plan and documentation Testing environment report

Integrate Applications Customization test report

Test the ERP customization Implementation report

Train users

Production / Go LiveRun trial production Reconciliation reports

Maintain systems Conversion Plan execution


Ease of use

General purpose

Readymade solution for most of the problems

Only customization required

Integration of all functions already established

ROI earlier than software developed in house

Dependency on human resources eliminated

Easy enterprise wide information sharing

Suppliers and Customer can be online in terms of

communication

Knowledge transfer between industries leads to

innovation

Automatic adaptation to new technologies

Advantages of ERP


Zero Downtime

Support global customers with worldwide operations

Move towards 24 x7 availability

Co-operate with hardware and database vendors

Incorporate leading edge technologies

MPP systems

Cluster

Mirrored disks

Fault tolerant database systems

Reduce planned downtime

Hardware configuration

System software upgrade

Database reorganization

Application migration


Make or Buy ?

In House Development ERP Package

Project Development takes time Readymade Projects

Needs only customization

Documentation is difficult Documentation is part of the system

Maintenance depends on individuals The ERP vendor takes care of this

EDI implementation modifications to be taken care of EDI compatible, Universally accepted.

Enterprise implementation is difficult as each unit

follows different s/w options

The package itself is designed as an Enterprise

Package

Latest developments to be studied before

implementation

Constant updates on technology and processes

assured


• Reduced Overheads and Inventory

• Timely responsiveness

• Market share and image enhancement

• Faster design to manufacturability

• Keep up with technology changes

• Only way for integrated systems for a

client with multiple locations

ERP helps you !

Summary


What is ERP?

Software

Transcript of What is ERP?