erp ppt

Presented By:

Gurwinder Kaur

3804

Enterprise Resource

Planning (ERP) Systems

What is ERP?

• The practice of consolidating an enterprise’s planning, manufacturing, sales and marketing efforts into one management system.

• Combines all databases across departments into a single database that can be accessed by all employees.

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

Major Reasons for Adopting ERP

• Integrate financial information

• Integrate customer order information

• Standardize and speed up operations

processes

• Reduce inventory

• Standardize Human Resources information

How do ERP System Work

5

Employees

Managers andStakeholders

CentralDatabase

ReportingApplications

HumanResource

ManagementApplications

FinancialApplications

ManufacturingApplications

InventoryAnd SupplyApplications

HumanResource

ManagementApplications

ServiceApplications

Sales andDelivery

Applications

Sales ForceAnd CustomerService Reps

Customers Back-officeAdministratorsAnd Workers

Suppliers

Components of ERP System

Finance: modules for book keeping and making sure the bills are paid on time. Examples:

General ledger

Accounts receivable

Accounts payable

HR: software for handling personnel-related tasks for corporate managers and individual employees. Examples:

HR administration

Payroll

Self-service HR

8

Customers

Customer

Demographic

FilesSales Dept.

Vendor

Orders

Parts

Accounting

Accounting

Files

Purchasing

Purchasing

Files

Order is placed

with Vendor

Invoices

accounting

Inventory

Files

Warehouse

Checks for Parts

Calls back “Not in stock”

“We ordered the parts”

“We Need parts #XX”

“We ordered the parts”

Sends report

Sends report

Sends report

Ships parts

9

An ERP Example: After ERP

Database

Customers Sales Dept.

Purchasing

Warehouse

Accounting

Vendor

Inventory Data

If no parts,

order is placed

through DB

Orders

Parts

Order is submitted

to Purchasing.

Purchasing record

order in DB

Order is placed

with Vendor

And invoices accounting

Financial Data exchange;

Books invoice against PO

Books inventory

against PO

Ships parts

Potential Benefits of ERP

Internal Benefits

Integration of a single source of

data

Common data definition

A real-time system

Increased productivity

Reduced operating costs

Improved internal communication

Foundation for future improvement

Potential Benefits of ERP

External Benefits

• Improved customer service and order

fulfillment

• Improved communication with suppliers and

customers

• Enhanced competitive position

• Increased sales and profits

Benefits of ERP

Direct benefits include:

1. improved efficiency

2. information integration for better

decision making

3. Faster response time to customer

queries

Benefits of ERP

Indirect benefits include:

1. Better corporate image

2. Improved customer goodwill

3. Customer satisfaction

Potential Benefits are1. Reduction of Lead-Time

2. On-Time Shipment

3. Reduction in cycle time

4. Better customer satisfaction

Others are

1. Improved supplier performance

2. Increased Flexibility

3. Reduction in quality costs

4. Improved resource utility

5. Improved information accuracy and decision-

making ability

Risks with ERP Implementation

Expensive (can costs 100 thousands to

millions of dollars)

Time-consuming (can take months to years)

Great risk for the organization

Transfer of Knowledge

Acceptance with the company

Before ERP & After ERP

Stand alone System.

Lack of coordination among business function(Manufacturing & sales)

Non Integrated data: Data have different meanings.

System are maintained on a procedural basis

Redundant data and inconsistent information.

Difficult to manage.

Integrated System.

Support coordination among business functions.

Integrated Data: Data have the same meaning across multiple functions.

Changes affect multiple functions or Systems

Common interfaces across systems.

Modules of ERP

Finance

Material

Sales

Marketing

Personnel

Popular ERP Modules

ERP

Finance

Sale

Planning

Inventory

Operation

HR

ERP Finance Module

In This Data is collected From

various functional departments

and generate financial reports

ledger, Trail Balance, Balance

Sheets etc.

ERP HR(Human Resource) Module

HR Module routinely maintain a complete

employee database including contact information,

Salary details Attendance, Promotions of all

employees.

Produce pay check Reports

Maintain personnel Record

Training

Time and Attendance Benefits

ERP Purchasing Module

Purchasing module is tightly

integrated with the inventory

control and production planning

Modules.

ERP Inventory Module

Inventory Module facilitates processes

of maintaining the appropriate level of

stock in a warehouse.

BPR

ERP Implementation Approaches

The big bang – install a single ERP system across

the entire organization

Franchising – Independent ERP systems are

installed in different units linked by common

processes, e.g., bookkeeping.

Slam dunk – install one or several ERP modules

for phased implementation of key business

processes

Major Phases of ERP Implementation

Initiation – develop business case, project scope,

and implementation strategy

Planning – establish implementation team,

determine goals and objectives, establish metrics

Analysis and process design – analyze and

improve existing processes, map new processes to

be adopted by the system

Major Phases of ERP Implementation

Realization – install a base system,

customization, and test the system

Transition – replace the formal system with

the new system, data conversion

Operation – monitor and improve system

performance, provide continued training and

technical support

Major Challenges to ERP Implementation

Limitations of ERP technical capabilities

Inconsistency with existing business processes

Costs - implementation (hardware, software,

training, consulting) and maintenance

Changes in employee responsibilities

Major Challenges to ERP Implementation

Flexibility of software system upgrades

Implementation timelines

Availability of internal technical knowledge

and resources

Education and training

Implementation strategy and execution

Resistance to change

New Developments In ERP

Availability of web-based and wireless ERP

systems

Adoption of easy-to-install ERP systems

Linkage to other software systems, e.g., supply

chain management system, e-commerce, customer

relationship management system

Advantages of ERP

Quicker completion of Processes

Single system

Modular software

Database

Easier to track various tasks

Manage globally Data

Disadvantages of ERP

Cost

Time Consuming

Training to employees