Enterprise Resource Planning

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Enterprise Resource Planning
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• What does a companys strategy consist of ?
• Company strategies concern,
• How to grow the business
• How to satisfy customers
• How to out compete rivals
• How to respond to changing in market conditions
• How to manage each functional piece of the
  business and develop needed organizational
  capabilities
• How to achieve strategic and financial objectives

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Introduction

• Manufacturing Organizations are complex Systems'
  where the interactions between the various
  functions Sales, Distribution, Manufacturing,
  Materials, Finance, Human Resources, Maintenance
  have to be managed towards a common purpose of
  delivering the customers maximum value at the
  optimum price.
• However, since most of these organizations have a
  Functional Structure', each function/department
  works towards their own goals and objectives,
  rather than the organizational goals.
• These are the issues addressed by Enterprise
  Resource Planning' software solutions providing a
  common, consistent system to capture data
  organization wide, with minimum redundancy.

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What is ERP?

• ERP integrates the information across functions,
  and provides a set of tools for planning and
  monitoring the various functions and processes
  and ensuring progress towards a common purpose
• A business management system that integrates all
  facets of the business, including planning,
  manufacturing, sales, and marketing.
• ERP helps business managers to implement ERP in
  business activities such as inventory control,
  order tracking, customer service, finance and
  human resources

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MRP the predecessor to and backbone of
MRP II
And
ERP
a joint effort between J.I. Case, a manufacturer
of tractors and other construction machinery, in
partnership with IBM.
Initial MRP solutions were big, clumsy and
expensive.(1960-1970)
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Strategic management Business plan
Trends
plan
Resource requirement planning
Demand management (Sales forecasting)
objective
Master production scheduling
Resource req.
Reports

• MRP
• BOM
• Lead Time
• Lot sizing
• Planned purchase
• Performance reports

MRPII Elements
Inventory level
Inventory Transaction
report
Buy
Capacity req. Planning(CRP)
Realistic
Realistic
Supplier
Factory coordination
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In 1972 five engineers in Mannheim, Germany,
started up SAP (Systemanalyse und
Programmentwicklung).
The purpose of the company was to produce and
market standard software for integrated business
solutions.
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The term Enterprise resource planning (ERP)
was coined in the early 1990s by the Gartner
Group (Wylie, 1990). Their definition of ERP
included criteria for evaluating the extent that
software was actually integrated both across and
within the various functional
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A typical Example
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Data Flow Diagram to support Part product
approval process
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How WIP could be improved by implementation of
ERP (Work in Process )
Without using of any integrated system
using of integrated system
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• Some Questions
• What are the major types of systems in a
  business? What role do they play?
• How do information systems support the major
  business functions?
• Why should managers pay attention to business
  processes?

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Major Types of Systems

• Executive Support Systems (ESS)
• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Knowledge Work Systems (KWS)
• Office Systems
• Transaction Processing Systems (TPS)

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• Transaction Processing Systems (TPS)
• Basic business systems that serve the operational
  level
• A computerized system that performs and records
  the daily routine transactions necessary to the
  conduct of the business

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Types of TPS Systems
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Payroll TPS
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• Executive Support System (ESS)
• Strategic level
• Inputs Aggregate data
• Processing Interactive
• Outputs Projections
• Users Senior managers
• Example 5-year operating plan

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• Management Information System (MIS)
• Management level
• Inputs High volume data
• Processing Simple models
• Outputs Summary reports
• Users Middle managers
• Example Annual budgeting

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• Decision Support System (DSS)
• Management level
• Inputs Low volume data
• Processing Interactive
• Outputs Decision analysis
• Users Professionals, staff
• Example Contract cost analysis

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• Knowledge Work Systems (KWS)
• Knowledge level
• Inputs Design specs
• Processing Modeling
• Outputs Designs, graphics
• Users Technical staff and professionals
• Example Engineering work station

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Decision Support System (DSS)
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Decision Support System (DSS)
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Relation Between 5 systems
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(MIS)
With out any Integrated system
(ESS)
(KWS)
(TPS)
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ERP elements
Enterprise resources planning software
Supply Chain management
Best Practice Comparing your process with
similar processes In higher companies
6 level of sys.(ESS,MIS,TPS,) MRPII
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ERP Software Companies Marketshares
Software Market Share SAP 15.6 Peoplesoft 4.9
Oracle 4.8 Baan 3.0 CA 3.0 JDE 2.2 SSA 2.1
GEAC 2.0 IBM 1.8 JBA 1.7 Others 59.0
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TABLE 1.2 Business Functions Potentially
Supported by ERPsource T.H . Davenport,
Putting the Enterprise into the Enterprise
System.Harvard Business Review, July-August
1998.
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Modules Offered by Leading Vendors
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Reasons for Implementing ERP-Rating 1(Not
Important) to 5(very Important)
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Modules Offered by Leading Vendors
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A supply chain is characterized by the flow of
materials and information both within and between
business entities including suppliers,
manufacturers and customers. The ultimate goal
of supply chain management is to meet customers
demand more efficiently. For a manufacturing
company, it is to make the right
product, for the right customer, in the right
amount, at the right time.
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ERP System Options and Selection Methods

• Enterprise resource planning systems are very
  large IS/IT projects .The cost range is enormous,
  depending upon the size of the firm implementing
  the system ,as well as on how many modules are
  used.

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ERP Implementation And Maintenance ERP Systems
Are Adopted In The Hopes That They Will Improve
The Performance Of An Organization On A Number Of
Key Performance Indicators , Such As
Profitability , Efficiency , And Accuracy In
Information System Data And Reports . ERP Vendors
Typically Promise Gains Of 10 To 15 Percent In
Revenue , Customer Satisfaction , And Other
Measures Of Value . The Effort Required To Build
These Systems Is Significant . Meta Group found
that the average ERP implementation takes 23
months with total Ownership cost of 15 million
.
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Business Intelligence Systems And ERP Enterprise
Resource Planning Systems Offer Powerful Tools To
Better Measure And Control Organizational
Operations . Many Organizations Have Found That
This Valuable Tool Can Be Enhanced To Provide
Even Greater Value Though The Addition Of
Powerful Business Intelligence Systems . Business
Intelligence In This Context Is Supported By
Sorting Data (Data Warehouse And Related Systems)
And Conducting Studies Using This Data To Solve
Business Problems ( One Means To Do This Though
Data Mining ) . One Of The Most Popular Forms Of
Data Mining In ERP Systems Is Support Of Customer
Relationship Management (CRM). Data Warehouses
Are One Of The Most Popular Extensions To ERP
Systems , With Over Two-Thirds Of U.S.
Manufacturers Adopting Or Planning Such Systems (
And Slightly Less Than Two Thirds of Swedish
Manufacturers doing the same ). There Has Been
Tremendous Progress In Computer Storage Of Data .
Many Applications Are Being Found For This new
capacity . one major user of massive storage
capacity is ERP systems, witch have large storage
requirements due to their comprehensive nature .
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Data Mining Overview Data Mining Overview
Refers To The Analysis Of The Large Quantities Of
Data Stored In Computers . For Example , Grocery
Stores Have Large Amounts Of Data Generated By
Purchases . Bar Coding Has Made Grocery Checkout
Very Convenient . Grocery Stores And Other Retail
Stores Are Able To Quickly Process Purchases ,
And Use Computers To Accurately Determine Product
Prices . These Same Computers Help The Stores
With Inventory Management By Instantaneously
Determining The Quantity Of Items Of Each Product
On Hand . Stores Can Also Apply Computer
Technology To Contact Their Vendors So That They
Do Not Run Out Of Items . Computers Allow The
Stores Accounting System To More Accurately
Measure Costs And Determine The Profit That Store
Stockholders Are Concerned About . All Of This
Information Is Available Based Upon The Bar
Coding Information Attached To Each Product . The
Benefits Of Bar Coding Encompass For More Than
Faster Checkout Service . The Entire Business
Management Process Can Use The Information
Generated .
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ERP And Supply Chains Supply Chain Are
Collections Of Organizations That Work Together
To Provide Raw Materials That Are Converted Into
Products And Delivered To Retail Outlets Where
Customers Can Obtain Them . In The Past ,
Monopolies Would Sometimes Seek Vertical
Integration So That They Could Control The Entire
Supply Chain ( Standard Oil Went A Long Way
Toward Total Vertical Integration Steel
Companies Also Attained At Lest Something
Approaching It ) . The Dutch East India Companies
Are An Early Example Of A Global Supply Chain .
Military Logistics Systems Are The Epitome Of
Supply Chain Is Control And Efficiency . TodayS
Companies Gain Efficiency Through A Higher Degree
Of Specialization . This Appears In Various Forms
, Including Outsourcing . The Idea Behind
Outsourcing Is That There Are Specialists
Throughout The Supply Chain Who Can Do A Better
Job Of The Specific Function They Perform .
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ERP SOLUTIONS
QUALITY
Increased
Increased
Decreased
Decreased
Increased
Increased

PRODUCTIVITY
CUSTOMER SATISFACTION


MARKET SHARE
COST

PROFIT
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Conclusion

• The growing information needs of an enterprise
  make it imperative to improve or replace old
  systems.
• Especially under the present business
  environment, where the globalization has been
  initiated, full convertibility is coined.
• Infrastructure Projects are nearing completion,
  and it is expected that the whole business system
  will undergo a major shift.

• Implementation of ERP solutions is one of the
  largest drivers of growth in the consultancy
  business.
• The introduction of such a large and complex
  software like ERP, enables an organization
  to integrate their manufacturing, finance and
  marketing operations at all levels, is in itself
  a challenge, since it calls for technical and
  functional skills and a change in user mindsets.