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ERP unit 1.ppt
- 1. 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.
- 2. 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
- 3. Major Reasons for Adopting ERP • Integrate financial information •Integrate customer order information • Standardize and speed up operations processes • Reduce inventory • Standardize Human Resources information
- 4. How do ERP System Work Employees Central Database Human Resource Management Applications Managers and Stakeholders Financial Applications Reporting Applications Manufacturing Applications Inventory And Supply Applications Human Resource Management Applications Service Applications Sales and Delivery Applications Sales Force And Customer Service Reps Customers Back-office Administrators And Workers Suppliers
- 5. 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
- 7. Customers Customer Demographic Files Sales Dept. V endor 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
- 8. An ERP Example: AfterERP 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 Financial Data exchange; Books invoice against PO Books inventory against PO Shipsparts And invoices accounting
- 9. Potential Benefits of ERP Internal Benefits of Integration of a single source data Common data definition A real- time system Increased productivity Reduced operating costs Improved internal communication Foundation for future improvement
- 10. 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
- 11. Benefits of ERP Direct benefits include: 1.improved efficiency 2.information integration for better decision making 3.Faster response time to customer queries
- 12. Benefits of ERP Indirect benefits include: 1. Better corporate image 2. Improved customer goodwill 3. Customer satisfaction
- 13. Potential Benefits are 1. 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
- 14. 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
- 15. 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.
- 18. ERP Finance Module In This Data is collected From various functional departments and generate financial reports ledger, Trail Balance, Balance Sheets etc.
- 19. 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
- 20. ERP Purchasing Module Purchasing module is tightly integrated with the inventory control and production planning Modules.
- 21. ERP Inventory Module Inventory Module facilitates processes of maintaining the appropriate level of stock in a warehouse.
- 22. BPR
- 23. ERP ImplementationApproaches 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
- 24. 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
- 25. 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
- 26. Major Challenges to ERPImplementation Limitations of ERP technical capabilities Inconsistency with existing business processes Costs - implementation (hardware, software, training, consulting) and maintenance Changes in employee responsibilities
- 27. 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
- 28. 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
- 29. Advantages of ERP Quicker completion of Processes Single system Modular software Database Easier to track various tasks Manage globally Data
- 30. Disadvantages of ERP Cost Time Consuming Training to employees