Enterprise Resource Planning

1. Enterprise Resource Planning

2. What does a company’s 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

3. 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.

4. Whatis 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

7. 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)

9. Trends Strategic management & Business plan plan Demand management (Sales forecasting) Resource requirement planning objective Master production scheduling Resource req. Reports • MRP : • BOM • Lead Time • Lot sizing • Planned purchase • Performance reports MRPII Elements Inventory level Inventory Transaction report Capacity req. Planning(CRP) Buy Realistic Realistic Factory coordination Supplier

10. 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.

11. The term Enterpriseresource 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

12. A typical Example

13. Data Flow Diagram to support Part product approval process

14. How WIP could be improved by implementation of ERP (Work in Process ) Without using of any integrated system using of integrated system

15. 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?

16. 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)

18. 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

19. Types of TPS Systems

20. Payroll TPS

21. Executive Support System (ESS): Strategic level • Inputs: Aggregate data • Processing: Interactive • Outputs: Projections • Users: Senior managers Example: 5-year operating plan

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

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

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

25. Decision Support System (DSS)

26. Decision Support System (DSS)

27. Relation Between 5 systems

28. (MIS) With out any Integrated system (ESS) (KWS) (TPS)

29. Using Integrated system

30. ERP elements Enterprise resources planning software Best Practice : Comparing your process with similar processes In higher companies Supply Chain management 6 level of sys.(ESS,MIS,TPS,…) +MRPII

31. ERP Software Companies& Marketshares SoftwareMarket Share SAP15.6 Peoplesoft4.9 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

32. 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.

33. Modules Offered by Leading Vendors

34. Reasons for Implementing ERP-Rating 1(Not Important) to 5(very Important)

35. Modules Offered by Leading Vendors

42. 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 customer’s 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.

45. 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.

49. 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 .

50. 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 .