enterprise resource plannig system

8/14/2019 Enterprise Resource Plannig System

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A

Project Report

On

ENTERPRISE RESOURCE

PLANNING

submitted in partial fulfilment of therequirements of the degree of MBA MBL/LLM

for the course

Submitted by : Submitted to:

Punita Sharma Mr. Amit Banerjee

MBA- MBL Sem.- II Faculty In Charge

FACULTY OF MANAGEMENT STUDIES

NATIONAL LAW UNIVERSITY, JODHPUR


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PREFACE

The present project, undertaken as a part of the partial fulfillment as a requirement for

the award of MBA- MBL, is an honest attempt to study the concept ofEnterprise

Resource Planning Systems. The study undertaken in order to come up with the

project has given me a good knowledge about the changing and developing methods

being adopted by the big companies to meet the changing needs of the time.

The project looks into the evolution and development of the concept of ERP and how

it has contributed to the way the functioning of the organisations have changed over

the past years.

The Enterprise Resource Planning (ERP) system plays a very important role. The

major decision making and it execution is done through ERP. Its the system of

managing all functions of the business with information support coming through the

ERP. It handles the operational systems to run business and provides the required

inputs to planning and control systems handled by the middle management.


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ACKNOWLEDGMENT

This project owes its accomplishments to the inputs, help, and assistance received

from various website (www.). A great sense of gratitude is also expressed towards my

guiding faculty Mr. Amit Banerjee, who very ably guided me in the completion of

this project.

Thanks are also the library staff of the National Law University. I also thanks the

senior students of the University for their help.

In the end I also extend my thanks to my classmates who have always helped me

whenever I needed their help.


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INTRODUCTION:

The growing and the dynamic business environment of today is faced with lots of

challenges and opportunities. The dependence on the information, as a driving energy

source is increasing. The business needs today stretch beyond the transaction

processing, requiring an instant real time response wherever it occurs.

The word Enterprise conveys that it encompasses the larger business community

covering all the players and their participation in the business. The system has

extended beyond corporate boundaries and the system that is being designed is an

enterprise wide.

The business today is a paperless operation, a wireless communication as a result of

fully transparent and automated operations at all centers in an integrated and

coordinated manner taking care of the business, actions and decision needs. And these

demands of the business are met by systems of information processing and

communication.

Though the tools and technologies, and the solutions for these needs are available but

what is required is an integrated solution out of these technologies and the systems

offering an enterprise. Such an integrated solution is called Enterprise Management

System (EMS).

In EMS, the Enterprise Resource Planning (ERP) system plays a very important role.

The major decision making and it execution is done through ERP. Its the system of

managing all functions of the business with information support coming through the

ERP. It handles the operational systems to run business and provides the required

inputs to planning and control systems handled by the middle management.


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ENTERPRISE RESOURCE PLANNING

The initials ERP originated as an extension of MRP (material requirements planning

then manufacturing resource planning). ERP systems now attempt to cover all basic

functions of an enterprise, regardless of the organization's business or charter. Non-

manufacturing businesses, non-profit organizations and governments now all utilize

ERP systems.

The introduction of an ERP system to replace two or more independent applications

eliminates the need for external interfaces previously required between systems, and

provides additional benefits that range from standardization and lower maintenance

(one system instead of two or more) to easier and/or greater reporting capabilities (as

all data is typically kept in one database).

The Enterprise planning system (ERP) deals with the planning and use of resources

used in the business. The resources are finance, materials, manufacturing capacity and

human resource. The ERP provides methodology of assessing the resource needs for a

given business plan to achieve certain business objectives. It also helps to execute the

strategies, plans, decisions and actions in a time bound manner. The ERP provides a

support system in transaction processing, updation, and reporting across the

functions.

The ERP is a package encompassing all major functions of a business.

Prior to the concept of ERP systems, departments within an organization (for

example, the human resources (HR)) department, the payroll department, and the

financial department) would have their own computer systems. The HR computer

system (often called HRMS or HRIS) would typically contain information on the

department, reporting structure, and personal details of employees. The payroll

department would typically calculate and store paycheck information. The financial


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The key benefit of ERP id that it provides an integrated solution for all the

requirements of the business. It addresses the issue of data integrity, information

transparency, seamless integration and information communication. Simultaneously

it respects the organisational hierarchy of authority, while conducting the business

transactions through the system.

FEATURES

Some of the major features of ERP and what ERP can do for the business system are

as below:

ERP performs core corporate activities and increases customer service and

thereby augmenting the Corporate Image.

ERP bridges the information gap across the organization

ERP provides for complete integration of Systems not only across the

departments in a company but also across the companies under the same

management.

ERP is the only solution for better Project Management.

ERP allows automatic introduction of latest technologies like Electronic Fund

Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, and

Video conferencing, E-Commerce etc.

ERP facilitates company-wide Integrated Information System covering all

functional areas like Manufacturing, Selling and distribution, Payables,

Receivables, Inventory, Accounts, Human resources, Purchases etc.,

ERP eliminates the most of the business problems like Material shortages,Productivity enhancements, Customer service, Cash Management, Inventory

problems, Quality problems, Prompt delivery etc.,

ERP not only addresses the current requirements of the company but also

provides the opportunity of continually improving and refining business

processes.

ERP provides business intelligence tools like Decision Support Systems

(DSS), Executive Information System (EIS), Reporting, Data Mining and


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Early Warning Systems (Robots) for enabling people to make better decisions

and thus improve their business processes.

The ERP solution provides Drill Down and Context sensitive helps to use

the system. The drill down helps to run through the system to locate the weekspot for action and control. The context sensitivity help provides an access to

help library which can be used by the user by calling help. The help could be

for information, guidance and understanding of the term or process or format.

COMPONENTS

Examples of modules in an ERP which formerly would have been stand-aloneapplications include:

Manufacturing

Engineering

Bills of Material

Scheduling

Capacity

Workflow Management

Quality Control

Cost Management

Manufacturing Process

Manufacturing Projects

Manufacturing Flow

Supply Chain Management

Inventory

Order Entry


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Purchasing

Product Configurator

Supply Chain Planning

Supplier Scheduling

Inspection of goods

Claim Processing

Commission Calculation

Financials

General Ledger

Cash Management

Accounts Payable

Accounts Receivable

Fixed Assets

Projects

Costing

Billing

Time and Expense

Activity Management

Human Resources

Human Resources

Payroll

Training

Time & Attendance


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Rostering Benefits

Customer Relationship Management

Sales and Marketing.

Commissions

Service

Customer Contact and

Call Center support

Data Warehouse

various Self-Service interfaces for Customers,

Suppliers, and

Employees

Planning and Quality control:

System of data gathering to assess quality and measure against standards.

Analysis of quality by process, material and work centre location.

Analysis of quality by reasons and action taken

Monitoring quality across the organisation from input to output for operatingdecisions and business decisions.

Maintenance:

Plant maintenance planning.

Breakdown, preventive, conditional maintenance.


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Monitoring performances fro maintenance action as all kind kinds of

productive assets.

Enterprise Resource Planning is a term originally derived from manufacturingresource planning (MRP II) that followed material requirements planning (MRP).

MRP evolved into ERP when "routings" became a major part of the software

architecture and a company's capacity planning activity also became a part of the

standard software activity. ERP systems typically handle the manufacturing, logistics,

distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise

Resource Planning or ERP software can aid in the control of many business activities,

like sales, marketing, delivery, billing, production, inventory management, quality

management, and human resource management.

ERPs are often incorrectly called back office systems indicating that customers and

the general public are not directly involved.

ERPs are cross-functional and enterprise wide. All functional departments that are

involved in operations or production are integrated in one system. In addition to

manufacturing, warehousing, logistics, and information technology, this would

include accounting, human resources, marketing, and strategic management.

Implementation


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Because of their wide scope of application within a business, ERP software systems

are typically complex and usually impose significant changes on staff work practices.

Implementing ERP software is typically not an "in-house" skill, so even smaller

projects are more cost effective if specialist ERP implementation consultants are

employed. The length of time to implement an ERP system depends on the size of the

business, the scope of the change and willingness of the customer to take ownership

for the project. A small project (e.g., a company of less than 100 staff) may beplanned and delivered within 3-9 months; however, a large, multi-site or multi-

country implementation may take years.

To implement ERP systems, companies often seek the help of an ERP vendor or of

third-party consulting companies. These firms typically provide three areas of

professional services: consulting, customization and support.

Process preparation


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ERP vendors have designed their systems around standard business processes, based

upon best business practices. Different vendors have different types of processes but

they are all of a standard, modular nature. Firms that want to implement ERP systemsare consequently forced to adapt their organizations to standardized processes as

opposed to adapting the ERP package to the existing processes. Neglecting to map

current business processes prior to starting ERP implementation is a main reason for

failure of ERP projects. It is therefore crucial that organizations perform a thorough

business process analysis before selecting an ERP vendor and setting off on the

implementation track. This analysis should map out all present operational processes,

enabling selection of an ERP vendor whose standard modules are most closely

aligned with the established organization. Redesign can then be implemented to

achieve further process congruence. Research indicates that the risk of business

process mismatch is decreased by:

- linking each current organizational process to the organization's strategy;

- analyzing the effectiveness of each process in light of its current related business

capability;

- understanding the automated solutions currently implemented.

A disadvantage usually attributed to ERP is that business process redesign to fit the

standardized ERP modules can lead to a loss of competitive advantage. While

documented cases exist where this has indeed materialized, other cases show that

following thorough process preparation ERP systems can actually increase

sustainable competitive advantage.

Configuration

Configuring an ERP system is largely a matter of balancing the way you want the

system to work with the way the system lets you work. Begin by deciding which

modules to install, then adjust the system using configuration tables to achieve the

best possible fit in working with your companys processes.


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Modules - Most systems are modular simply for the flexibility of implementing some

functions but not others. Some common modules, such as finance and accounting are

adopted by nearly all companies implementing enterprise systems; others however

such as human resource management are not needed by some companies and

therefore not adopted. A service company for example will not likely need a module

for manufacturing. Other times companies will not adopt a module because they

already have their own proprietary system they believe to be superior. Generally

speaking the greater number of modules selected, the greater the integration benefits,

but also the increase in costs, risks and changes involved.

Configuration Tables A configuration table enables a company to tailor a particular

aspect of the system to the way it chooses to do business. For example, an

organization can select the type of inventory accounting FIFO or LIFO it will

employ or whether it wants to recognize revenue by geographical unit, product line,

or distribution channel.

So what happens when the options the system allows just arent good enough? At this

point a company has two choices, both of which are not ideal. It can re-write some of

the enterprise systems code, or it can continue to use an existing system and build

interfaces between it and the new enterprise system. Both options will add time and

cost to the implementation process. Additionally they can dilute the systems

integration benefits. The more customized the system becomes the less possible

seamless communication becomes between suppliers and customers.

Advantages

In the absence of an ERP system, a large manufacturer may find itself with many

software applications that do not talk to each other and do not effectively interface.

Tasks that need to interface with one another may involve:

Ease of use

General Purpose

Readymade solution for most of the problems

Integration of all functions already established


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design engineering (how to best make the product)

order tracking from acceptance through fulfillment

the revenue cycle from invoice through cash receipt

managing interdependencies of complex Bill of Materials

tracking the 3-way match between Purchase orders (what was ordered),

Inventory receipts (what arrived), and Costing (what the vendor invoiced)

the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on

a granular level.

Change how a product is made, in the engineering details, and that is how it

will now be made. Effective dates can be used to control when the switch over

will occur from an old version to the next one, both the date that some

ingredients go into effect, and date that some are discontinued. Part of the

change can include labeling to identify version numbers.

Some security features are included within an ERP system to protect against

both outsider crime, such as industrial espionage, and insider crime, such as

embezzlement. A data tampering scenario might involve a disgruntled

employee intentionally modifying prices to below the breakeven point in order

to attempt to take down the company, or other sabotage. ERP systems

typically provide functionality for implementing internal controls to prevent

actions of this kind. ERP vendors are also moving toward better integration

with other kinds of information security tools.

Disadvantages

Many problems organizations have with ERP systems are due to inadequate

investment in ongoing training for involved personnel, including those implementing

and testing changes, as well as a lack of corporate policy protecting the integrity of

the data in the ERP systems and how it is used.

Limitations of ERP include:

Success depends on the skill and experience of the workforce, including

training about how to make the system work correctly.


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Managers cannot generate custom reports or queries without help from a

programmer. This inhibits managers from obtaining information quickly so

that

they can act on to for competitive advantage. This can create a backlog for the

is department.

ERP systems provide current only such as open orders. Managers often need

to look past the current status to find trends and patterns that aid better

decision-making

Small enterprises are often undercapitalized & are also not updated about the

latest offerings in the market

Personnel turnover; companies can employ new managers lacking education

in the company's ERP system, proposing changes in business practices that are

out of synchronization with the best utilization of the company's selected ERP.

Customization of the ERP software is limited. Some customization may

involve changing of the ERP software structure which is usually not allowed.

Re-engineering of business processes to fit the "industry standard" prescribed

by the ERP system may lead to a loss of competitive advantage.

ERP systems can be very expensive to install often ranging from 30,000 US

Dollars to 500,000,000 US Dollars for multinational companies.

ERP vendors can charge sums of money for annual license renewal that is

unrelated to the size of the company using the ERP or its profitability.

Technical support personnel often give replies to callers that are inappropriate

for the caller's corporate structure. Computer security concerns arise, for

example when telling a non-programmer how to change a database on the fly,

at a company that requires an audit trail of changes so as to meet some

regulatory standards.

ERPs are often seen as too rigid and too difficult to adapt to the specific

workflow and business process of some companiesthis is cited as one of the

main causes of their failure.

Systems can be difficult to use.

Systems are too restrictive and do not allow much flexibility in

implementation and usage.


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The system can suffer from the "weakest link" probleman inefficiency in

one department or at one of the partners may affect other participants.

Many of the integrated links need high accuracy in other applications to work

effectively. A company can achieve minimum standards, then over time "dirtydata" will reduce the reliability of some applications.

Once a system is established, switching costs are very high for any one of the

partners (reducing flexibility and strategic control at the corporate level).

The blurring of company boundaries can cause problems in accountability,

lines of responsibility, and employee morale.

Resistance in sharing sensitive internal information between departments can

reduce the effectiveness of the software.

Some large organizations may have multiple departments with separate,

independent resources, missions, chains-of-command, etc, and consolidation

into a single enterprise may yield limited benefits.

There are frequent compatibility problems with the various legacy systems of

the partners.

The system may be over-engineered relative to the actual needs of the

customer. .

The data in ERP application is not integrated with other enterprise or division

systems and dies not include external intelligence.

REFERENCES:

W.S Jawedekar, Management Information Systems, ( Tata McGraw Hill, 2nd

Ed, 2005)

www.Wikipediia.com


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http://www.erpfans.com/erpfans/erpdefinition/erp042.html

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