enterprise resource planning
DESCRIPTION
Enterprise Resource Planning. Enterprise Resource Planning. Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm - PowerPoint PPT PresentationTRANSCRIPT
Enterprise Resource Planning
• Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm
• This integration is accomplished through a database shared by all the application programs
ERP can be considered an initiative launched to better manage business processes across the organization using a common, integrated database, shared data management applications and reporting tools.
Enterprise Resource Planning - Background
An organization’s critical business processes often cut across many of its functional units.
In most organizations, each process has its own data needs and applications that operate as distinct systems.
The results of this approach:- Function-Centric view in the business units- Operational Inefficiencies
Example: A customer order
Sal
es
Acc
ou
nti
ng
Pu
rch
asin
g
Pro
du
ctio
n
Lo
gis
tics
Enterprise Resource Planning - Background
ERP evolved from MRP (Material Requirements Planning) and MRP II.
Material requirements plan
Inventory records Inventory transactions
Bills of materialsRoutings
Time standards
MRPMRPexplosionexplosion
Master production schedule
Manufacturing resource planCost and
financial data
Customer orders Forecasts
Enterprise Resource Planning - Background
“Instead of having one set of numbers for the operating system in manufacturing and one set kept by the financial people – once the manufacturing people have numbers that are valid, the financial people can use these to get their numbers. Of course, whenever there are two systems – the numbers are bound to be different. With MRP II, everybody can be working with the same set of numbers, but that’s only the technical difference. The big difference comes in the way management uses these tools…MRP II becomes a company game plan for manufacturing, marketing, engineering, and finance.”
Oliver Wright, The Executives Guide to Successful MRP II, 1982.
ERP Functional Components
Functional ComponentsSales & Distribution Human Resources
Manufacturing & Logistics
Financial Accounting
Accounts PayableAccounts ReceivableGeneral LedgerCapital InvestmentsOpen Item ManagementABC (costing approaches)Asset Management
PayrollBenefitsSchedulingPersonnel DevelopmentWorkforce PlanningTravel Expense Accounting
Largest and most complexMaterials ManagementPlant MaintenanceQuality ManagementProduction Planning and ControlProject ManagementBudgeting
Customer ManagementOrder ManagementConfiguration ManagementBillingRebate Processing
Reasons for implementing ERP
• Desire to standardize and improve processes• To improve the level of systems integration• To improve information quality
• Integrate Financial Information• Integrate Customer Order Information• Standardize and Speed Up Manufacturing Processes• Reduce Inventory• Standardize Human Resources Information
• Global Outreach• Avoid Redundancies
ERP Disadvantages
• Time-consuming
• Expensive
• Fit
• Vendor Dependence
• Too many features, too much complexity
• Process Rigor (Standardized)
The General ERP Process
1. Product Analysis
2. Module Selection
3. Process Analysis
4. Data Analysis
5. Applications Integration
6. Testing and Installation
7. Employee Training
Average Implantation Time24+ Months
Meta Group Study
How Much Does an ERP Implementation Cost?
1. The size and geographic distribution of the company.
2. The size of the ERP package.
3. Hardware
4. Software
5. Consultants and Analysts Fees
6. Time
7. Training
A large company may spend from $ 50 to $ 100 M or more USD for an integrated ERP implementation.
Meta group survey; 63 companies (large and small) in a range of industries.
Average cost $ 15,000,000.
High $300 M, $300,000,000 USD
Low $ 400 K, $400,000 USD
Successful ERP Implementation Criteria
• Top Management Support• Good Cost Estimation• Realistic Expectations• ERP Implementation• Cultural Impact• Training• Customization and Integration
Additional ERP Resources
• SSA Global Technologies – www.ssaglobal.com• SAP – www.sap.com• Oracle/PeopleSoft – www.oracle.com• IBM -http://www-03.ibm.com/solutions/businesssolutions/erp• Microsoft (Great Plains) – www.microsoft.com• Also, American Software, i2, Manugistics