Enterprise Resource Planning

mywbut.com

ConceptERP is a set of tools and processes that integratesdepartment and functions across a company intoone computer system.

ERP runs off a single database, enabling variousdeptts to share information and communicate witheach other.

ERP system comprise function specific modulesdesigned to interact with other modules, e.g.accounts receivable, accounts payable purchasingetc.ERP is an enterprise reengg. solutions that uses newbusiness computing paradigms to integrate ITprocesses across co’s divisions and departments.mywbut.com

Evolution of ERPTimeline System Description1960s Inventory

Mgmt & control

It’s a combination of infr. tech, andbus processes of maintaining theappropriate level of stock in awarehouse.

1970s Material Req. Planning

Utilizes s/w applications forscheduling production processes.

1980s MRP II Utilizes S/w applications forcoordinating mfg processes.

1990s Enterprise Resource Planning

Uses multi module application s/wfoe improving the performance ofinternal bus, processes.

mywbut.com

What drives ERP ?

Business Customer satisfaction Business development Face competition Efficient processes

mywbut.com

Cross functional approach of ERP

Customer/Employee

ProductionPlanning

Integrated Logistics

Accounting andFinance

Sales, Distribution, order Management

Human Resources

mywbut.com

Components of ERP

ERP system is consists of two types ofcomponents Core components and Extendedcomponents.

CORE ERP COMPONENTS: CEC are the traditionalcomponents included in most ERP systems andthey primarily focus on internal operations.

EXTENDED ERP COMPONENTS: EEC are theextra components that meet the organizationalneeds not covered by the core components andprimarily focus on external operations.

mywbut.com

CORE & EXTENDED COMPONENTS OF ERP

Enterprise Resource Planning S/W

Accounting &FINANCE

Production & Materials Management Human Resource

Business Intelligence

Customer RelationshipManagement

Supply Chain Management E- Business

Core ERP Components

Extended ERP Componentsmywbut.com

Core ERP Components:-Accounting and Finance: A/cng and Finance

components manage a/cng data andmanage financial processes within theenterprise with functions as accountspayable, accounts receivable, assetsmanagement, credit management etc.

Production and material management: handlesthe various aspects of production planningand execution such as demand forecasting,product scheduling, quality control.

mywbut.com

Example of Production planning process of Grupo Farmanova Intermed, in Costa Rica…

Sales Forecasting

Operations Planning

Detailed Scheduling Materials requirement planning

Production Purchasingmywbut.com

Human Resource Components: Tracks employee’sinformation including payroll benefits,compensation, performance assessment, andassume compliance with legal requirements ofmultiple jurisdictions and tax authorities.

Extended ERP Components:-Business Intelligence: ERP system offers powerful

tools to measure and control organizationaloperations. BI describes the information peopleused to support their decision making efforts.

mywbut.com

Customer Relationship Management Component: involvesmanaging all the aspects of customer’s relationwith an organization to increase customer loyaltyand retention and organization’s profitability.

Supply Chain Management Components: involves themanagement of information flows b/w andamong stages in a supply chain to maximize totalsupply chain effectiveness and profitability.

E-Business Components: means conducting business onthe internet, not only buying and selling, but also

serving customer and collabrating with businesspartners. Two primary functions of E-Bus is E-Procurement and E-Logistics.

mywbut.com

Example of E-Business as ERP component of Orbis Corp. , Australia.

Retailer Supplier(Sony) Courier

AD Agency

Scanning HouseDigital ImageCatalog

User

Linear Process model Followed By Orbis Corp.

mywbut.com

After Introducing E-bus,the Orbis Business model is like

Product-bank.comHub

Printer

Sony

Nokia

Other

AD Agency 1 AD Agency 2

Other

Retailer 2

Retailer 1

mywbut.com

Basic advantages of ERP . The Direct advantages include improved Business Integration Efficiency Faster response Flexibility Better analysis and planning capabilities Use of latest technology

The Indirect benefits includes better corporate image, improved customer goodwill, customer satisfaction etc.

mywbut.com

Some of the quantitative benefits are: Reduced Inventory and inventory carrying

cost. Reduced manpower costs. Improved sales and customer service. Efficient financial management.Some of the qualitative benefits are: Accounting Product and process design Production and material management Sales MIS Function

mywbut.com

Why ERP is Important in a company?

mywbut.com

ERP in A company results

ERP effects almost all the organizations-irrespective of their size and nation.

Forces the competition to change theirstrategies.

Influence bus partners to become morecompetitive.

Improves the Profits. Fully utilize the true potential client-server

computing to deliver an enterprise product. Changes the nature of information systems

functions.mywbut.com

ERP Benefits

Integrate Financial Information Integrate Customer Order Information Standardize & Speed up manufacturing

Processes Reduce Inventory Standardize human resource information

mywbut.com

Benefits to Colgate Pamolive Order acquisition & processing reduced

from 2 days to 4 hrs On-time deliveries increased to 97.5%

from 91.5% Domestic inventories dropped by one -

third Receivables outstanding dropped to 22.4

days from 31.4 Total delivery cost per case reduced by

10% mywbut.com

Risks of ERP

mywbut.com

Data In 1999,Hershey missed customers(

walmart) as 3 mths behind schedule,trying to fix glitches in order-processing,shipping functions

Warehouses piled up with undeliveredgoods

III quarter sales dropped by 12.4% Earnings were off 18.6%

mywbut.com

Case study-Ambuja cements Launched Connect India Plus, which has

proved to be one of the most significant,large scale IT deployment. Connecting200 locations, training 2,500 end-users,and migrating data from 8 differentlegacy systems onto the ERP all in 14months flat

manufacturing plants are located inremote areas where the scope ofconnectivity was minimal, the resources,namely hardware, software and peoplewere located at plant sites mywbut.com

Reasons to implement uniform, standard, and ubiquitous system

across the organization(globally also) reduction in cost of operations and

maintenance of the IT system respond quickly to changes in the business

environment.

mywbut.com

Challenges faced Tech-multiple plants, each with their own

computer systems and processes, there was a need to create a single business blueprint across the organization.

People-integrate individuals with diverse background to be able to work as a focused team.

Processes- Infrastructure refreshes, Data migration

mywbut.com

After the successful implementation

improve operational efficiency in terms ofcycle-time monitoring

fleet management The information is dispatched to

customers via SMS

mywbut.com

Conclusion It is the right combination of technology,

architecture, functionality, active customersupport that provides max paybackpotential

For successful implementation it is imp toanticipate, handle & mitigate risks

Introduce new business processes,eliminate redundant practices

mywbut.com