enterprise resource planning ppt @ bec doms

1Chapter 9: Enterprise Resource

Planning

Chapter 9:

Enterprise Resource Planning


Planning

Introduction


Planning

Elf Aquitaine

Diversified French company with interests in petroleum products, chemicals, and pharmaceuticals.

Experiencing problems with the flow of critical information across and within its 12 business units.

Ordering and production, and sales forecasting and budgeting were not integrated with one another.


Planning

Elf Aquitaine continued

Compounding the problem, each of the 12

business units developed a unique approach

for tracking and reporting financial data.

To address these problems and better integrate

the flows of data, Elf Atochem decided to

implement SAP’s R/3 ERP system.


Planning


Elf Atochem chose to focus on four key

processes: materials management, production

planning, order management, and financial

reporting, rather than trying to implement

ERP across the entire organization.

Decided to implement the system in one

business unit at a time.


Planning


Using this phased implementation approach,

Elf Atochem was able to roll out its ERP

system ahead of schedule and under budget.

The primary benefit Elf Atochem has

achieved is that it now has the real-time

information needed to link sales and

production planning.


Planning

National Semiconductor

National Semiconductor’s CIO, has a rather

non-traditional view of the role of IT.

Rather than viewing IT as a support function,

IT is part of the business that creates

technology solutions that in turn position the

company to capitalize on business

opportunities.


Planning

National Semiconductor continued

Maintaining the existing legacy systems left little

time or money for new systems development.

National decided to focus its efforts on three key

areas: purchasing, inventory management, and

maintenance management.

Considered adopting SAP’s R/3 system.

In the end National chose IFS as its ERP vendor.


Planning

MRP for Dependent Demand


Planning

MRP for Dependent Demand: Background

Independent Demand

automobiles, televisions, cartons of ice cream

demand often occurs at constant rate

Dependent Demand

most raw materials, components, and subassemblies

demand often occurs in lumps

Materials Requirements Planning (MRP)

designed when lumps in demand are known about before

hand


Planning

Constant and Lumpy Demands


Planning

Relationship Between Finished Item Inventory and Raw

Material/Subassembly Item Inventory (ROP)


Planning

Relationship Between Finished Item Inventory and Raw

Material/Subassembly Item Inventory (MRP)


Planning

The Boardsports Company

Component Lead Time

Sidewalk Special 1 week

Fiberglass board 3 weeks

W heel assembly 1 week

W heel mount stand 4 weeks

W heel 1 week

Locknut 1 week

Spindle 2 weeks


Planning

Skateboard Product Tree


Planning

Material Requirements of Sidewalk

Special

Fiberglass boards: 1number of specials

Wheel assemblies: 2

number of specials

Wheels: 2 number of

wheel assemblies

Spindles: 1 number of

wheel assemblies

Locknut: 2 number of

wheel assemblies

Wheel mount stand: 1

number of wheel


Planning

Material Required to Produce 50 Sidewalk

Specials

Fiberglass boards: 1 number of specials = 1 50 = 50

Wheel assemblies: 2 number of specials = 2 50 = 100

Wheels: 2 number of wheel assemblies = 2 100 = 200

Spindles: 1 number of wheel assemblies =1 100 = 100

Locknut: 2 number of wheel assemblies = 2 100 = 200

Wheel mount stand:

1 number of wheel assemblies = 1 100 = 100


Planning

Delivery 50 Sidewalk Specials in Week 10

1 2 3 4 5 6 7 8 9 10

Sidewalk Specials 50

Date needed 50

Boards Order date 50

Date needed 100

Wheel assembly Order date 100

Date needed 200

Wheels Order date 200

Date needed 100

Spindles Order date 100

Date needed 100

Mounting stands Order date 100

Date needed 200

Locknuts Order date 200

Week

3 week lead time


Planning

Time-Scaled Assembly Chart for

Skateboard


Planning

The Mechanics of MRP


Planning

Primary Inputs to MRP System

Master Production Schedule

Bill of Materials File

Inventory Master File


Planning

Schematic of MRP System


Planning

Master Production Schedule

Based on actual customer orders and

predicted demand

Indicates when each ordered item will be

produced


Planning

Bill of Materials (BOM)

Indicates all the raw materials, components,

subassemblies, and assemblies required to

produce an item

Shows way a finished product or parent item

is put together from individual components

Parent item shown at highest level or level

zero


Planning

Bill of Materials continued

Parts that go into parent item are called level 1

components and so on

Production planners explode BOM for level

zero item to determine the number, due dates,

and order dates of subcomponents


Planning

Product Structure Tree


Planning

Inventory Master File

Detailed information regarding the quantity of each

item, on hand, on order committed to use in various

time periods

MRP system using inventory master file to

determine the quantity available for use in a given

period

If sufficient items not available, the system includes

the item on the planned order release report


Planning

Low-Level Coding

Original product tree

structureLow-level-coded product tree

structure


Planning

MRP System Outputs

Order Action Report

which orders are to be released and canceled

during the current time period

Open Orders Report

which orders to expedite or deexpedite

Planned Order Release Report

time-phased plan for orders to be released in

future time periods


Planning

MRP Computations

Process all items in BOM level-by-level

For each item at a level

determine time phased gross requirements

subtract on-hand and on-order amounts from gross

requirements to determine net requirements

apply lot-sizing rule to determine lot size

offset the order release for lead time yielding time-

phased planned order releases


Planning

MRP Computations continued

Net requirements for planning period = gross requirements

for planning period - planned on hand at planning period

Planned on hand at planning period = current on hand +

scheduled receipts prior to planning period - scheduled

requirements prior to planning period


Planning

MRP Computations continued

Zero-LevelWeek 1 2 3 4 5 6 7 8 9 10 11 12

Gross requirements 50 150 50 100 100

On hand 400 400 400 350 350 350 200 200 200 150 50 50 50

Net requirements -- -- -- -- -- -- -- -- -- -- -- 50

Planned order receipts 50

Planned order releases 50

Lead time = 3 weeks

Level 1Week 1 2 3 4 5 6 7 8 9 10 11 12

Gross requirements 50 200

On hand 50 50 50 100 100 100 100 100 100 100 50 100

Net requirements 150

Planned order receipts 50

Planned order releases 250

Lead time = 4 weeks


Planning

MRP Extensions


Planning

Capacity Requirements Planning

Capacity Using Overall Factors

production standards used to convert MPS into

loads on each work center

loads assumed to fall in same period as finished

goods in MPS

Bills of Capacity

same as capacity using overall factors but instead

of using historical ratios, uses the BOM and

routing sheets


Planning

Enterprise Resource Planning (ERP)

MRP II extends MRP systems to share

information with other functional areas

Key component of MRP II is storing

operational information centrally

ERP systems seek to integrate all business

activities and processes throughout the

organization

Goal is to provide real-time information to all

employees that need it


Planning

Typical ERP System


Planning

The ERP Industry

Forrester Research estimates that the overall

market for ERP software and services was

$21 billion in 2004.

Estimates are overall spending on ERP

systems will increase 4.2% annually through

2008, spending on maintenance will increase

at almost double this rate, or 7% annually

through 2008.


Planning

Figure 9.12 Market share (based on 2004 revenues) of five top ERP

vendors.

SAP, 44.0%

Oracle, 24.6%

Sage Group,

6.1%

Microsoft, 3.4%

SSA Global,

3.3%

Other, 18.7%


Planning

Implementing ERP Systems

Key drivers for the strong interest in ERP

include:

The desire to standardize and improve business

processes.

The desire to integrate the organization’s existing

information systems.

The need for better and more timely information.

The need to comply with Sarbanes-Oxley.


Planning

Implementing ERP Systems continued

One to three years to implement an ERP system.

Actual costs of implementing an ERP are driven by a number of factors including:

The number of employees that will be using the system.

The number of modules that will be implemented.

The extent to which the organization attempts to integrate its ERP system with an internal intranet.

How much the organization’s processes must be modified to conform with the ERP system.

The amount of consulting and training required

The extent to which the organization’s existing data must be converted to conform to the data requirements of the new ERP system.


Planning

Implementation Approaches

The “Big Bang” approach: this approach organizations implement the new ERP system all at once and scrap their existing legacy systems.

The “United Federation” approach: this approach business units/divisions are free to implement independent systems but common processes such as financial reporting are linked across the enterprise.

The “Test the Waters” approach: focus of this approach is on a few key processes.


Planning

CopyrightCopyright John Wiley & Sons, Inc. All rights reserved.

Reproduction or translation of this work beyond that named in Section

117 of the United States Copyright Act without the express written

consent of the copyright owner is unlawful. Requests for further

information should be addressed to the Permissions Department, John

Wiley & Sons, Inc. Adopters of the textbook are granted permission to

make back-up copies for their own use only, to make copies for

distribution to students of the course the textbook is used in, and to

modify this material to best suit their instructional needs. Under no

circumstances can copies be made for resale. The Publisher assumes no

responsibility for errors, omissions, or damages, caused by the use of

these programs or from the use of the information contained herein.

enterprise resource planning ppt @ bec doms

Documents

inventory management

finished item inventory

production planning

business units

materials management

saps r3 erp system

business opportunities

order management