Enterprise Resource Planning

ERP

How ERP Systems Works?

A typical ERP system would use multiple component of computer software and hardware to achieve integration

ERP delivers a single database that contains all data for the software module

Example of Activity ProcessIndustrial Engineering Faculty wants to buy a

new Printer.For this reason Secretary gives a purchasing

order by filling purchasing order forms.Next slide shows how this purchasing request

process flow was working before ERP systems.

New Printer Purchasing Process1. Purchase order form for a new printer

2. Head of Department Confirmation- Faculty Head

3. Purchase order document sent to E.M.U. Account Office

4. Account Office Secretary sents the purchase order to the Responsibles

5. Purchase order- Responsible personal Confirmation

6. Purchasing department- Manager Confirmation

7. Transfer to Finance Department Secretary for processing

8. Finance Department Responsible’s Confirmation

9. Transfer to Rector’s Office

10.Rector’s Secretary- Confirmation

11.Confirmation Transfer, to Purchase Department Secretary

12.Purchase Responsible personal commends with Purchase:

Secretary’s New printer application

Transfer to

Finance

Departmen

Transfer to Accounting Office

Transfer to Manager

Transfer to Accounting Office

Example: Before ERP Systems

After ERP SystemsSAP SYSTEM ONLINE

HEAD OF DEPARTMENTREQUEST OF NEW

HP PRINTERCONFIRMATION

SAP SYSTEM ONLINEPURCHASE

RESPONSIBLE

FINANCIAL ACCOUNTING

SAP SYSTEM ONLINE PURCHASEING MANAGER

CONFIRMATION

SECRETARY

SAP SYSTEM ONLINEFINANCE DEPARTMENT

CONFIRMATION SAP SYSTEM ONLINE

RECTORS OFFICECONFIRMATION

SAP SYSTEM ONLINEPURCHASE DEPARTMENT

PURCHASE OF NEW

HP PRINTER

Example Faculty Industrial Engineering Faculty wants to buy a

new HP Printer.For this reason Secretary gives a purchasing

order with using E.M.U. Online ERP systems.Next slide shows the purchasing order

process flow with ERP Systems.

Online Data Flow decreases the process time

Fast & Online ConfirmationLess PaperworkNo need for folder storageDatabase SecurityLess Employee needed Easy Financial ManagementBetter Inventory Management

In this real case there the benefits of the ERP systems

Chemical company before ERP Systems

Chemical Industry Business Process Goals

Enabling Efficient Processes and Reducing CostImprove visibility

Enable decision making with consolidated and relevant data (sense, learn, and respond) Provide consistent data across entities Obtain broad visibility of production status Ensure faster closing, get information to management daily

Become more responsive Ensure flexible response to demand changes in manufacturing and supply chain Distribute new plans to supply chain network Speed up cash-to-cash cycle Move toward real-time “sense and respond” capability

Simplify change Enable collaboration Move toward standard business processes Cooperate with external partners Easily manage mergers, acquisitions, and divestitures

Strategic Area For Improvement in Chemical Org.

Innovation Management

Business Issues:1. Meet regulatory & compliance

needs2. Manage capital investments3. Manage resources and stage

gate projects4. Visibility in development

activities5. Develop new markets6. Meet customer formulation

needs7. View of all R&D portfolio8. Cross functional communication

& planning9. Document product formulas10. Minimize R&D costs11. Knowledge retention

ERP Solution:1. Specification Management2. Recipe Management and Trials3. R&D Project Management4. Knowledge & Document5. Management6. Collaboration tools

Benefits:1. Faster time to market2. Streamlined Development Processes3. Minimize R&D spend4. Stronger program management5. Knowledge retention & sharing6. Easy regulatory compliance

Supplier CollaborationBusiness Issues:

1. Obtain total view of purchases

2. Evaluate vendor performance

3. Manage strategic & tactical sourcing

4. Minimize inventory5. Maintain standard catalog6. Minimize transaction costs7. Analyze all types of

purchases8. Control spending9. Manage contract compliance

ERP Solution:1. Contract management2. Vendor evaluation & monitoring3. Purchase order processing4. Delivery schedule processing5. Invoice processing6. Managing catalog content7. Purchasing statistics8. Material & service procurement9. Self service procurement

Benefits:1. Lower purchase prices2. Better purchasing leverage3. Stronger vendor commitment4. Better inter-plant coordination5. Less expedited shipments6. Standard parts7. Lower costs to procure

Supply Chain Planning & ExecutionBusiness Issues:

1. Globalization and low cost country sourcing drives complicated & expensive supply chain

2. Minimizing costs & wastes3. Rising transportation costs due to

tighter security and regulations4. Rising natural gas, raw material and

fuel Costs5. Managing and optimizing supply chain6. Global visibility of extended supply

chain activities7. Manage & evaluate vendors and

carriers

ERP Solution:1. Supply Chain Planning2. Material Requirements Planning3. Distribution Requirements Planning4. Vendor Managed Inventory (VMI)5. Inventory & Warehouse Management6. Shipping and transportation7. Commodity Management and Bulk

Logistics8. Physical inventory process9. Operations analytics

Benefits:1. Lower inventory 2. Lower logistics costs3. Higher service levels 4. Faster order-to-cash cycle5. More accurate planning36. Stronger S&OP process

ManufacturingBusiness Issues:

1. Pack and Make to order planning2. Understand plant capability3. Maintenance planning & control4. Accurate asset records5. Interface with plant control

systems6. Produce to plan7. Visibility of data8. Cost control and reporting

ERP Solution:1. Materials Requirements2. Planning (MRP) process3. Production planning, scheduling &

execution4. Batch management5. Subcontracting6. Shop floor integration7. Enterprise asset management8. Predictive maintenance9. Preventive maintenance10. Work order processing11. Shutdown management12. Failure mode analysis13. Work clearance management14. Mobile asset management

Benefits:1. Integrate production & planning2. Less inventory3. Longer production runs, increased

uptime4. Lower maintenance costs5. Faster maintenance shutdowns6. Integrated reporting

Sales & MarketingBusiness Issues:

1. Accurate customer data2. Efficient Order-to-Cash process3. Meet customer‘s service & delivery

needs4. Immediate Available to Promise5. Efficient price management6. Contract compliance7. Appropriate credit & collections

policies8. Product information9. Order status information

ERP Solution1. Contract management2. Inquiry & quotation management3. Sales order management4. Internet sales5. Availability check6. Billing & credit management7. Rebate processing8. Pricing, tax & text handling9. Product listing, substitution and

Exclusion10. Sales analytics11. Complaints processing12. Returns management & credit memos13. Quality assurance & control

Benefits:1. Integration of orders to production and

supply chain2. Higher order fill rates3. Lower cost to serve4. Smooth customer facing business

process5. Lower day sales outstanding6. Greater customer contract compliance7. Analyze complaint sources effectively

Quality Management & ComplianceBusiness Issues:

1. Product and process data accuracy and Transparency

2. 6 Sigma analysis and ISO requirements

3. Incoming quality tracing4. Process control tie-in5. Select to customer requests6. Plant capability vs. customer needs7. Regulatory compliance8. Protection of Worker

ERP Solution:1. Quality engineering2. Quality assurance and control

in3. purchasing, production & sales4. Quality improvement5. Audit management6. Product safety7. Waste management8. Dangerous goods movement9. Industrial hygiene & safety10. Substance Volume Tracking /

REACHBenefits:1. Better analysis of quality root cause issues2. Improved production and inventory quality profile, leading to lower

inventory3. Reduced risk of non-compliance and protection of brand value4. Reduced compliance costs through increased productivity

Enterprise Management & SupportBusiness Issues:

1. Single source of financial truth2. Corporate Governance & Financial

Reporting Standards3. Lack of internal control & visibility4. Minimize financial costs5. Inability to pinpoint most

profitable products, customers, Business Units

Benefits:1. Faster close process2. Better data visibility3. Insightful analytics4. Better cost and

segmented profit data5. Financial Compliance

ERP Solution:1. General Ledger Accounting2. Accounts Receivable3. Accounts Payable4. Bank Accounting5. Cash Journal Accounting6. Fixed Asset Accounting7. Inventory Accounting8. Tax Accounting9. Strategic Enterprise

Management & Analytics10. Managerial Accounting11. Cost & Profit Center Accounting12. Internal Order & Project

Accounting13. Product Costing14. Investment Management15. Profitability Analysis

Chemical company after ERP Systems

Finish

Anubhav Bharadwajanubhav.adman@gmail.com

www.essindia.com

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