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Major topics Major topics

•Modules of ERP

••Human Resources ManagementHuman Resources Management

•• Financial ManagementFinancial Management

•• Inventory ManagementInventory Management•• Inventory ManagementInventory Management

••Quality ManagementQuality Management

•• Sales and DistributionSales and Distribution

by:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 2

••What is Business?What is Business?–– Not just buildings, machinery or money.Not just buildings, machinery or money.

–– Business is people who voluntarily come together Business is people who voluntarily come together

because they can do much more working because they can do much more working

together than they could work alone.together than they could work alone.

–– There are also people who work on their own There are also people who work on their own –– There are also people who work on their own There are also people who work on their own

known as Entrepreneurs.known as Entrepreneurs.

–– Land, labor and capital when combined in a Land, labor and capital when combined in a

rational way becomes productive.rational way becomes productive.

–– ERP Systems help the management by making ERP Systems help the management by making

the planning process more productive and the planning process more productive and

efficient.efficient. By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 3

•• In a non ERP situation! In a non ERP situation! –– Company receives a purchase orderCompany receives a purchase order

–– Order entry clerk enter the order detailsOrder entry clerk enter the order details

–– Order details passed on to the finished goods Order details passed on to the finished goods

inventory sectioninventory section

–– Inventory clerk will check whether the items Inventory clerk will check whether the items –– Inventory clerk will check whether the items Inventory clerk will check whether the items

ordered are available or not.ordered are available or not.

–– If items are available, the distribution If items are available, the distribution

department is notified, they will pack the item department is notified, they will pack the item

and send it to the customer.and send it to the customer.

By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 4

–– If the item is not in stock then the production If the item is not in stock then the production

planning department is notified, which in turn planning department is notified, which in turn

schedules the item for production.schedules the item for production.

–– The manufacturing department receives the The manufacturing department receives the

production plan and checks whether all the production plan and checks whether all the

items required to make the in the inventory.items required to make the in the inventory.

–– If not, the purchasing department is asked to If not, the purchasing department is asked to –– If not, the purchasing department is asked to If not, the purchasing department is asked to

procure raw materials.procure raw materials.

–– If the materials are available, then the production If the materials are available, then the production

department in association with the plant department in association with the plant

maintenance sets up the machines for maintenance sets up the machines for

production.production.


•• In In an an ERP situation! ERP situation! –– Order processing in an ERP SystemOrder processing in an ERP System

by:-Assist. Prof. Vijay Vora (ERP : 2: ERP and related Technology) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 6

–– Same activities happens differently in an ERP Same activities happens differently in an ERP

System.System.

–– As soon as order entry clerk, enters the order into As soon as order entry clerk, enters the order into

the system, the system clerk checks the inventory the system, the system clerk checks the inventory

records, and finds out whether the items are records, and finds out whether the items are

available or not.available or not.

–– If the items are available, procedures are If the items are available, procedures are –– If the items are available, procedures are If the items are available, procedures are

triggered automatically that will inform the triggered automatically that will inform the

people in the sales and distribution department people in the sales and distribution department

and finance department.and finance department.

–– The information will contain the details of the The information will contain the details of the

items shipped, the most economic route to the items shipped, the most economic route to the

customer and so on.customer and so on.By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 7

–– System System will trigger the procedures in the financial will trigger the procedures in the financial

module so that invoices are sent to the customer.module so that invoices are sent to the customer.

–– The information is transferred electronically The information is transferred electronically

through electronic data transfer and payments through electronic data transfer and payments

received through Electronic Funds transfer.received through Electronic Funds transfer.

–– If items are not available, then the production If items are not available, then the production

planning module makes a production schedule planning module makes a production schedule planning module makes a production schedule planning module makes a production schedule

which is available to the production, material which is available to the production, material

management and plant maintenance so that management and plant maintenance so that

everybody is prepared to start the production everybody is prepared to start the production

schedule.schedule.


•• FFunctional Modules of ERP Softwareunctional Modules of ERP Software–– All ERP packages contain many modules. The number and All ERP packages contain many modules. The number and

features of the modules vary with the ERP packages. features of the modules vary with the ERP packages.

–– Some of the most common modules available in almost all Some of the most common modules available in almost all packages are:packages are:

•• Financial moduleFinancial module

•• Manufacturing moduleManufacturing module

•• HR moduleHR module


•• HR moduleHR module

•• Materials management moduleMaterials management module

•• Production planning moduleProduction planning module

•• Plant maintenance modulePlant maintenance module

•• Purchasing modulePurchasing module

•• Marketing moduleMarketing module

•• Sales and distribution moduleSales and distribution module

1. Human Resources 1. Human Resources

ManagementManagementManagementManagement

•• IntroductionIntroduction–– Human Resources is another widely implemented Human Resources is another widely implemented

ERP module. ERP module.

–– HR module make more efficient the management HR module make more efficient the management of human resources and human capitals. of human resources and human capitals.

–– HR modules routinely maintain a complete HR modules routinely maintain a complete employee database including contact employee database including contact employee database including contact employee database including contact information, salary details, attendance, information, salary details, attendance, performance evaluation and promotion of all performance evaluation and promotion of all employees. employees.

–– Advanced HR module is integrated with Advanced HR module is integrated with knowledge management systems to optimally knowledge management systems to optimally utilize the expertise of all employees.utilize the expertise of all employees.


–– The different ERP systems offer many different The different ERP systems offer many different

subsub--systems under the HR umbrella.systems under the HR umbrella.

–– Listed below are some of the most common subListed below are some of the most common sub--

systems.systems.

••Personnel managementPersonnel management

••Organizational managementOrganizational management

••Payroll accounting Payroll accounting

•• Time managementTime management

••Personnel developmentPersonnel development


•• Personnel managementPersonnel management–– Personnel management includes numerous software Personnel management includes numerous software

components, which allow to deal with human components, which allow to deal with human resources tasks more quickly, accurately and resources tasks more quickly, accurately and efficiently.efficiently.

–– Personnel management includes..Personnel management includes..

•• Personnel administrationPersonnel administration––Information shared and administrate by Information shared and administrate by ––Information shared and administrate by Information shared and administrate by

multiple entities across organization.multiple entities across organization.

––This eliminates duplicate entries, the chance This eliminates duplicate entries, the chance for error and improves data accuracy.for error and improves data accuracy.

•• Employee Master DataEmployee Master Data––The HR module has a centralized database with The HR module has a centralized database with

integration to multiple components for integration to multiple components for processing employee information.processing employee information.


••Recruitment ManagementRecruitment Management

––This subsystem helps in hiring the right This subsystem helps in hiring the right

people with the right skills.people with the right skills.

•• Travel managementTravel management

––This module helps to process the travel This module helps to process the travel

expenses effortlessly in several currencies and expenses effortlessly in several currencies and

formats.formats.formats.formats.


••Benefits administrationBenefits administration

––This system bring flexibility and power to This system bring flexibility and power to benefits program.benefits program.

––As organizations continue to grow, as laws As organizations continue to grow, as laws change and employee requirements expand, change and employee requirements expand, organization need a flexible system to satisfy organization need a flexible system to satisfy all their requirements.all their requirements.

––The benefits administration component The benefits administration component ––The benefits administration component The benefits administration component provides the capabilities and flexibility to provides the capabilities and flexibility to effectively manage benefits programs for effectively manage benefits programs for diverse employee populations.diverse employee populations.

•• Salary AdministrationSalary Administration

––This function helps in simplifying the process This function helps in simplifying the process of rewarding employees of rewarding employees


••Organizational managementOrganizational management––With this module one can maintain an accurate With this module one can maintain an accurate

picture of organization’s structure.picture of organization’s structure.

–– It will assist in maintaining an accurate picture of It will assist in maintaining an accurate picture of organization’s structure, no matter how fast it organization’s structure, no matter how fast it changes.changes.

•• Payroll accounting Payroll accounting •• Payroll accounting Payroll accounting –– The payroll accounting system can fulfill the The payroll accounting system can fulfill the

payroll requirements and provide with the payroll requirements and provide with the flexibility to respond to changing needs.flexibility to respond to changing needs.

–– Payroll accounting should address payroll Payroll accounting should address payroll functions from a global pointfunctions from a global point--ofof--view.view.


•• Time managementTime management–– This module assists in simplifying the administration This module assists in simplifying the administration

and evaluation of time data.and evaluation of time data.

–– Time management is a powerful tool that helps to Time management is a powerful tool that helps to administer and evaluate data related to the administer and evaluate data related to the employees spend working.employees spend working.

–– This component can simplify efforts whether This component can simplify efforts whether organization uses centralized or decentralized data, organization uses centralized or decentralized data, to determine employees’ working hours.to determine employees’ working hours.organization uses centralized or decentralized data, organization uses centralized or decentralized data, to determine employees’ working hours.to determine employees’ working hours.

–– Time management module includes..Time management module includes..

• Shift planning

•Work schedules

• Time recording

•Absence determinationBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 18

•• Personnel developmentPersonnel development–– This function helps in selecting the best people This function helps in selecting the best people

and enhancing careers more effectively.and enhancing careers more effectively.

–– Effective personnel development planning Effective personnel development planning

ensures that the goals of the organization and the ensures that the goals of the organization and the

goals of the employee are in synchronization. goals of the employee are in synchronization. goals of the employee are in synchronization. goals of the employee are in synchronization.

–– The benefits of such planning include The benefits of such planning include

improvements in employee performance, improvements in employee performance,

employee potential, staff quality, working climate employee potential, staff quality, working climate

and employee morale.and employee morale.

–– “Training and Event Management” module “Training and Event Management” module

comes under the Personnel development modulecomes under the Personnel development moduleBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 19

•• Training and Event ManagementTraining and Event Management

––Every successful organization should plan Every successful organization should plan

the training and events faster then ever the training and events faster then ever

before.before.

––A good HR system will have features to A good HR system will have features to

assist with planning, managing and assist with planning, managing and

analyzing scheduled seminars, training analyzing scheduled seminars, training analyzing scheduled seminars, training analyzing scheduled seminars, training

courses, and business events.courses, and business events.


2. Financial Management2. Financial Management2. Financial Management2. Financial Management

•• IntroductionIntroduction–– A set of processes are required so that they can A set of processes are required so that they can

provide the financial information in the form that provide the financial information in the form that

is required by the useris required by the user

–– The financial application component of the ERP The financial application component of the ERP

provides the information of financial functionality provides the information of financial functionality provides the information of financial functionality provides the information of financial functionality

across the different business area.across the different business area.

–– The finance module of ERP also provides analysis The finance module of ERP also provides analysis

support to the business. support to the business.


–– The finance module of the most ERP system will The finance module of the most ERP system will

have the following subsystems:have the following subsystems:

1.1. Financial Accounting Financial Accounting

•• General LedgersGeneral Ledgers

•• Accounts Receivable / Payable, Accounts Receivable / Payable,

•• Fixed Asset AccountingFixed Asset Accounting

•• Legal Consolidation.Legal Consolidation.

2.2. Investment Management Investment Management

•• Investment Planning / Budgeting / Investment Planning / Budgeting /

Controlling,Controlling,

•• Depreciation Depreciation

Forecasting/Simulation/CalculationForecasting/Simulation/CalculationBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 23

3. Controlling 3. Controlling

•• Overhead Cost Controlling, Overhead Cost Controlling,

•• Activity Based Costing, Activity Based Costing,

•• Product CostProduct Cost

•• Cost Object ControllingCost Object Controlling

•• Profitability AnalysesProfitability Analyses

4. Treasury 4. Treasury

•• Cash Management, Cash Management, •• Cash Management, Cash Management,

•• Treasury Management, Treasury Management,

•• Market Risk Management,Market Risk Management,

•• Funds ManagementFunds Management

5. Enterprise Controlling 5. Enterprise Controlling

•• EIS, EIS,

•• Business Planning and Budgeting, Business Planning and Budgeting,

•• Profit Center AccountingProfit Center AccountingBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 24

1.1. Financial Accounting Financial Accounting

–– The financial accounting system objective is to The financial accounting system objective is to provide companyprovide company--wide control and integration wide control and integration of financial information which is required for of financial information which is required for strategic decision making.strategic decision making.

–– The Financial Accounting Module of an ERP The Financial Accounting Module of an ERP system, gives the ability to centrally track system, gives the ability to centrally track financial accounting data within an international financial accounting data within an international financial accounting data within an international financial accounting data within an international framework of multiple currencies, companies framework of multiple currencies, companies and languages. and languages.

–– EgEg: When raw material moves from inventory : When raw material moves from inventory into manufacturing, the system reduces into manufacturing, the system reduces quantity values in inventory and subtracts value quantity values in inventory and subtracts value for inventory account in the balance sheet.for inventory account in the balance sheet.


1.1 General Ledgers1.1 General Ledgers–– The general ledger is essential to both financial The general ledger is essential to both financial

accounting system and to strategic decision accounting system and to strategic decision making.making.

–– The general ledger supports all the functions The general ledger supports all the functions which are required in financial accounting system. which are required in financial accounting system.

–– The GL provides document parking, posting, The GL provides document parking, posting, reporting, and an integrated financial calendar for reporting, and an integrated financial calendar for automating periodic activities.automating periodic activities.automating periodic activities.automating periodic activities.

–– The output generated by the general ledger is the The output generated by the general ledger is the data summary that can be used in planning, data summary that can be used in planning, distribution and reporting.distribution and reporting.


1.2 Accounts Receivable / Payable1.2 Accounts Receivable / Payable–– ERP system provides a financial overview of ERP system provides a financial overview of

business partner relationships by maintaining business partner relationships by maintaining accounts payable & receivable.accounts payable & receivable.

–– These accounts are integrated with general ledger These accounts are integrated with general ledger and it is associated in sales and distribution & and it is associated in sales and distribution & material management.material management.

–– The accounts receivable and payable functions The accounts receivable and payable functions include:include:include:include:

• Internet Integration

• Document Management

• Automatic Integration with Cash Management

–– The module also provides, enterprise wide credit The module also provides, enterprise wide credit management with workflow integration.management with workflow integration.


1.3 Fixed Asset Accounting1.3 Fixed Asset Accounting–– This module manages the company’s fixed asset It This module manages the company’s fixed asset It

provides the detailed information on asset related provides the detailed information on asset related transactions.transactions.

–– The functions performed by this module are:The functions performed by this module are:

• Provides with depreciation charge.

• Support throughout the complete lifecycle of the asset.asset.

• Management of capital assets.

• Integration with Plant Maintenance for management of machinery and equipment.

–– Fixed Assets: It does not change. Fixed Assets: It does not change. EgEg: Land & : Land & BuildingBuilding

–– Current Assets: It keeps on changing. Current Assets: It keeps on changing. EgEg: Cash: CashBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 29

1.4 Legal Consolidation (merge).1.4 Legal Consolidation (merge).–– All the financial statements should be integrated All the financial statements should be integrated

effectively with the operational data.effectively with the operational data.

–– The legal consolidation helps in the direct data The legal consolidation helps in the direct data

transfer from individual statements into the transfer from individual statements into the

consolidated report. consolidated report.

–– The legal consolidation helps to create multiple The legal consolidation helps to create multiple –– The legal consolidation helps to create multiple The legal consolidation helps to create multiple

views of consolidated data and thus one can views of consolidated data and thus one can

generate separate reports for the different generate separate reports for the different

functions of an organization.functions of an organization.


2. Investment Management 2. Investment Management –– Investment management process starts from the Investment management process starts from the

planning of an organization till the settlement of an planning of an organization till the settlement of an organization.organization.

–– The investment programs are carried out in each and The investment programs are carried out in each and every department and it also tells the up to date every department and it also tells the up to date information about funds, plant cost and actual cost information about funds, plant cost and actual cost from external and internal activities. from external and internal activities. from external and internal activities. from external and internal activities.

–– The investment program allows to distribute budgets The investment program allows to distribute budgets which help to monitor the budget and avoid over which help to monitor the budget and avoid over run.run.

–– It also helps to manage and plan capital projects.It also helps to manage and plan capital projects.

–– The investment measures that need to be monitored The investment measures that need to be monitored are done from time to time according to the internal are done from time to time according to the internal order.order.


3. Controlling 3. Controlling –– This module gathers the functions required for This module gathers the functions required for

effective internal cost accounting. effective internal cost accounting.

–– It offers a flexible information system, with It offers a flexible information system, with

standard reports and helps in analysis.standard reports and helps in analysis.

•• Overhead Cost ControllingOverhead Cost Controlling•• Overhead Cost ControllingOverhead Cost Controlling–– The over head cost controlling system The over head cost controlling system

focuses on monitoring and the allocation of focuses on monitoring and the allocation of overheads.overheads.

•• Cost Cost center Accountingcenter Accounting–– It analyses where the overheads have It analyses where the overheads have

occurred in the organization. occurred in the organization. By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 32

•• Overhead OrdersOverhead Orders

–– This system collects and analyses costs and This system collects and analyses costs and

also checks and monitors the budget that also checks and monitors the budget that

has been assigned.has been assigned.

•• Activity based CostingActivity based Costing

–– This module gives a response to the growing This module gives a response to the growing –– This module gives a response to the growing This module gives a response to the growing

need for monitoring and controlling crossneed for monitoring and controlling cross--

departmental business processes.departmental business processes.

•• Product cost controllingProduct cost controlling

–– It determines the cost arising from It determines the cost arising from

manufacturing a product or providing a manufacturing a product or providing a

service.service.By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 33

•• Cost Object ControllingCost Object Controlling

–– This module helps in monitoring the This module helps in monitoring the

manufacturing orders.manufacturing orders.

–– Follow up calculations determine and Follow up calculations determine and

analyze the variances between actual analyze the variances between actual

manufacturing cost, and the plan cost manufacturing cost, and the plan cost

resulting from product cost planning. resulting from product cost planning. resulting from product cost planning. resulting from product cost planning.

•• Profitability AnalysesProfitability Analyses

–– Profitability analysis subsystem examines Profitability analysis subsystem examines

the sources of returns.the sources of returns.


4. Treasury 4. Treasury –– The organization can gain a significant competitive The organization can gain a significant competitive

advantage by efficiently managing the short term, advantage by efficiently managing the short term, medium term and long term payment flows and medium term and long term payment flows and managing the risk.managing the risk.

–– All these operating divisions are linked so that the All these operating divisions are linked so that the financial transactions can be planned and these financial transactions can be planned and these positions in treasury have a significant impact on the positions in treasury have a significant impact on the organizations success.organizations success.organizations success.organizations success.

–– The treasury component provides us with the following The treasury component provides us with the following sub components:sub components:

•• Cash ManagementCash Management

•• Treasury ManagementTreasury Management

•• Market Risk ManagementMarket Risk Management

•• Funds ManagementFunds ManagementBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 35

5. Enterprise Controlling5. Enterprise Controlling–– Enterprise controlling comprises of those functions Enterprise controlling comprises of those functions

that will optimize sharethat will optimize share--holder value, while meeting holder value, while meeting internal objectives for growth and investment.internal objectives for growth and investment.

–– This module includes:This module includes:

•• Executive Information System (EIS)Executive Information System (EIS)–– It provides an overview of the critical information It provides an overview of the critical information

necessary to manage the organization. necessary to manage the organization. necessary to manage the organization. necessary to manage the organization.

–– It integrates data from other ERP components It integrates data from other ERP components and nonand non-- ERP data sources both inside and ERP data sources both inside and outside the enterprise. outside the enterprise.

–– DrillDrill-- down reporting and report portfolio are down reporting and report portfolio are available to evaluate and present the data. available to evaluate and present the data.


•• Business Planning and Budgeting, Business Planning and Budgeting, –– Business Planning and Budgeting Business Planning and Budgeting

supports the management team of supports the management team of business units and groups in the business units and groups in the calculation of business targets such as calculation of business targets such as return on investment.return on investment.

•• Profit Center AccountingProfit Center Accounting–– It analyzes the profitability of internal It analyzes the profitability of internal –– It analyzes the profitability of internal It analyzes the profitability of internal

responsibility centers. responsibility centers.

–– All business transactions in financial All business transactions in financial accounting, material management, asset accounting, material management, asset management ,and sales and distribution , management ,and sales and distribution , which affects profit, are automatically which affects profit, are automatically reflected in profit center accounting.reflected in profit center accounting.


3. 3. Material Material ManagementManagement3. 3. Material Material ManagementManagement

•• IntroductionIntroduction––The Material Management module The Material Management module

optimizes all purchasing processes with optimizes all purchasing processes with workflowworkflow--driven processing functions.driven processing functions.

–– It also enables It also enables

•Automated supplier evaluations, •Automated supplier evaluations,

• Lower procurement cost,

•Warehousing costs with accurate inventory,

•Warehouse management,

• Integrates invoice verification, etc…By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 39

–– The main modules of the Material Management The main modules of the Material Management

module are:module are:

••PrePre-- Purchasing Activity. Purchasing Activity.

••Purchasing. Purchasing.

••Vendor Evaluation. Vendor Evaluation.

•• Inventory management.Inventory management.•• Inventory management.Inventory management.

•• Invoice verification and material Invoice verification and material

inspection.inspection.


•• PrePre-- Purchasing Activity. Purchasing Activity. –– This system supports the complete cycle of This system supports the complete cycle of

tenderstenders

–– It also contract and acceptance of services and It also contract and acceptance of services and

also include maintaining a service master also include maintaining a service master

database, in which the descriptions of all services database, in which the descriptions of all services

that are to be procured can be stored. that are to be procured can be stored. that are to be procured can be stored. that are to be procured can be stored.


–– The steps that are followed in the preThe steps that are followed in the pre--purchasing purchasing

activity are shown in the diagram that follows:activity are shown in the diagram that follows:


•• Purchasing. Purchasing. –– Purchasing is a very important component of the Purchasing is a very important component of the

material management module.material management module.

–– It supports all the phases of material It supports all the phases of material

management, material planning and control, management, material planning and control,

purchasing, goods receiving, inventory purchasing, goods receiving, inventory

management and invoice verification.management and invoice verification.management and invoice verification.management and invoice verification.

–– Good communication between all parties in the Good communication between all parties in the

procurement process is necessary for purchasing procurement process is necessary for purchasing

to function smoothly.to function smoothly.


–– Purchasing communicates with other modules in the Purchasing communicates with other modules in the system to ensure a constant flow of information. system to ensure a constant flow of information.

–– For example it works sideFor example it works side--byby--side with the following side with the following modules : modules :

• Cost Accounting System

• Financial Accounting,

• Sales and distribution


•• Vendor Evaluation. Vendor Evaluation. –– The vendor evaluation component has been The vendor evaluation component has been

completely integrated into the Material completely integrated into the Material

Management module. Management module.

–– Information such as delivery dates, prices and Information such as delivery dates, prices and

quantities can be taken from purchase orders. quantities can be taken from purchase orders.

–– Vendor Evaluation also uses data from Quality Vendor Evaluation also uses data from Quality

Management, such as the results of incoming Management, such as the results of incoming

inspections or quality audits.inspections or quality audits.


–– The The vendor evaluation system supports the vendor evaluation system supports the optimization of the procurement process in the case optimization of the procurement process in the case of both material and service.of both material and service.

–– By evaluating vendors, one can improve enterprises By evaluating vendors, one can improve enterprises competitiveness. competitiveness.

–– Most of the vendor evaluation systems offers a Most of the vendor evaluation systems offers a pointpoint--based evaluation system, based on certain based evaluation system, based on certain selection criteria. selection criteria.

–– Most systems have their own preMost systems have their own pre--defined set of defined set of –– Most systems have their own preMost systems have their own pre--defined set of defined set of criteria, but will allow the usercriteria, but will allow the user--defined set of criteria defined set of criteria also.also.

–– Using these criteria, the performance of the vendors Using these criteria, the performance of the vendors is measured and points are given.is measured and points are given.

–– The main criteria that are usually used are price, The main criteria that are usually used are price, quality, delivery, service and support, replacement of quality, delivery, service and support, replacement of returns, lead time and so on.returns, lead time and so on.


•• Inventory management.Inventory management.–– Inventory management systems allows to manage stocks Inventory management systems allows to manage stocks

on a quantity and value basis, plan, enter and check any on a quantity and value basis, plan, enter and check any goods movements.goods movements.

–– The user can easily obtain an overview of the current The user can easily obtain an overview of the current stocks of any given material.stocks of any given material.

–– For each material not only are the stocks in the warehouse For each material not only are the stocks in the warehouse shown , but also the stocks ordered but not yet delivered, shown , but also the stocks ordered but not yet delivered, reserved for production or for customer, and the stocks in reserved for production or for customer, and the stocks in reserved for production or for customer, and the stocks in reserved for production or for customer, and the stocks in quality inspection can be monitored.quality inspection can be monitored.

–– Special stocks from the vendor or from the customer are Special stocks from the vendor or from the customer are managed separately from the company’s own stock managed separately from the company’s own stock

–– Most inventory management systems support inventory Most inventory management systems support inventory methods like periodic inventory, continuous inventory, methods like periodic inventory, continuous inventory, inventory sampling and cycle counting. inventory sampling and cycle counting.


•• Invoice verification and material Invoice verification and material

inspection.inspection.–– The invoice verification component is part of the The invoice verification component is part of the

material management system. material management system.

–– It provides the link between materials It provides the link between materials

management components and the financial management components and the financial management components and the financial management components and the financial

accounting, controlling and asset accounting accounting, controlling and asset accounting

components.components.

–– Invoice verification does not handle the payment Invoice verification does not handle the payment

or the analysis of invoices. or the analysis of invoices.

–– The information required for these processes is The information required for these processes is

passed on to other departments.passed on to other departments.By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 48

4. Quality Management4. Quality Management4. Quality Management4. Quality Management

•• IntroductionIntroduction–– The ISO9000 series of standards defines the The ISO9000 series of standards defines the

functions of quality management and the functions of quality management and the

–– elements of a quality management systemelements of a quality management system

–– Quality Management in ERP is 100% configurable Quality Management in ERP is 100% configurable module. module.

–– This module allows a wide variety of characteristics This module allows a wide variety of characteristics and parameters to be specified in the standard and parameters to be specified in the standard and parameters to be specified in the standard and parameters to be specified in the standard inspection operation and maintain an extensive inspection operation and maintain an extensive history to improve product quality and identify history to improve product quality and identify recurring problems.recurring problems.

–– ERP Quality Management allows the quality ERP Quality Management allows the quality department to define its own quality test cases department to define its own quality test cases required at different stage of production, beginning required at different stage of production, beginning from quality check required during the inward of from quality check required during the inward of raw materials.raw materials. By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 50

•• CAQ and CIQCAQ and CIQ–– CAQ : ComputerCAQ : Computer--Aided Quality ManagementAided Quality Management

–– CIQ : ComputerCIQ : Computer--integrated Quality Management integrated Quality Management

–– The requirements for quality management The requirements for quality management system changed as a result of the quality system changed as a result of the quality standards like ISO 9000 standards, and the term standards like ISO 9000 standards, and the term ComputerComputer--aided quality Management must also aided quality Management must also ComputerComputer--aided quality Management must also aided quality Management must also rere--defined.defined.

–– ComputerComputer--integrated Quality Management (CIQ) integrated Quality Management (CIQ) is more appropriate term in comparison to is more appropriate term in comparison to ComputerComputer--Aided Quality Management (CAQ), Aided Quality Management (CAQ), because an isolated CAQ system cannot carry out because an isolated CAQ system cannot carry out the complete tasks of a quality management the complete tasks of a quality management system.system. By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 51

•• Quality Management ModuleQuality Management Module--

FunctionsFunctions–– The quality Management module fulfills the The quality Management module fulfills the

following functions:following functions:

1. Quality planning

2. Quality Inspection 2. Quality Inspection

3. Quality Control


•• ComputerComputer--integrated Quality Management integrated Quality Management –– The integration of Quality Management in the ERP The integration of Quality Management in the ERP

systems considerable advantages because only an systems considerable advantages because only an integrated system can support all the elements of a integrated system can support all the elements of a quality management system.quality management system.

–– The Quality Management module is integrated with The Quality Management module is integrated with the master data and processes of the following the master data and processes of the following applications:applications:

• Materials management • Materials management

–(purchasing, inventory management, warehouse management, material requirements planning).

• Production

–( work scheduling, shop floor control)

• sales and distribution

–( delivery, creation of quality certificates)By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 53

5. Sales and Distribution5. Sales and Distribution5. Sales and Distribution5. Sales and Distribution

•• IntroductionIntroduction––With today’s business environment characterized With today’s business environment characterized

by growing competition decrease cycle times and by growing competition decrease cycle times and the accelerating speed of technological innovation the accelerating speed of technological innovation companies are increasingly being forced to make companies are increasingly being forced to make more efficient business processes.more efficient business processes.

–– Here, increased efficiency in sales and distribution Here, increased efficiency in sales and distribution –– Here, increased efficiency in sales and distribution Here, increased efficiency in sales and distribution is a key factor to insure that companies retain a is a key factor to insure that companies retain a competitive edge and improve both profit margins competitive edge and improve both profit margins and customer service.and customer service.

–– The sales and distribution module very actively The sales and distribution module very actively interacts with the material management and interacts with the material management and financial accounting modules for delivery and financial accounting modules for delivery and billing.billing.


––Sales related business transactions are :Sales related business transactions are :

• Sales queries, such as inquiries and

quotations

• Sales orders

•Outline agreements, such as contracts

and scheduling agreements and scheduling agreements

•Delivery/Shipment

• Invoicing/Billing

•After sales support


–– During sales order processing, the following basic During sales order processing, the following basic functions are carried out: functions are carried out:

• Inquiry handling

• Quotation preparation and processing

• Contracts and contract management(order management)

• Monitoring the sales transactions

• Checking for availability

• Transferring requirements to material • Transferring requirements to material planning(MRP)

• Scheduling the delivery

• Calculating pricing and taxes

• Checking credit limits

• Invoicing/Billing

• Creating printed or electronically transmitted documents (confirmations and so on)


–– Sub system of sales and distribution module:Sub system of sales and distribution module:

••Master data management Master data management

••Order managementOrder management

••Warehouse management Warehouse management

••Shipping Shipping

••Billing Billing ••Billing Billing

••Pricing Pricing

••Sales support Sales support

••Transportation Transportation

••Foreign tradeForeign tradeBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 58

(Murlidhar Group of Institutions,Bhavnagar

Road , Rajkot)59

••Master data management Master data management –– Every company will have products, customers and Every company will have products, customers and

will require raw materials and will have suppliers.will require raw materials and will have suppliers.

–– The task of the Master data management module The task of the Master data management module

is to keep information about all these entities, so is to keep information about all these entities, so

that these can be made available to the decision that these can be made available to the decision that these can be made available to the decision that these can be made available to the decision

makers and also for the automatic generation of makers and also for the automatic generation of

reports, contracts, invoices and so on.reports, contracts, invoices and so on.

–– In addition to sales and distribution, other In addition to sales and distribution, other

departments of the company, such as departments of the company, such as

accounting or materials management access the accounting or materials management access the

master data.master data.By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 60

••Order managementOrder management––This module includes..This module includes..

•• Sales order management and Sales order management and

••purchase order managementpurchase order management

–– It also supports the entire sales and purchase It also supports the entire sales and purchase –– It also supports the entire sales and purchase It also supports the entire sales and purchase

processes from start to finish.processes from start to finish.


•• Sales order management and Sales order management and

•Applications in sales order management

represents a company’s most important

point of contact with the customer.

• These applications allow a company to

manage sales operations quickly and manage sales operations quickly and

efficiently and provide comprehensive

solutions for the management of

quotes, orders, contracts, prices, and

customer discounts.

•• purchase order managementpurchase order managementBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 62


Road , Rajkot)63

•• Purchase order managementPurchase order management• Purchase order management is increasingly

essential in more competitive business environment because it enables a company to make the correct purchase decisions about quality and price, where quality refers to supply lead-time as well as to the (to be purchased) product itself.

Purchase order management includes online • Purchase order management includes online requisitioning, centralized contract management, just in time schedules and vendor management.

• Purchase order Analysis enables historical as well as statistical data to be used to assist in the analysis of purchase activities.



Road , Rajkot)65

••Warehouse management Warehouse management –– This module provides real time information about This module provides real time information about

inventory levels across the enterprise and tools to inventory levels across the enterprise and tools to manage the daily operational needs of singlemanage the daily operational needs of single--site site or multipleor multiple--site warehouses.site warehouses.

–– Components of a good warehouse management Components of a good warehouse management application include the following:application include the following:

•• Inventory PlanningInventory Planning•• Inventory PlanningInventory Planning

•• Inventory handlingInventory handling

•• Intelligent location assignmentIntelligent location assignment

•• Inventory reportingInventory reporting

•• Inventory analysisInventory analysis

•• Lot controlLot control

•• Distribution data collectionDistribution data collectionBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 66

•• Inventory PlanningInventory Planning

–Comprises of planned inventory movements, so

that customers receive right order in the right

quantity at the right time.

•• Inventory handlingInventory handling

–Allows for monitoring of all warehouse order

scenarios such as the receipt, issue and transfer of scenarios such as the receipt, issue and transfer of

inventory.

•• Intelligent location assignmentIntelligent location assignment

–Used to create intelligent storage put away lists.

•• Inventory reportingInventory reporting

–This function permits full visibility of inventory at

single or multiple sites. By:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 67

•• Inventory analysisInventory analysis–This module enables the analysis of

information that result from warehousing activities and the use of feedback in process optimization.

•• Lot controlLot control–This facility offers lot tracking and tracing, so that

a company can trace all the raw materials and a company can trace all the raw materials and the finished goods that its products require.

••Distribution data collectionDistribution data collection–This is an essential element in paperless

warehousing that provides the communication link between storage and shipping systems and warehousing equipment like bar coding scanners.


•• Shipping Shipping –– The shipping module supports the functions:The shipping module supports the functions:

•• Monitoring dates of orders due for deliveryMonitoring dates of orders due for delivery

•• Creating and processing deliveriesCreating and processing deliveries

•• Planning and monitoring work lists, for shipping Planning and monitoring work lists, for shipping activities.activities.

•• Monitoring material availability and processing Monitoring material availability and processing outstanding orders.outstanding orders.outstanding orders.outstanding orders.

•• Selection (can be linked to the Warehouse Selection (can be linked to the Warehouse Management System)Management System)

•• Packing deliveries.Packing deliveries.

•• Information support for transportation planning.Information support for transportation planning.

•• Support for foreign trade requirements.Support for foreign trade requirements.

•• Printing and sending shipping output Printing and sending shipping output

•• Data update in goods issueData update in goods issueBy:-Assist. Prof. Vijay Vora (ERP : 3: Modules of ERP) MCA-I(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 69

––The shipping Process:The shipping Process:


•• Billing Billing –– A business transaction is completed for Sales and A business transaction is completed for Sales and

Distribution once it has been billed. Distribution once it has been billed.

–– The ERP systems support billing functions like The ERP systems support billing functions like issuing of invoices on the basis of goods and issuing of invoices on the basis of goods and services, issuing of credit and debit memos services, issuing of credit and debit memos based on corresponding requests and based on corresponding requests and based on corresponding requests and based on corresponding requests and Performa invoices, canceling billing transactions, Performa invoices, canceling billing transactions, giving rebates, transferring billing data to giving rebates, transferring billing data to Financial Accounting, Purchasing and so on. Financial Accounting, Purchasing and so on.

–– The billing system is integrated with the other The billing system is integrated with the other modules like Financial Accounting, so that the modules like Financial Accounting, so that the documents are automatically generated.documents are automatically generated.


•• Pricing Pricing –– The term pricing is used broadly to describe the The term pricing is used broadly to describe the

calculation of prices (for external use by calculation of prices (for external use by customers or vendors) and costs (for internal customers or vendors) and costs (for internal purposes, such as cost accounting). purposes, such as cost accounting).

–– The pricing module keeps the information about The pricing module keeps the information about the prices of the various items, the details about the prices of the various items, the details about the quantity discounts, the discounts to the the quantity discounts, the discounts to the the quantity discounts, the discounts to the the quantity discounts, the discounts to the different customer categories and so on and different customer categories and so on and enables the organization to generate enables the organization to generate documents like quotations, delivery notes, documents like quotations, delivery notes, invoices and so on. invoices and so on.

–– Also, since this information is available to all the Also, since this information is available to all the sales people, they can make better decisions thus sales people, they can make better decisions thus improving the sales performance.improving the sales performance.


••Sales support Sales support ––The Sales Support component helps the The Sales Support component helps the

sales and marketing department to support sales and marketing department to support existing customers and, at the same existing customers and, at the same time, to develop new business. time, to develop new business.

––Sales Support provides an environment Sales Support provides an environment ––Sales Support provides an environment Sales Support provides an environment where all sales personnelwhere all sales personnel—— both the field both the field sales people and the staff in the sales sales people and the staff in the sales officeoffice——can contribute to and access can contribute to and access valuable information about customers, valuable information about customers, sales prospects, competitors and their sales prospects, competitors and their products, and contact people.products, and contact people.


•• Transportation Transportation –– The transportation functionality fulfills the The transportation functionality fulfills the

requirements in the areas of transportation requirements in the areas of transportation planning and processing, for both inbound planning and processing, for both inbound and outbound shipments.and outbound shipments.

––One can control and monitor the entire One can control and monitor the entire transportation process from the planning transportation process from the planning transportation process from the planning transportation process from the planning stage right through to the dispatch of stage right through to the dispatch of the goods from shipping point (outbound the goods from shipping point (outbound shipment) or the vendor location (inbound shipment) or the vendor location (inbound shipment) and their arrival at the customer shipment) and their arrival at the customer location (outbound shipment) or one's own location (outbound shipment) or one's own plant (inbound shipment).plant (inbound shipment).


•• Foreign tradeForeign trade–– In domestic and in international trade, person In domestic and in international trade, person

has to strictly follows the laws and regulations. has to strictly follows the laws and regulations.

–– The growing tendency towards the formation of The growing tendency towards the formation of trade areas is a further challenge to a company trade areas is a further challenge to a company operating on, a worldwide basis. operating on, a worldwide basis.

–– The entire logistics chain, from the import of The entire logistics chain, from the import of raw materials, finished and unfinished goods, to raw materials, finished and unfinished goods, to raw materials, finished and unfinished goods, to raw materials, finished and unfinished goods, to the sale of goods and the transfer of the sale of goods and the transfer of data to materials management and data to materials management and financial accounts, is significantly influenced by financial accounts, is significantly influenced by foreign trade activities. foreign trade activities.

–– These main tasks in foreign trade processing can These main tasks in foreign trade processing can be carried out using the foreign' trade system.be carried out using the foreign' trade system.


(By:(By:--Assist. Prof. Vijay L. Vora ) (SOOADM MCAAssist. Prof. Vijay L. Vora ) (SOOADM MCA--III) 2011III) 2011(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot)(Murlidhar Group of Institutions, Bhavnagar Road , Rajkot) 76

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