ERP System and Current Practices

1
ERP System and Current Practices

• References
• Vernadat, Enterprise modeling and integration
• ???, ???????????
• Keller, SAP R/3 process-oriented implementation
• Oracle ERP training handouts
• Shtub, Enterprise Resource Planning

2
Drivers for Enterprise Integration
Lower customer loyalty
Lower price
More choices
Enterprise
Shorter product life cycle
Shorter time to market / customer
Better quality
Source ???, Supply chain management in Taiwans
mfg, in 1999 CALS/eBusiness????????
3
Enterprise System Integration Trend
CALS
SCP/SCM
System integration
GL
Extranet
EC
ERP
EDI
CIM
Supply chain integration
EIS
MRP?
MRP
CAD/CAM
POS
Individual enterprise integration
FIN
SFC
BOM
PUR
Partially integrated system
ACC
INV
EOS
Island system
Time
4
Inter-Enterprise Integration vs. Intra-Enterprise
Integration
5
Enterprise Integration Definition

• Enterprise integration is concerned with
  facilitating information, control, and material
  flows across organizational boundaries by
  connecting all the necessary functions and
  heterogeneous functional entities in order to
  improve communication, cooperation, and
  coordination within this enterprise so that the
  enterprise behaves as an integrated whole,
  therefore enhancing its overall productivity,
  flexibility, and capacity for management of
  change.
• The aims of enterprise integration are
• to enable communication among the various
  functional entities of the enterprise
• to provide interoperability of IT applications,
  and
• to facilitate coordination of functional entities
  for executing business processes

6
Enterprise Integration Migration Path
Business Objectives
Reference Models
Evaluation Criteria
Enterprise TO-BE State
Enterprise AS-IS State
Migration Path
Business Constraints
Modeling Formalism
Structured Approach
7
The Old ERP World
ERP was the Enabler of Intra-Enterprise
Integration
EDI
EDI
Supplier Network
Customer Network
Your Enterprise
8
e-ERP Model
9
e-Business Application Architecture
e-Supply Chain Management
Business Partners, Suppliers
Customers, Resellers
CRM
HRMS/ORMS
Employees
e-Supply Chain Information Backbone
Source ???, Paragon
10
Elements of Enterprise Information System

• Advanced planning and scheduling (APS)
• advanced system to provide from supply chain
  optimization to real-time shop floor control
• Enterprise resource planning (ERP)
• transactional backbone to ensure data integrity
  and best business processes
• Manufacturing execution system (MES)
• management of information related to the
  production processes to efficiently utilize
  resources (macro-level process control)
• Manufacturing control system (MCS)
• real-time control of the production processes
  (micro-level process control)
• Product data management (PDM)
• management of product data information across the
  enterprise

11
Functions of Enterprise Information System
Manufacturing Forecasting MPS MRP CRP
APS
ERP
Demand planning and Forecasting
Supply Planning
Finance
Supply Chain Strategic Planning
Distribution
Inventory Planning
Project Management
DRP Inventory Control Purchase Control
Sales and Operations Planning
Supply Chain Planning
Service Management
Distribution Planning
Transportation Management
Warehouse Management
Transportation Planning
Supply Chain Network Planning
Shipment Scheduling
Quality Assurance
Shop Floor Control
Shop Floor Operation Scheduling
PDM
Quality Management
Product Tracking Genealogy
Product Structure, BOM
Dispatching Production Unit
Engineering Change
Resource Allocation Status
Configuration Management
Maintenance Management
Document Control
CAD / CAM
Performance Analysis
Process Planning
MES
Process Control
Data Collection Acquisition
Labor Management
Manual Process Control
Supervisory Control and Data Acquisition
Programmable Logic Controller
Distribution Control System
MCS
Human Machine Interface
12
Interactions between ERP/APS and MES
13
Enterprise Resource Planning

• Enterprise transactional backbone to ensure data
  integrity and best business processes
• Using a single database streamlines the flow of
  information through a business
• Four main (M) functions
• Money (financial)
• Man (human resources)
• Manufacturing (production and logistics)
• Marketing (sales and distribution)

14
Need for an Integrated Database
Functions
Objects / Outputs Products
Pn
...
Pn-1
P1
P2
Sales / Marking
Primary requirements
Production
Demand for outsourced parts
Engineering
Reference units
Purchasing
Order for outsourced parts
...
Customer order
Accounts payable
Accounts receivable
Invoices
...
Production controlling
Sales / Marketing information system
Integrated database
Function-oriented data islands
Process Order processing
15
Enterprise Resource Planning
Managers and stakeholders
Reporting applications
Financial applications
Sales and delivery applications
Sales force and customer service reps
Customers
Central Database
Manufacturing applications
Back-office administrators and workers
Suppliers
Service application
Inventory and supply applications
Human resource management applications
Employees
16
Features of ERP Compared to MRPII

• Focus on external supply chain
• Client/server architecture (3 levels)
• Relationship database and SQL
• Graphic user interface
• Multiple database support
• Front-end systems for decision support
• Automated EDI
• Interoperability with multiple platforms
• Standard application programming interfaces

17
Client/Server Scalability
18
ERP Market Size in 2000-2005
Year Market Size(Million)
2000 33,619
2001 29,463
2002 30,203
2003 31,917
2004 34,157
2005 37,051

• Data source Gartner Group, 2002/10

19
Global ERP Information Service in 2000-2005
2000 2001 2002 2003 2004 2005
Software support 2,860 3,267 3,653 4,153 4,667 5,172
Consulting 4,154 3,648 3,816 4,071 4,255 4,602
Training 814 684 707 744 832 823
Development Integration 15,946 13,827 14,556 15,624 16,585 18,122
Outsourcing Management 2,346 2,539 2,631 2,871 3,322 3,700
Total 26,120 23,965 25,363 27,464 29,661 32,419

• Data source Gartner Group, 2002/10 (in million)

20
Global ERP Information Service Market Growth Rate
in 2000-2005
2001 2002 2003 2004 2005 01-05 CAGR
Software support 14 12 14 12 11 12.17
Consulting -12 5 7 5 8 5.98
Training -16 3 5 12 -1 4.74
Development Integration -13 5 7 6 9 7.00
Outsourcing Management 8 4 9 16 11 9.87
Total -8 6 8 8 9 7.85

• Data source Gartner Group, 2002/10

21
Global ERP Information Service Regional Market
Growth Rate in 2000-2005
Total 4.42
Eastern Europe 5.51
Japan 9.74
Rest of the world 0.3
Pacific Asia 9.58
Western Europe 4.29
Northern America 3.43
Latin America 4.97

• Data source Gartner Group, 2002/10

22
Global ERP Software Market
2000 2001 2002 2003 2004 2005
Manufacturing Management 3,192 2,147 1,931 1,757 1,774 1,824
Personnel Management 1,148 1,033 962 893 902 923
Financial Management 3,159 2,318 1,947 1,803 1,820 1,885
Total 7,499 5,498 4,840 4,453 4,496 4,632

• Data source Gartner Group, 2002/10 (in million)

23
??ERP????

• MRP
• ??
• ????
• ??
• ????
• ????

MRPII ?? ???? ?? ???? ????
ERP ?? ???? ?? ???? ????
EERP ??? ???? ???? ???? 1?1??
???? ???? ???? ???? ???? ????
24
2000-2003???ERP??????????????
1997 2.13
1998 4.68
1999 6.13
2000 7.72
2001 9.88
2002 12.65
2003 16.19
25
2000???ERP????????
?? 9
???? 31
???? 7
???? 8
???? 45
26
2000???1000????ERP????
????? 24
????? 13
????? 17
??? 46
27
2000???????ERP????
??? 50.2
??? 11.6
???? 38.2 (26 ??,74????)
28
SAP R/3 System
29
Oracle ERP System

• Planning
• Oracle Supply Chain Planning
• Oracle Rythmn
• Oracle Master Scheduling
• Oracle MRP
• Oracle Capacity
• Procurement
• Oracle Purchasing
• Oracle Payables
• Oracle Supplier Scheduling
• Oracle Web Suppliers
• Manufacturing
• Oracle Engineering
• Oracle Bills of Material
• Oracle Work in Process
• Oracle Cost Management
• Oracle Quality

• Distribution
• Oracle Order Entry
• Oracle Product Configurator
• Oracle Inventory
• Oracle Receivables
• Oracle Web Customers
• Front Office
• Oracle Sales Marketing
• Oracle Service
• Oracle Apps. Data Warehouse
• Oracle Sales Compensation
• Electronic Commerce
• Oracle EDI Gateway
• Oracle Alert
• Oracle Workflow
• Oracle Interoffice

• Finance
• Oracle General Ledger
• Oracle Cash Management
• Oracle Assets
• Oracle Financial Analyzer
• Oracle Project Costing
• Oracle Project Billing
• Oracle Prsl Time Expense
• Human Resources
• Oracle Human Resources
• Oracle Payroll
• Oracle Training Admin.
• Oracle Time Management
• Oracle Web Employees
• Process Manufacturing
• Oracle GEMMS

30
Oracle ERP Solutions
??????
???? ?? RCCP
????
????
????
???? ??
????
???? FCST
????
????? MPS
???? ?? MRP
????? MDS
????
????
???? ??
????
???? Discrete Repetitive Flow Project
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????? ?????
???? ????
???? ??
????
????
???? ?? CRP
31
Generic Functions in an Enterprise
Supporting
Logistics
Supplier
Sales Distribution
Customer
EIS / DSS
Procurement
Personnel DB
Acc. DB
Orders Processing
Customer Service
Supply Planning
Materials Planning
Purchase DB
Administration
Production Planing Scheduling
Orders DB
ATP Available to Promise
Parts DB
Inventory Management
Finance Control
HR Development
Orders Delivery
Operations Scheduling
Master Production Schedule
Product/Process Development
Production
WIP DB
Transportation Management
Manufacturing Execution
Product Data Management
CAD / CAE / CAx
Quality Management
Demand Planning
Shop Floor Control
Warehousing Management
SPC DB
Production Engineering
BOM DB
Distribution Management
Equipment Control
Warehousing DB
Plant Maintenance
Process Design
Facility DB
Source ???, Supply chain management in Taiwans
mfg, in 1999 CALS/eBusiness????????
32
Potential Functions in ERP
Supporting
Logistics
Supplier
Sales Distribution
Customer
EIS / DSS ERP
Procurement ERP
Personnel DB
Acc. DB
Orders Processing ERP
Customer Service ERP
Supply Planning
MPR ERP
Purchase DB
Administration ERP
Factory Planning
Orders DB
ATP ERP
Parts DB
Inventory Management ERP
FI CO ERP
HR ERP
Orders Delivery ERP
Operations Scheduling
SCP / MPS ERP
Product/Process Development
Production
WIP DB
Transportation Management
MES ERP
PDM ERP
CAD / CAE / CAx
QM ERP
Demand Planning ERP
Shop Floor Control
Warehousing Management
SPC DB
Production Engineering
BOM DB
Distribution Management
Equipment Control
Warehousing DB
PM ERP
Process Design
Facility DB
Source ???, Supply chain management in Taiwans
mfg, in 1999 CALS/eBusiness????????
33
Order Fulfillment Process

• The process is triggered by customers order.
• The process is aimed at fulfilling customers
  order to ensure the long-term success of the
  organization.

34
Design of Order Fulfillment Process

• Focus on Time, Cost, Flexibility, and Quality.
• The key design factor is the way production and
  purchasing orders are initiated.

35
Order Fulfillment Process Chart
36
Part I Outbound Logistics

• Order Management
• Order entry, order processing, order fulfillment
• Customer Service
• Customer management, sales support (post-sales
  service), sales returns
• Sales Marketing
• Sales planning, forecast, sales distribution
  system information, sales compensation, pricing
  discount management.

37
Order Management for e-Business
Goal Improve responsiveness customer service

• Demand from all sources
• Customer self service
• Configuration w/ guided selling
• Global order promising
• Advanced pricing deals
• Integrated fulfillment
• Tailorable user interface
• Flexible, high volume arch.

38
Oracle Order Entry
How It Fits In - Manufacturing and Distribution
Oracle Master Scheduling
OraclePurchasing
Internal Requisitions / Drop Shipment
Demand
Reservations Available to Promise
Invoices Credit Memos
OracleReceivables
Oracle Order Entry
Oracle Inventory
Order Fulfillment / Inventory Update
Customers Credit Profiles
ATO Configured Items
Discrete Work Orders
Automated Bill Structures
OracleWork in Process
OracleBills of Material
39
Customer Service

• Customer Management
• Define customers, sites and contacts
• Maintain customer information
• Define credit limits and limits per order
• Define customer agreement and payment

40
Customer Service

• Sales Support
• Identify service requirement
• Create sale and service employee plan
• Schedule service
• Sales Return
• Determine return materials process
• Receive and inspect returns
• Credit to customers

41
Sales and Marketing

• Sale Planning
• Plan sales quantity for groups of products
• Evaluate planned sales quantities with data
  (sales revenue, rebates, discount)
• Plan profitability
• Forecast
• Predict future price and demand
• Sales and Distribution Information System
• Gather, condense and evaluate data from sales

42
Sales Marketing

• Sales Compensation
• Pricing and Discount Management
• Create pricing list
• Define currency
• Change price structure
• Define discount program

43
Part II Production Logistics

• Production Planning
• Sales and operations planning, demand management,
  master planning (MPS), MRP, capacity planning,
  scheduling
• Inventory Control
• Inventory, WIP, logistics information system,
  warehouse management
• Shop Floor Control
• Product Process Development
• Engineering, BOM, routing, materials forecast
• Quality
• Planning, inspection, control, certification,
  notification.
• Plant Maintenance
• Preventive maintenance, maintenance order
  management, service management

44
Part III Inbound Logistics

• Procurement
• Purchasing
• Supplier Scheduling
• Receiving
• Invoice Certification
• Vender Management

45
Part IV Integrated Logistics

• Human Resources
• Organizational Management, Workforce Planning,
  Training Event Management, Recruitment, Time
  Management, Incentive Wages, Payroll, Travel,
  Personal Development.
• Financial Management
• Investment Management, Cash Management,
  Depreciation Simulation, Capital Measures.
• Accounting Management
• General Ledger, A/P, A/R, Legal Consolidation,
  Asset Management.

46
Part IV Integrated Logistics

• Cost Management
• Overhead Cost Controlling, Product Cost
  Controlling, Profitability analysis.
• IT Related Management
• E-commerce (Web employee, Suppliers, Customers),
  EDI, Workflow, Business Intelligence System
  (BIS), Exception System (alert).
• Project Management
• Planning, Budgeting, Execution, Costing,
  Information System.

47
ERP Implementation
48
Six Phases

• Definition
• Operations Analysis
• Solution Design
• Build
• Transition
• Production

49
Objective of Six Phases

• Definition Determine current and future business
  needs.
• Analysis Map business models to applications.
• Design Define solutions and architecture.
• Build Code and test solutions.
• Transition Train users, convert data, deploy
  systems.
• Production Maintain and evaluate system.

50
11 Processes

• Business Process Architecture
• Business Requirements Definition
• Business Requirements Mapping
• Application Technical Architecture
• Module Design Build
• Data Conversion
• Documentation
• Business System testing
• Performance Testing
• Adoption and Learning
• Production Migration

51
????? AIM
Application Implementation Methodology
???? ????????? Kick-Off Meeting
Implementation Strategy ????
??? ???? ????
Operation Analysis ????
???? (Training) ?????? (OA)
?????? (BRM) ?????? (Config.) ??????
(SOP) ????????
Solution Design ??????
?????? (SOP Walkthrough) ??????(CRP) ?????
Build ??????
Documentation ??????
?????? (Documentation)
Transition ????
???????? (End User Training) ???????? (End User
CRP) ?????? (Data Preparation)
???? (Production) ????? (Post Support)
On-Production ????
52
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53
Roles (38 totally)

• Client Executive
• Client project manager
• Client staff member
• IS manager
• System administrator
• Key users and users

• Project manager
• System Architect
• DBA and DBD
• Network Administrator
• Developer
• Business Analyst

54
Information Tech Infrastructure Selection Strategy

• Control desired control level of corporate
• Structure organizational structure and how
  tightly integrated should be
• Database desired structure and how accessible
• Customization modifications
• Best Practice industry practice

55
Implementation Generalized Industry Application

• Determine the goals and expected deliverables
  from project
• Scope of project
• Budget(20 hardware, 30 software, 10 education,
  30 consulting service, 10 others)
• Scheduling time of implementation
• Figuring out the required resource

56
Implementation Generalized Industry Application

• Selecting the team members
• Identifying the roles and leadership
• Understanding the process
• Eliminating the waste
• Change management
• Hardware and OS installation
• Attending System Training

57
Implementation Generalized Industry Application

• Exercising the whole system and testing the
  users understanding
• Setting up security and permissions
• Real parts specific pilot
• Beginning pilot
• Entering fixed and variable data
• Documenting policies and procedures
• Go live

58
??????????
1996
1998
Source Standish Group International, Inc.
59
????????(Critical Successful Factor)

• Commitment
• Participation
• Change
• Education Training
• Project Planning Control

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60
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ERP ????
61
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Your Company
Project
Software Vendor
ConsultingFirm
62
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Oracle PM
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63
??ERP????

• ????
• ????????????
• ??????, ?????? (Reengineering)
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