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ERP- Enterprise Resource Planning


Title: ERP- Enterprise Resource Planning Author: Acer Last modified by: ASHIS MITRA Created Date: 4/20/2009 12:36:15 AM Document presentation format – PowerPoint PPT presentation

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Title: ERP- Enterprise Resource Planning

ERP- Enterprise Resource Planning
  • Prepared for B. Com 4th Semester, 2012
  • St. Xaviers College

  • ERP systems provide an integrated suite of
    information technology applications that support
    the operations of an enterprise and are not, as
    the acronym ERP implies, limited to planning
  • The activities supported by ERP systems include
    all core functions of an enterprise, including
    financial management, human resources management,
    and operations.

What is ERP?
  • 1. It is an integrated multi-dimensional system
    for all functions.
  • 2. It is not merely the import and export of data
    across the functional modules. The integration
    ensures that the logic of a process that cuts
    across the function is captured genuinely. This
    in turn implies that data once entered in any of
    the functional modules (whichever of the module
    owns the data) is made available to every other
    module that needs this data.

  • 3. It seeks to standardize, streamline and
    integrate the various operations and information
    flows in a company by synergizing its resources,
    that is, men, material, money and machinery,
    through information technology.
  • 4. ERP allows information to enter at a point in
    the process and updates a single, shared database
    for all functions that directly or indirectly
    depend on this information.

  • 5. Integration takes place in real time and once
    placed into the system, the information is
    available in all the necessary forms through
    which it may be accessed throughout the system.
  • 6. Many of the processes implemented in an ERP
    software are core processes such as order
    processing, order fulfillment, shipping,
    invoicing, purchase order processing, preparation
    of Balance Sheet, Profit and Loss statement etc.,
    that are common to all industry segments.

  • 1. ERP can be defined as an integrated suite of
    application software modules, providing
    operational, managerial and strategic information
    for an enterprise to improve productivity,
    quality and competitiveness.
  • 2. ERP is package software solution that
    addresses the enterprise needs of an organization
    by integrating the various functions of an
    organization using a process view of the

Organisation before and after ERP
Major characteristics
1. Integration
  • It provides seamless integration of all the
    information flowing through a company financial
    and accounting, human resource information,
    supply chain information, and customer

2. Packages
  • Enterprise systems are not developed in house.
  • IS life cycle is different 1)mapping
    organizational requirements to the processes and
    terminology employed by the vendor and 2) making
    informed choices about the parameter setting.
  • Organizations that purchase enterprise systems
    enter into long-term relationships with vendors.
    Organizations no longer control their own

3. Assembly Requirement
  • Only the software is integrated, not the
    computing platform on which it runs. Most
    companies have great difficulty integrating their
    enterprise software with a package of hardware,
    operating systems, database management systems
    software, and telecommunications suited to their
    specific needs.

4. Best Business Practices
  • ERP vendors talk to many different businesses
    within a given industry as well as academics to
    determine the best and most efficient way of
    accounting for various transactions and managing
    different processes. The result is claimed to be
    industry best practices.

5. Evolving system
  • Enterprise Systems are changing rapidly.
  • Architecturally the changes are Mainframe,
    Client/Server, Web-enabled, Object-oriented,
    Componentization (Baan).
  • Functionally the changes are front-office (ie.
    Sales management), supply chain (advanced
    planning and scheduling), data warehousing,
    specialized vertical industry solutions, etc.

Levels of ERP
1. Planning
  • This level includes supply chain planning,
    manufacturing planning and other planning
    operations like budgeting and sales planning.

2. Execution
  • This level includes production systems (involving
    process modeling, statistical process control,
    inventory etc.) logistics (including order
    entry, shipping, transportation, etc.) and other
    activities like procurement, maintenance and
    human resources.

3. Analysis
  • This level includes costing (like product
    costing) financials (consisting of payables,
    receivables, general ledger, etc.) and other
    activities like sales analysis.

Benefits of ERP
1. Integration of financial information
  • Finance has its own set of revenue numbers, sales
    has another version, and the different business
    units may each have their own version of how much
    they contributed to revenues. ERP creates a
    single version of the truth that cannot be
    questioned because everyone is using the same

2. Integration of customer order information
  • By having all aspects of customer order
    information in one software system, rather than
    scattered among many different systems that can't
    communicate with one another, companies can keep
    track of orders more easily, and coordinate
    manufacturing, inventory and shipping among many
    different locations at the same time.

3. Standardisation and speeding up manufacturing
  • ERP systems come with standard methods for
    automating some of the steps of a manufacturing
    process. Standardizing those processes and using
    a single, integrated computer system can save
    time, increase productivity and reduce head

4. Reduction of inventory
  • ERP helps the manufacturing process flow more
    smoothly, and it improves visibility of the order
    fulfillment process inside the company. That can
    lead to reduced inventories of the stuff used to
    make products (work-in-progress inventory), and
    it can help users better plan deliveries to
    customers, reducing the finished good inventory
    at the warehouses and shipping docks.

5. Standardisation of HR information
  • Especially in companies with multiple business
    units, HR may not have a unified, simple method
    for tracking employees' time and communicating
    with them about benefits and services. ERP can
    fix that.

Enterprise potentials of ERP
1. Enterprise integration
  • ERP enables integration of different functional
    and geographically dispersed enterprise units
    through cross-functional, process-oriented and
    virtually integrated enterprise.

2. Business Process Reengineering
  • Business Process Reengineering is a pre-requisite
    for going ahead with a powerful planning tool,
    ERP. An in depth BPR study has to be done before
    taking up ERP. Business Process Reengineering
    brings out deficiencies of the existing system
    and attempts to maximize productivity through
    restructuring and re-organizing the human
    resources as well as divisions and departments in
    the organisation .

3. Standardization of systems and procedures
across the enterprise
  • Multiple business units of large companies can be
    standardized by using a single integrated system
    that can save time, reduce cost and increase

4. Business Networking Systems (BNS)
  • It is concerned with the exchange of business
    documents (like purchase orders, sales orders,
    invoicing and billing) electronically among
    business partners. ERP systems can easily be
    enhanced into BNS by combining them with Web
    technology using standards such as XML and EDI.

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Modules of ERP
  • 1. Financial modules These modules support the
    accounting and finance functions.
  • 2. Manufacturing and logistics modules These
    modules consist of a group of applications for
    planning production, taking orders and delivering
    products to the customer.
  • 3. Human resource modules These modules handle
    personnel related tasks for corporate managers
    and individual employees.

Phases of ERP implementation
The Chartering Phase
  • Comprises the decisions leading up to the funding
    of an enterprise system.
  • Key Players Vendors, Consultants, Company
    Executives, IT specialists.
  • Key Activities Build a business case for ERP,
    Select a software package, Identify a project
    manager, Approve a budget and schedule.

The Project Phase
  • Comprises the activities performed to get the
    system up and running in one or more
    organizational units.
  • Key Players Project Manager, Project team
    members, Internal IT specialists, Vendors, and
  • Key Activities Software configuration, system
    integration, testing, data conversion, training,
    and rollout.

The Shakedown Phase
  • The organization is coming to grips with the ERP
    System. Ends when normal operations have been
    achieved. (Or they give up and pull the plug on
    the system)
  • Key Players Project Manager, Project team
    members, Operational Managers, and End users.
  • Key Activities Bug fixing and rework, system
    performance tuning, retraining, staffing up to
    handle temporary inefficiencies.

The Onward and Upward Phase
  • Continues from normal operation until the system
    is replaced with an upgrade or a different
    system. This is where the organization is able to
    ascertain the benefits (if any) of its
  • Key Players Operational Managers, End-users, IT
    support personnel (Vendors and consultants may be
    involved upgrades)
  • Key Activities Continuous business improvement,
    additional user skill building, post
    implementation benefit assessment. Most of these
    activities are not performed.

What is SAP?
  • The original name for SAP was German Systeme,
    Anwendungen, Produkte, German for "Systems
    Applications and Products."
  • SAP is the leading Enterprise Information and
    Management Package worldwide. Use of this package
    makes it possible to track and manage, in
    real-time, sales, production, finance accounting
    and human resources in an enterprise.

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SAP Application Modules
  • (FI )Financial Accounting--designed for automated
    management and external reporting of general
    ledger, accounts receivable, accounts payable and
    other sub-ledger accounts with a user defined
    chart of accounts. As entries are made relating
    to sales production and payments journal entries
    are automatically posted. This connection means
    that the "books" are designed to reflect the real

  • (CO )Controlling--represents the company's flow
    of cost and revenue. It is a management
    instrument for organizational decisions. It too
    is automatically updated as events occur.
  • (AM )Asset Management--designed to manage and
    supervise individual aspects of fixed assets
    including purchase and sale of assets,
    depreciation and investment management.
  • (PS) Project System--is designed to support the
    planning, control and monitoring of long-term,
    highly complex projects with defined goals.
  • (WF) Workflow--links the integrated SAP
    application modules with cross-application
    technologies, tools and services

  • (IS) Industry Solutions--combine the SAP
    application modules and additional
    industry-specific functionality. Special
    techniques have been developed for industries
    such as banking, oil and gas, pharmaceuticals,
  • (HR) Human Resources--is a complete integrated
    system for supporting the planning and control of
    personnel activities.
  • PM Plant Maintenance--In a complex manufacturing
    process maintenance means more than sweeping the
    floors. Equipment must be services and rebuilt.
    These tasks affect the production plans.
  • (MM) Materials Management--supports the
    procurement and inventory functions occurring in
    day-to-day business operations such as
    purchasing, inventory management, reorder point
    processing, etc.

  • (QM) Quality Management--is a quality control and
    information system supporting quality planning,
    inspection, and control for manufacturing and
  • (PP )Production Planning--is used to plan and
    control the manufacturing activities of a
    company. This module includes bills of material,
    routings, work centers, sales and operations
    planning, master production scheduling, material
    requirements planning, shop floor control,
    production orders, product costing, etc.

  • (SD) Sales and Distribution--helps to optimize
    all the tasks and activities carried out in
    sales, delivery and billing. Key elements are
    pre-sales support, inquiry processing, quotation
    processing, sales order processing, delivery
    processing, billing and sales information system.