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ERP MODULES

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Title: ERP MODULES


1
CHAPTER 5
ERP MODULES Alexis Leon
2
ERP MODULES
  • Finance
  • Manufacturing and Production Planning
  • Sales and Distribution
  • Plant Maintenance
  • Quality Management
  • Materials Management

3
Financial Module
  • Financial Accounting (General Ledger, Accounts
    Receivable, Accounts Payable, Fixed Assets)
  • Investement Management (Investment
    Planning/Budgeting/Controlling, Depreciation
    Forecast/Simulation/Calculation)
  • Controlling (Overhead Cost Controlling, Activity
    Based Costing, Product Cost Accounting,
    Profitability Analysis)
  • Treasury (Cash Management, Treasury Management,
    Market Risk Management, Funds Management)
  • Enterprise Controlling (Executive Information
    System, Business Planning and Budgeting, Profit
    Center Accounting)

4
FINANCIAL ACCOUNTING ? General Ledger
  • General Ledger
  • General Ledger produces the enterprises
    financial statements including the Balance Sheet,
    which shows the enterprises assets, liabilities
    and equity at a point in time, the Income
    Statement, which shows the enterprises income,
    expenses and net profit over a period of time,
    the Cash Flow Statement which shows sources and
    applications of cash, and associated financial
    reports such as the Trial Balance. The rest of
    the reports are there to track the numbers on the
    financial statements back to individual
    transactions. Most businesses prepare monthly
    statements. Every ERP package has a General
    Ledger module.
  • General Ledger is unusual in that it receives
    transactions from many other modules. There are
    two ways to accomplish this Detail and
    Summarized. In the detail method, every invoice,
    check, or other such transaction creates a
    separate General Ledger transaction. The
    advantage of this is that the General Ledger is
    continuously updated in real time so the entire
    set of ERP tables is in sync. The disadvantage is
    that there are large numbers of transactions. In
    the summarized method, transactions are
    accumulated for some period (typically a day) and
    posted in summary. Instead of many small
    transactions, there is a few big ones. The
    advantage is that there are far fewer
    transactions. The disadvantage is that the
    General Ledger is out of sync with the rest of
    the ERP until the data is posted.

General Ledger has the following functions Maintain Chart of Accounts Maintain Budgets Maintain Recurring Transactions Print Financial Statements Print Trial Balance Allocate Transactions Consolidate Transactions Periodic Processing Maintain Module Information
5
FINANCIAL ACCOUNTING ? General Ledger
6
FINANCIAL ACCOUNTING ? Accounts Payable
  • Every enterprise purchases goods, services,
    assets, or office supplies from its suppliers
    (also known as vendors). Accounts Payable pays
    these suppliers on time (taking advantage of
    payment discounts if possible) while avoiding
    duplicate payments and bank over-drafts. Accounts
    Payable is the last step in the supply chain
    where Purchasing is the first. Accounts Payable
    accepts invoices, selects invoices to be paid,
    generates checks and forecasts future cash
    requirements based on due dates. Some AP checks
    are issued to people or organizations that are
    not worth putting on file since they are likely
    to receive only one check. Some enterprises
    prepay part of the invoice amount because the
    supplier requires a deposit. Every ERP has an
    Accounts Payable module.
  • Transactions
  • The first transaction records a supplier invoice.
    This can be verified against the related purchase
    order if there is one and the receiving report
    that lists what goods were actually received. Not
    every enterprise uses the last two options.
  • The second transaction pays supplier invoice(s).
    Each check can pay one or more supplier invoices.
    Invoices must be approved for payment before they
    can be paid.
  • The vast majority of the module's transactions
    consist of the above two. The third fundamental
    transaction is that of adjustment when things go
    wrong.

7
FINANCIAL ACCOUNTING ? Accounts Receivable
  • Every business sells products and/or services to
    its customers. Order Entry creates invoices when
    a customer orders something and Accounts
    Receivable keeps track of what payments have been
    made to which invoices. Commonly, it also
    prepares a report ("Aged Analysis") which shows
    how long each invoice has been outstanding. Every
    ERP has an Accounts Receivable module.
  • Collection
  • If Accounts Receivable invoices become overdue,
    Collection initiates processes to collect the
    money. Usually this means a telephone call
    followed by a series of dunning letters of
    increasing severity. If these efforts fail, Legal
    may become involved or the invoice may be written
    off, or sold to a collection agency for a
    fraction of its face value. As part of CRM,
    details of each contact with the customer
    including date, employee, contact person, and
    activity are stored in Customer.
  • Transactions
  • The first transaction records an invoice. This is
    done by Order Entry/Invoicing rather than
    Accounts Receivable.
  • The second transaction records a customer
    payment. One customer payment can pay one or more
    invoices. Payment can be in cash, by debit card,
    credit card, or check. Somethimes payments are
    received without information about what invoices
    are being paid.
  • The vast majority of the module's transactions
    consist of the above two. The third fundamental
    transaction is that of adjustment when things go
    wrong.

8
FINANCIAL ACCOUNTING ? Asset Accounting
  • A "fixed asset" is something the enterprise has
    purchased that has a useful life of more than one
    year. Fixed Assets keeps track of all these
    objects and allocates part of their purchase
    price to each year of their life. There are a
    variety of ways in which this allocation can be
    done. For some assets, the allocation or
    "depreciation" is specified by law. Not all ERP
    packages have a Fixed Assets module.
  • Fixed Assets has the following functions
  • Maintain Asset Information
  • Enter Transactions
  • Generate Depreciation
  • Maintain Module Information

9
FINANCIAL MODULE-INVESTMENT MANAGEMENT
(Investment Planning/Budgeting/Controlling,
Depreciation Forecast/Simulation/Calculation)
  • Every enterprise has a reserve of funds. As the
    enterprise grows larger, the total reserve
    becomes larger and larger. Eventually, it is
    large enough that it is prudent for the
    enterprise to invest part of it to gain a higher
    rate of return than would be possible in a
    checking account. These investments include GICs,
    mutual funds, stocks, bonds, and other investment
    options. Investment Manager keeps track of these
    investments. Only large ERP packages have an
    Investment Manager module.
  • Investment Manager has the following functions
  • Maintain Investment Information
  • Enter Transactions
  • Print Investment Summary
  • Maintain Module Information

10
FINANCIAL MODULE - CONTROLLING (Overhead Cost
Controlling, Activity Based Costing)
  • Controlling
  • The controlling system gathers the functions
    required for effective internal cost accounting.
    lt offers a versatile information system, with
    standard reports and analysis paths for the most
    common questions. In addition, there are features
    for creating custom reports to supplement
    standard reports.
  • Overhead Cost Controlling
  • Many organizations erience a signin t increase in
    the percentage of indirect costs, which cannot be
    directly assigned to either the products
    manufactured, or to the services rendered. While
    cost monitoring and optimisation may be quite
    advanced in production areas, transparency is
    often lacking in overhead cost areas. The
    Overhead Cost Controlling sub system focuses on
    monitoring and allocation of overheads.
  • Cost Centre Accounting
  • Cost centre accounting analyses where overheads
    occur within the organization. Costs are assigned
    to the sub-areas of the organization where they
    originated. The system offers a wide variety of
    methods for allocating posted amounts and
    quantities. In particular, activity accounting
    permits, the allocation of great many costs to
    products, based on cost sources and enabling
    assignments, which were not previously possible.

11
FINANCIAL MODULE - CONTROLLING (Overhead Cost
Controlling, Activity Based Costing,
  • Overhead Orders
  • Overhead orders subsystem collects and analyses
    costs, based on individual internal measures.
    This system can monitor and automatically check
    budgets assigned to each measure.
  • Activity-Based Costing
  • The goals of the entire organization, should come
    before the goals of individual departments, when
    it comes to business process reengineering. The
    Activity-Based Costing module, is a response to
    the growing need for monitoring and controlling
    cross-departmental business processes. in
    addition to functions and products. Seeing costs
    from a new perspective, substantially enhances
    organizational transparency in overhead areas.
    The system automatically determines the
    utilisation of business processes by products,
    customers, and other cost objects based on the
    cost drivers taken from the integrated accounting
    environment. This, signiiicantly reduces the
    effort involved in maintaining a business process
    model in a separate system.
  • Product Cost Controlling
  • Product Cost Controlling module determines, the
    costs arising from manufacturing a product, or
    providing a service. Plan and standard values,
    serve in valuating warehouse stock and for
    contrasting revenues received with costs. In
    addition, the values in Product Cost Controlling.
    are crucial for determining the lowest price
    limit for which a product is profitable.
    Simulations illustrate the effects of changes in
    production methods on the cost of goods
    manufactured.
  • Cost Object Controlling
  • Cost object controlling helps you monitor
    manufacturing orders. Integration with the
    logistics components results in a logistical
    quantity flow, that provides instant information
    on actual cost object costs, allowing ongoing
    costing calculations at any time. Follow-up
    calculations determine and analyse the variances
    between actual manufacturing costs, and the plan
    costs resulting from Product Cost Planning.
  • Profitability Analysis
  • Profitability analysis subsystem examines the
    sources of returns. As part of sales controlling,
    Profitability Analysis is the last step in
    cost-based settlement, where revenues are
    assigned to costs according to the market
    segment. You can dehne any market
    segment-distinguishing, for example, between
    products, customers, orders, sales organizations,
    distribution channels and business areas-and
    evaluate it, according to contribution and
    revenue margins. information from Profitability
    Analysis, frames important decisions in areas
    such as determining prices, selecting customers,
    developing conditions and choosing distribution
    channels.

12
FINANCIAL MODULETreasury (Cash Management,
Treasury Management)
  • Cash Management
  • To anlyse financial transactions for a give
    period. It also records future developments for
    purposes of financial budgeting.
  • Treasury Management
  • It offers functions for managing financial deals
    and positions, from trading to transferring data
    to Financial Accounting.

13
FINANCIAL MODULETreasury (Market Risk
Management, Funds Management)
  • Market Risk Management
  • It acts as an integrated central risk control
    station with monitoring and management
    functions.s
  • Funds Management
  • It supports Funds Management Process from
    budgeting all the way through to payments,
    including monitoring expenditures, activities,
    resources and revenues.

14
FINANCIAL MODULEEnterprise Controlling
(Executive Informaiton Systems, Business
Planning and Budgeting, and Profit Center
Accounting)
  • Executive Information Systems
  • It integrates data from Financial Components,
    other ERP Components, and non-ERP data sources
    both inside and outside the enterprise.
  • Business Planning and Budgeting
  • It supports Business Units and Groups in the
    calculation of business targets, such as return
    on investment. It also supports central
    investment planning, budget release and tracking.
  • Profit Center Accounting
  • All business transactions in Financial
    Accounting, Material Management, Asset
    Management, and Sales / Distribution, which
    affect profits, are automatically reflected in
    Profit Center Accounting

15
SALES AND DISTRBUTION
16
SALES AND DISTRBUTION
MAIN MODULES 1. Master Data Management 2. Order
Management 3. Warehouse Management 4. Shipping 5.
Billing 6. Pricing 7. Sales Support 8.
Transportation 9. Foreign Trade
17
SALES AND DISTRBUTION Master Data Management
Master Data 1. Trading Community Architecture
Customer, Supplier, Employee 2. Products 3.
Salespersons 4. Sales Territory
18
SALES AND DISTRBUTION Order Management Sales
Order Management
19
SALES AND DISTRBUTION Order Management
Purchase Order Management
20
SALES AND DISTRBUTION Warehouse Management
1. Inventory Planning 2. Inventory Handling 3.
Inventory Location, Assignment 4. Inventory
Reporting 5. Inventory Analysis 6. Lot Control 7.
Distribution Data Collection
21
SALES AND DISTRBUTION Shipping
22
SALES AND DISTRBUTION Billing
1. Invoice 2. Debit and Credit Memo 3. Proforma
Invoices 4. Rebates
23
SALES AND DISTRBUTION Pricing
1. Price Quotations 2. Discounts (Quantity,
Payment Terms etc.)
24
SALES AND DISTRBUTION Sales Support
1. Price Quotations 2. Discounts (Quantity,
Payment Terms etc.)
25
SALES AND DISTRBUTION Transportation
1. Inward Outward Movement of Goods 2.
Transportation Planning and Processing
26
MANUFACTURING
27
MANUFACTURING Material and Capacity Planning
1. Material 2. Labor Resources 3. Plant
Machinery
28
MANUFACTURING Shop Floor Control
1. Shop Orders 2. Work Orders 3. Backward and
Forward Scheduling
29
MANUFACTURING Quality Management
1. Shop Orders 2. Work Orders 3. Backward and
Forward Scheduling
30
MANUFACTURING Cost Management
1. Costing Methods a) Weighted Average b)
Standard c) LIFO d) FIFO 2. Product Cost
31
MANUFACTURING Serialization/Lot Control
1. Lot Control / Batches 2. Serialization / LPN
(License Plate Number)
32
HUMAN RESOURCES
1. Personnel Management (HR Master Data,
Personnel Administration, Recruitment, Travel
Management, Benefits administration, Salary
administration) 2. Organizational Management
(Organizational Structure, Staffing Schedules,
Job Descriptions, Planning Scenarios, Personnel
Cost Planning) 3. Payroll Accounting (Gross / net
Accounting, History Function, Multi-Currency
Capability, International Solutions) 4. Time
Management (Shift Planning, Work Schedules, Time
Recording, Absence Determination) 5. Personnel
Development (Career and Succession Planning,
Profile Comparisons, Qualifications Assessments,
Additional Training Determination, Training and
Event Management)
33
HUMAN RESOURCES Personnel Management
Personnel Administration Shared Employee
Information HR Master Data Core HR Data a)
Job b) Position c) Grade d) Employee Master
Information Recruitment Automated Hiring
Process (Manage Open Positions, Applicant
Screening, Selection, Hiring, Correspondence,
Reporting, and Cost Analysis) eHiring Travel
Management Travel Approval to Travel Expense
Report Benefits administration Define Benefits,
Enroll Employees, Cost/Benefit Simulations Salary
administration Salary Review Process, Manpower
Costing
34
HUMAN RESOURCES Organizational Management
Graphical Organization Charts Staffing
Schedules by headcount, percentage, and working
hours Work Center Descriptions Job Tasks and
Description
35
HUMAN RESOURCES Payroll Accounting
Centralized / Decentralized Payroll Apply
Business Rules Country Specific Payroll
(Language, Currency, and Regulatory Requirements)
36
HUMAN RESOURCES Time Management
Attendance System Leave System
Overtime/Late Sitting System Shift Planning
(Manage Staff Shortage and Excess)
37
HUMAN RESOURCES Personnel Development
Comparison of Qualification and Profile
Training Need Analysis Training Schedules
38
PLANT MAINTENANCE
Preventive Maintenance Control Equipment
Tracking Component Tracking Plant Maintenance
Calibration Tracking Plant Maintenance Warranty
Claims Tracking
39
PLANT MAINTENANCEPreventive Maintenance Control
Planning, Scheduling, and Control of facilities
and Equipment Monitoring by a) Hours of
Operation b) Units of Production Produced c)
Gallons of Fuel Consumed d) Number of Days in
operation since the last service level
40
PLANT MAINTENANCEEquipment Component Tracking
Acquisition and Utilization History Asset
Management Identification of Chronic Problems
41
PLANT MAINTENANCEPlant Maintenance Warranty
Claims Tracking
Establish Type and Length of Warranty History
of Warranty Maintenance
42
QUALITY MANAGEMENT
1. Quality Planning (Management of basic data
for quality planning and inspection planning,
Material Specifications, Inspection Planning) 2.
Quality Inspection (Trigger Inspections,
Inspection Processing with inspection plan
selection and sample calculation, Print shop
papers for sampling and inspection, record
results and defects, make the usage decision and
trigger follow-up actions) 3. Quality Control
(Dynamic sample determination on the basis of the
quality level history, application of statistical
process control techniques using quality control
charts, Quality Scores for inspection lots,
Quality notifications for processing internal or
external problems and initiating corrective
action to correct the problems, Inspection lot
processing and problem processing)
43
QUALITY MANAGEMENTComputer Integrated Quality
Management (CIQ)
Material Management (Purchasing, Inventory
Management, Warehouse Management, Material
Requirements Planning) Production (Work
Scheduling, Shop Floor Control) Sales and
Distribution (Delivery, Creation of Quality
Certificates)
44
MATERIALS MANAGEMENT
  • Pre-Purchasing Activities
  • Purchasing
  • Vendor Evaluation
  • Inventory Management
  • Invoice Verification and Material Inspection

45
MATERIALS MANAGEMENTPre-Purchasing Activities

46
MATERIALS MANAGEMENTPurchasing Activities
  • Purchasing Integration with other modules
  • Cost Accounting System
  • Financial Accounting System
  • Sales and Distribution

47
MATERIALS MANAGEMENTVendor Evaluation
  1. Deliver Date, Prices etc. ? Purhcase Order
  2. Quality Results ? Quality Management
  3. Lead Times ? Material Planning

48
MATERIALS MANAGEMENTInventory Management
  1. Maintenance of Stock
  2. Quantity
  3. Value

49
MATERIALS MANAGEMENTInvoice Verification and
Material Inspection
  1. 2 Way ? PO Quantity
  2. 3 Way ? PO Quantity Receive Quantity
  3. 4 Way ? PO Quantity Receive Quantity
    Inspection Quantity
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