ENTERPRISE RESOURCE PLANNING

WHAT IS ERP ?

Enterprise Resource Planning systems (ERPs) integrate all data and processes of an organization into a unified system.

A typical ERP system will use multiple components of computer hardware and software to achieve the integration.

A key ingredient of most ERP systems is the use of a unified database to store data for various system modules.

KEY COMPONENTS

DATABASE

APPLICATIONS

BUSINESS MGTPRACTICES

INFORMATION TECHNOLOGY

ERP systems are large computer systems that integrate application programs in accounting , sales (i.e., order booking), manufacturing (i.e. product shipping) and the other functions in the firm.   This integration is accomplished through a database

shared by all the application programs. 

ERP HISTORY IN DEPTH

The first software that was designed to assist the manufacturing process happens to be the MRP (Material Resource Planning) in the year 1975.

This was followed by another advanced version namely MRP2 which is the acronym for Manufacturing Resource Planning.

None of them yielded benefit of ERP.

DRAWBACKS OF MRP SYSTEMS

These Software's were helpful in manufacturing processes only.

Their benefits do not extend to other sectors.

The MRP solutions did not render the expected results due to exorbitant costs and practical work problems.

MRP systems required huge pool of technical expertise in terms of manpower and machines.

ADVENT OF ERP

ERP came into being with effect from 1990. Though ERP existed from the year 1960 in the form of MRP1 and MRP2.

Infact MRP2 was more or less ERP except for its inability to coordinate departments other than marketing.

The whole period from the year 1960 is denoted as the age of ERP.

The benefit of ERP was slowly felt from this stage onwards.

DEFINITION OF ERP

Software solution that address the enterprise needs taking the process view of an organization to meet the organizational goals tightly integrating all functions of an enterprise.

WHY ERP?

Complete integration of systems across the departments in a company as well as across the enterprise as a whole.

Only solution for better project management.

Better customer service.

Automatic introduction of latest technologies.

Expertise database.

PROBLEMS TACKLED BY ERP SYSTEMS

Material Shortages

Productivity Enhancements

Customer Service

Cash Management

Inventory problems

Quality Problems

ERP SELECTION

Check whether all functional aspects of business are duly covered.

Check whether all the business functions and processes are fully integrated.

Check whether all the latest IT trends have been covered.

Check whether the vendor has customizing and implementing capabilities.

Check your purse and calculate ROI.

HOW DO WE START FOR ERP?

Ensure the management is behind you.Ensure enough financial funds.Identify core project team, project manager, analysts and specialists from all functional areas.Evaluate and select ERP package. Make an implementation plan.Present plan to management committee for sanctions.Present plan to employees group for feedback.

DEFINE REQUIREMENTS

Check whether you have desired hardwareTrain ERP teamAnalyze the existing processesFine-tune the processes to be in line with those of ERP definedRefine the prototype and freeze the specifications

ERP IMPLEMENTATION

Commitment from management.Form a task force with personnel from all functional areas. Take care of hardware requirements. Step-by-Step rather than big bang introduction.Be patient . ERP implementation takes time.

ERP INVOLVES

Project Planning.Business and Operational Analysis.Business process Re-engineering (BPR).Installation and Configuration.Project Team Training.Business requirements mapping to software.Module Configuration.System Modification and interfaces.Data conversion.Custom documentation.End user training.Conference room pilot.Acceptance testing.Production.Post implementation audit/support.

CHANGES OF CUSTOMER INFORMATION

DATA STORAGE IN ERPData is stored in the form of tables.

DATA TABLES: This group of tables control who can log on to the company and what functions they can perform.This allows the Systems Administrator to define a limited set of roles and allocate those roles to a large group of users .

i) USER: This table contains one record for evey user that can log into the company.

ii) ROLE:This table contains one record for each role.It is used by every function in every module.

iii) USER ROLE: This table contains one record for each role each user has.

iv) USER ACESS: This table contains one record for every function the user can perform in the company.FUNCTIONS: The ERP package has a pre-defined table which lists all the possible functions that can be performed.

SUPPORTING TABLES:

small, simple, infrequently changed tables that support the major tables. For example: Account type, Department, Gender, Marital status.

PARAMETERS:

They can be defined as the collection of options and values. For example: Contacts, Currency, Payroll, Inventory.

EXAMPLE

ITEM ANALYSIS TABLE:This table contains one record for every receipt into Inventory. It is optimized for quick access and updated once a day from the live data.Used by: InventoryKey: Transaction IDTransaction ID (a unique number assigned by the ERP package) Item ID Supplier ID Date Quantity

Transaction_id

Item_id

Supplier_id

Date Quantity

7001 155523

Supp5567

5-2-08

2.5tons

DECIDE MAKE OR BUY ERP ?

INHOUSE DEVELOPMENT:

Project development takes time.

Documentation is difficult.

Maintenance depends on individual.

EDI implementation modification to be taken care of.

Enterprise implementation is difficult as each unit follows different software option.

Latest developments to be studied before implementation.

INHOUSE DEVELOPMENT ERP PACKAGE

DECIDE MAKE OR BUY? (Continued….)

ERP PACKAGE :

Documentation is a part of system.Ready made projects needs only customization.Company takes care of maintenance.EDI compatible universally acceptable.The package itself is designed as enterprise package.Constant updates on technology and processes assured.

ADVANTAGES OF ERP

Ease of use.Readymade solutions for most of the problems.Increases access to available data for decision making.Timely and accurate information.Easy enterprise wide information sharing.Suppliers and customers can be online communication.Automatic adaptation to new technologies.Knowledge transfer between industries guarantees innovation.

DISADVANTAGES OF ERPTakes time to implement.Large amounts of workers have to shun their regular labor and undertake training. This not only disturbs the regular functioning of the organization but also runs the organization in the huge risk of losing potential business in that particular period.Expensive due to outside consulting, data analysis and conversion, training. It leads to performance problems that is when people can’t do their jobs in familiar way and haven’t yet mastered the new way. This causes panic and business goes into losses.

CONCLUSION

Reduced overheads and inventory.

Timely responsiveness.

Market share and image enhancement.

Keep up with technology changes.

Only way for integrated systems for client with multiple locations.