ERP - Enterprise Resource Planning ( An Introduction)
Definition Of ERP Software solution that addresses all the needs of an enterprise with the process view of an organization to meet the organizational goals and integrate all the functions of the enterprise
What is ERP ? • Facilitates Company-wide integrated Information Systems Covering all functional Areas and processes. • Performs core Corporate activities and increases customer service augmenting Corporate Image. • Organizes & Optimizes the data input methodologies systematically.
A process map
Why ERP ?
Profitability
You have Two Choices : Increase in sales OR Reduce Procurement Cost
- Say 30% - say by 5-10 %
Competition In the Market! Manufacturing Challenges. Manufacturing Globally. Distribution network spread. New Product introduction. Lower manufacturing lead time. Focus on markets. Satisfying the needs of customers. Develop specific business methods and processes. Integration with third party products.
Demands on the Industry • Better products at lower costs • Tough competition • Need to analyze costs / revenues on a product on customer basis • Strength to respond to changing business requirements • More informed management decision making
What are your Problems Areas Unable
to get accurate, timely information
Applications
not complete for existing business
practices Modifications
are time consuming or not feasible
A Typical IT Story
Manufacturing location 1
My growth will be OK . No?
Finance
Corporate office Sales Group
Manufacturing location 2
ERP - The Enabler
What is that ERP enables ? Systematic Look into your Systems & procedures Optimizing the processes Enables you to adapt yourself to new technologies Discipline across the functions
What does ERP integrate ? • • • •
Database Applications Interfaces Tools
What drives ERP ? • Business • • • •
Customer Satisfaction Business Development - new areas, products, services Ability to face competition Efficient processes required to push the company to top gear
• IT • Present Software does not meet growing business needs • Legacy systems difficult to maintain, Y2K Problem , Euro currency or upcoming issues • Obsolete hardware/software difficult to maintain
Subsystems of ERP • • • • • • • • •
Logistics Bill Of Materials Sales & Marketing Master Scheduling Capacity Planning Purchasing Shop Floor Control Accounts Payable/Receivable HR
Understanding ERP
Integration of Information Systems IS messages
IS messages
Manufacturing Local
purchasing, invoice verification Inventory management shipping and billing Profit/loss Capacity utilization
Head Quarters Information
Systems: Project Mgmt Inventory Purchasing
Sales Budget Cash Management
Marketing/Sales Sales,
shipping and billing Purchasing of trading goods Inventory Management Customer service
Enabling Best Business Practices Customer
Customer
Supplier’s Reference Model
Requirements
Best Business Practices
New Business Concepts
New Technologies
Business Engineering Workbench
Changes of Customer Information Change customer master data
Please Accept my new order for 1000 more sets
Customer Representative
Increase credit limit
Launch Workflow Prepare production
Credit Manager
Product Manager
Schedule customer visit
Sales Manager
Go Ahead with ERP
The USA Principle • Understand, Simplify, Automate Understand Existing Practices
Simplify Processes by Eliminating waste
Diagramming Story-boarding Brain storming
Eliminating Combining Rearranging
Automate the Process
ERP
ERP Selection • Check whether all functional aspects of your Business segment are covered • Check whether all the business functions and processes are integrated • Check whether all latest IT trends are covered • Check whether the vendor has customizing & implementing capabilities • Check the Service options available • Check your purse & calculate ROI
Prepare Base for ERP • • • • • • • • • • •
Do not start without Management commitment Allocate sufficient funds Identify Core Project Team Select specialists from all functional areas Evaluate and select ERP package Evaluate Implementation Partner Make an Implementation Plan Present plan to Management Committee for sanctions Present plan to Employee groups for feedback/acceptability Plan for User Training Plan for Future upgrades
Define Requirements • Determine the hardware required • Analyze the existing Processes • Fine tune the processes to be in line with those of ERP defined • Analyze effect of system changes. • Prototype and present • Refine the prototype & 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 & Operational Analysis, including Gap Analysis Business Process Re-engineering (BPR) Installation & 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
Implementation Approach Phase
Tasks
Detailed Discussions
■
Design & Customization
■
Implementation/ Prepare to Go Live
■
Production/ Go Live
Project Initialization ■ Evaluation of current processes, business practices, requirements ■ Set-Up Project Organization Map Organization ■ Map Business Processes ■ Define Functions and Processes ■ ERP S/w Configuration ■ Build ERP System Modifications
Create Go-Live Plan & Documentation Integrate Applications ■ Test the ERP Customization ■ Train Users ■
Deliverables Accepted norms & Conditions ■ Project Organization Chart ■ Identify Work Teams ■
Organization Structure ■ Design Specification ■ Process Flow Diagrams ■ Function Model ■ Configuration Recording ■ Systems Modification ■
Testing Environment report Customization Test Report ■ Implementation Report ■ ■
Run Trial Production ■ Maintain systems ■
Reconciliation Reports ■ Conversion Plan Execution ■
Advantages Of ERP
Advantages Of ERP Package Highly Graphics based User Interface. Zero Down time/ planned down time. Readymade solutions for most of the Problems. Only Customization required. Integration of all functions ensured. ROI earlier than the software developed in-house. Easy enterprise wide information sharing. Suppliers and Customers can be on-line communication. Knowledge transfer between industries guarantees innovation. Automatic adaptation to new technology.
Decide Make Or Buy !
In house Development
ERP package
Project Development takes time . Reinventing the wheel.
Ready made Projects. Needs only customization
Process specific to your industry are implemented
Optimized Business practices followed
Documentation may not be present
Documentation is part of system
EDI implementation modifications to be taken care of
EDI Compatible. Universally accepted
Enterprise implementation is difficult as each unit follows different S/W option
The package itself is designed as Enterprise Package.
Latest Developments to be studied as and when they are introduced.
Constant Updates on Technology and Processes assured
Summary • • • • • • • • •
Customer satisfaction Optimum utilization of resources Seamless integration between Functions Reduced overheads & inventory Timely responsiveness Market share & image enhancement Faster design to manufacturability Keep up with technology changes Only way for integrated systems for a client with multiple locations
Customer Relationship Management (CRM)
Definition • Customer relationship management (CRM) covers methods and technologies used by companies to manage their relationships with clients. Information stored on existing customers (and potential customers) is analyzed and used to this end. Automated CRM processes are often used to generate automatic personalized marketing based on the customer information stored in the system.
What is CRM? • It is a “comprehensive approach which provides seamless integration of every area of business that touches the customer- namely marketing, sales, customer services and field support through the integration of people, process and technology” • CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers • “The expression Customer Relationship Management (CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly narrow term, relationship marketing (RM)” .
Purpose • To create value for the customer and the company. • Competitive advantage.
Importance • “Today’s businesses compete with multi-product offerings created and delivered by networks, alliances and partnerships of many kinds. Both retaining customers and building relationships with other value-adding allies is critical to corporate performance” . • “The adoption of CRM is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation”
What does CRM involve? CRM involves the following : • Organisations must become customer focused • Organisations must be prepared to adapt so that it take customer needs into account and delivers them • Market research must be undertaken to assess customer needs and satisfaction
“Strategically Significant Customers” •
Customer relationship management focuses on strategically significant markets. Not all customers are equally important .
•
Strategically significant customers need to satisfy at least one of three conditions : 1. Customers with high life-time values (i.e. customers that will repeatedly use the service in the long-term) 2. Customers who serve as benchmarks for other customers 3. Customers who inspire change in the supplier
Information Technology and CRM • Plays a pivotal role in CRM . • Technological approaches involving the use of databases, data mining and one-to-one marketing can assist organisations to increase customer value and their own profitability • This type of technology can be used to keep a record of customers names and contact details in addition to their history of buying products or using services • This information can be used to target customers in a personalised way and offer them services to meet their specific needs • This personalised communication provides value for the customer and increases customers loyalty to the provider
Information Technology and CRM: Examples Here are examples of how technology can be used to create personalised services to increase loyalty in customers: • Phone calls, emails, mobile phone text messages, or WAP services. • Cookies • Loyalty cards • CRM software- “Front office” solutions
Benefits of CRM • • • • • • •
Reduced costs Increased customer satisfaction Growth in numbers of customers Maximisation of opportunities Increased competitor information Highlighting poor operational processes Long term profitability and sustainability
Implementing CRM A CRM system should: - Identify factors important to clients. - Promote a customer-oriented philosophy - Adopt customer-based measures - Develop end-to-end processes to serve customers - Provide successful customer support - Handle customer complaints - Track all aspects of sales - Create a holistic view of customers' sales & services information
Uses of CRM • Providing online access to product information and technical assistance • Identifying what customers value and devising appropriate service strategies • Providing a mechanism for handling problems and complaints • Providing a mechanism for correcting service deficiencies • Storing customer interests in order to target customers selectively • Providing mechanisms for managing and scheduling maintenance, repair, and on-going support • Providing mechanisms for managing and scheduling follow-up sales calls
Technical Considerations • Scalability • Communication channels • Workflow • Assignment • Database • Customer privacy
Compiere Open Source ERP & CRM
About Compiere (Overview)
Compiere (www.compiere.org) is the world’s No.1 Open Source ERP+CRM application. It is a comprehensive solution for small-tomedium sized enterprises (SME’s).
Compiere is a fully-integrated ERP, CRM, supply chain management and accounting system.
It works on business processes rather then departmental boundaries and is based on advanced technology which allows users to get new functionality fast.
Scalable, flexible, extensible and fully customizable. As a Compiere user, you have the option of customizing Compiere functionality as per your needs.
‘Safe-Fail’ architecture for 100% availability.
It is an extremely competitive application and has the best ROI of any ERP available in the market.
Who Can Use Compiere? (Users)
Small-to-Medium Enterprises (SME’s).
Distribution Chains.
Franchise Networks.
Outlets of Manufacturers.
Application Service Providers.
Used in varied industries such as Footwear, Garment and Apparel Manufacturing, OEM Manufacturers, Tire Manufacturers, Drug Manufacturers and Logistics Companies.
Compiere Functionality Compiere is based on business process rather than departmental boundaries.
Quote to Cash
Requisition to Pay
Customer Relations Management
Partner Relations Management
Supply Chain Management
Performance Analysis
Web Store
Compiere Modules The main modules of Compiere are:
Business Partners
Products
Purchasing
Material Management
Sales
Performance Analysis (Accounting)
Information and Reporting
Warehouse Control Compiere supports the following features of advanced warehousing:
Multiple physical warehouses with each physical warehouse broken into multiple logical warehouses such as receiving, quality assurance and testing,bulk storage and picking
Stock in each warehouse at a bin locations referenced with a 3axis (aisle,bin and level) user defined pointer
Multiple Units of Measurement (e.g. store in Boxes and sell in Pieces)
Picking priorities to ensure that picking takes place from bin locations in a prescribed sequence
User priority for shipments or receipts
Inventory movements between bin locations and between warehouses can be configured to produce appropriate shipping documentation and manage ‘in transit’ stock
Stock counts and stock valuation adjustments can be processed in parallel with sales activity. The difference between the book stock quantity and the count quantity is processed so that sales activity continues in parallel with the stock take data entry process
Stock used for internal purposes is written off with the stock record decrement and consequent financial entries recorded in the Financial Ledger
“Available to promise” is calculated after allowing for reservations for committed future customer shipments and expected vendor receipts
Inventory replenishment rules generate the Material Replenishment report. This, inturn, can be configured to automatically generate Requisitions and Purchase Orders
Shipment documentation created in batches or individually on a per order basis. Goods received from vendors can be compared directly with the purchase order or the vendor invoice.
Distribution •
Process that allows you to distribute a set quantity of a product to a list of Business Partners, based on the ratios that you define.
•
Comprised of two entities :- Distribution List defines the BPs, their ratio and any minimum quantity. - Distribution Run defines the products to be distributed, the quantity, the Distribution List and document type to be created.
Snapshot (a) The Login screen:
Snapshot (b) Preference setting screen:
Snapshot (c) •
Main Window: