Copy Of Erp

Aim To familiarise the participants with Enterprise Resource Planning Concepts with a view to enable them to implement ERP in their respective enterprises

Sequence of Presentaion • • • • • • • • • •

Evolution of Enterprise Application ERP: An Overview Rationale for ERP Enterprise Architecture Planning Selecting an ERP Vendor Implementing ERP Operational Advantages of ERP Implementation Problems of ERP Implementation Overview of ERP Modules ERP Integration with Supply Chain Management

Five richest people in the world with their net worth 1. Mukesh Ambani ($63.2 billion) 2. Carlos Slim Helu ($62.2993 billion) 3. William (Bill) Gates ($62.29 billion) 4. Warren Buffett ($55.9 billion) 5. Lakshmi Mittal ($50.9 billion)

Evolution of Enterprise Evolution • 1960s- Material Requirement Planning (MRP), using computer technology to plan for raw materials required for production in line with expected demand developed. • 1980s- MRP II developed automating the capacity planning, production scheduling and shop floor control functions. It was a closed loop model with a central database that recorded, managed and generated reports on various activities of the company. Compared forecasts with actual figures • Late 1980s- Manufacturing functions integrated with HR, Fin & Acctg. MRP was transformed into ERP

Why ERP?

• More problems

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• Year 2000 •Mergers & Acquisitions •Customer orientation •Cost control

Why ERP? • In 1970s extensive computing was introduced in firms to control and monitor operations and financials •Financial and accounting systems typically introduced first. •Additional needs created additional solutions •Problem: Added modules used inconsistent processes, conflicting assumptions and redundant data

What is ERP? “ERP(Enterprise Resource Planning Systems) comprises of a commercial software package that promises the seamless integration of all the information flowing through the company financial, accounting, human resources, supply chain and customer information.” T.J. Davenport Harvard Business Review July-Aug., 1998

ERP- An Overview • ERP – a Software Application that helps an organisation integrate various functions, make Optimum Utilisation of Management Resources and improve its Process Efficiency. • Improves consistency and integrity of data. • Uses Process View rather than Function View of an Org • Investments to the tune of10 crores may be required • Developed in-house or procured off the shelf as Packaged Application • Till 1990- Implemented in Big Corporations only. Now focus on SME also • ERP Vendors:- SAP, Oracle, JD Edwards, Peoplesoft, Baan etc.

Enterprise Architecture Planning • Holistic Analysis of the Organisation • Analyse the strategy, goals and objectives • Analyse the needs of the organisation like, information flow between business partners, decision making, elimination of manual work and integration between different business functions • ERP Architecture –Multilayered • Hardware Layer • Relational Database Layer • Database Access Layer • Application software layer • The Architecture covers: Business Processes, all the interconnections and interdependencies

ERP-architecture Source: Thomas H. Davenport. „ “Putting the Enterprise into the Enterprise System,“ Harvard Business Review, July, August 1998, p.124. Manufacturing applications Inventory +supply appl. Financial applications Central database Sales + delivery appl. Service applications HR management applications Reporting applications Managers and stakeholders Employees Customers

Approach to ERP Architecture • Adopt Integrated Process View: Data View or Function View alone can not be adequate • ARIS (Architecture of Integrated Information System) developed by Prof. A.W. Scheer , most widely used method for integrated process view • Evaluate different ERP packages

ERP-architecture • Central database is developed relational • Relates information regarding operational entities • 2 ways of handling data: 1. Proprietary: access to data just through ERP 2. Open database architecture: access to data through different applications

Selecting an ERP Vendor

• Make a decision regarding the ERP module to be procured or developed outlining features, functionalities and benefits expected from ERP • Evolve Request for Proposal Criteria including all aspects of hardware, software, support, functionalities, implementations and costs. • Appoint Evaluation Team – Senior IT and Business Function Managers • Invite Bids including scope, plan and method of implementation • Evaluate Bids Technically and Commercially as per RFP • Ask for Demonstration- and Question about the benefits expected • Get feed back from other clients

Implementing ERP • Big Bang Approach • Phased Approach- Four Phases 1. “As-is” Process Study: Identify the problem areas where process re-engineering is required. 2. “T-be” Process Design: New Process designs developed and mapped 3. Simulation: Pilot Test the ERP module. Fix the Problems if any. 4. Actual Implementation: Implement if Pilot test successful. Run it in Parallel with the existing manual processes till found successful

Factors Contributing to the Success of ERP • • • • • •

Understanding Corporate Needs and Culture Complete Business Process Change Communlative Across the Organisation Strong Project Leadership Efficient and Capable Project Leader Balanced Teams

Operational Advantages of ERP Implementation • • • • • •

Lead Time Reduction Punctuality in Shipment Reduction in Cycle Time Improved Supplier Performance Flexibility and Reduction in Quality Cost Improved Resource Utility

Problems of ERP Implementation • Failure of Organisations to understand what ERP is all about and what all is required for implementing the project effectively • Failure to take into account all the costs involved • Inadequate Planning • Failure to bring Organisational Cultural Change • Failure to train the employees on use of ERP • Resistance to Change • Failure to communicate exact benefits of ERP to the Employees

Overview of ERP Modules 1. 2. 3. 4. 5.

Manufacturing Module Finance and Accounting Module Sales and Distribution Module Human Resource Management Module Plant Maintenance Module

8 major data files concerning logistic operations: Customer file Product file Supplier file Order file Bill-of-Materials file Purchase order file Inventory file History file

Customer file Information describing the firm‘s customers Helpful when multiple devisions of the firm serve the same customer Product file Information describing products and services offered Maintenance is increasingly challenging due to shorter life cycles and more frequent price changes

Supplier file Lists firm‘s suppliers for material and services Order file All open orders that are in some stage of processing or fulfillment by the firm Must accept orders from multiple sources, e.g. EDI, Internet, and internal order entry

Bill-of-Materials file Describes how raw materials are combined for finishedproducts Purchase order file Roughly comparable to order file except that it contains records of purchase orders that have been placed on suppliers Purchase order may be for raw material to support product or for MRO supplies necessary to support operations

Inventory file Records physical inventory or quantity of product that is available History file Documents firm‘s order and purchase history to facilitate management reporting, budget and decision analyses

Inventory file Records physical inventory or quantity of product that is available History file Documents firm‘s oder and purchase history to facilitate management reporting, budget and decision analyses

ERP-suppliers 5 companies cover 50% of total ERP-market revenue: SAP 25.1 % Oracle 7.0 % Peoplesoft 6,5 % SAGE 5,4 % Microsoft Business Solutions 4,9 % Others 51,1 % New license software revenue: 5$ billion (2002) Source: Gartner Dataquest (June 2003) http://www.directionsmag.com/press.releases/in dex.php?duty=Show&id=7319

ERP-suppliers Several points to analyze before the decission for one supplier: Are all functional aspects of the company covered? Are all business functions and processes integrated? Are all latest IT-trends covered? Does the supplier have customizing and implementing capabilities? Do I have enough reserves, when will be the ROI?

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

Introducing ERP Define requirements Check whether you have desired hardware Analyze existing processes Fine tune processes to be in line with those of ERP defined Prototype and present Refine prototype and freeze specifications

Conclusion Any Questions Please ?