Enterprise Resource Planning: Learning Advisor Prof Jyotiranjan Hota, Ibs Hyderabad

Enterprise Resource Planning

Learning Advisor Prof Jyotiranjan Hota, IBS Hyderabad

Evolution of Enterprise Application A method of using computer technology to plan for the raw materials required for production in line with the expected demand was developed(MRP) in Mid 1960s A number of businesses had started using this method to manage their inventory effectively by mid 1970s Many companies realized the need for automation in their capacity planning, production scheduling and shop floor control functions in the 1980s which gives rise to MRP II with a central database which recorded, generated and managed reports on various activities In late 1980s ,MRP II transformed into ERP where HR,Financial accounting etc were integrated with MRP II

2000s Extended ERP 1990s Enterprise Resource Planning (ERP) 1980s

Manufacturing Resources Planning (MRP II) 1970s

Material Requirements Planning (MRP) 1960s

Inventory Control Packages

ERP : An Overview

ERP is a software application that helps an organization integrate various functions, make optimum utilization of management resources and improve it’s process efficiency Data entered in any one module is available to other modules that need the data(Proves consistency and Integrity of data)

ERP Requires

    

Strong executive support to implement Process approach rather than “silos” Change in business procedures (BPR) Change in organizational structure, culture, strategy Technology change

ERP  Difficult to install  Very large and complex software  Provides info about all aspects of the business -worldwide  Reduces inventory, waste  Easy communication with customers, suppliers

Before ERP

 Multiple systems, different interfaces, difficult to extract info about customers, sales,...  Hard to maintain, many languages, databases, inconsistencies  Can take weeks or months to obtain info about customers, or where systems changes are needed

After ERP      

Integrated systems Consistent interface One database Access to current data Improved planning capabilities Multinational capabilities

System automatically:       

Schedules shipping Reserves material Orders parts from suppliers Schedules assembly Checks customer credit limit Updates sales & production forecasts Creates MRP & bill-of-material lists

System automatically:

 Updates salesperson's payroll  commission  travel account  Calculates product cost & profitability  Updates accounting, financial records

Why Enterprise Architecture        

IT costs too much Costs of managing complexity Eliminate redundancy Growing IT ecosystem Demanding rate of change Need for info sharing Outsourcing (BPO) Future-proofing If you don’t have strong architecture strategy, everyone does their own thing and you end up with six kinds of servers and (software) platforms … you get silos of everything and that explodes your costs” Andy Miller VP of Technical Architecture, Corporate

Does Your IT Architecture Look Like…

Definition of Enterprise Architecture

The enterprise architecture is the organizing logic for a firm’s core business processes and IT capabilities captured in a set of principles, policies and technical choices to achieve the business standardization and integration requirements of the firm’s operating model.

Enterprise Architecture Planning  ERP Architecture is multi layered which communicates and transact among the members of Supply Chain with ease  It’s comprises hardware layer, relational database layer,database access layer and application software layers)  One of the first activities of ERP  A ERP architecture ensures management that the ERP system supports the business processes intended

ERP Vendor Selection Whether to buy a module or whole package ?? Features and benefits of ERP Implementation outlined Decision on evaluation team building with senior IT Managers and senior business managers Invitation of bids from vendors by specifying requirements The vendors are asked to Submit scope of their ERP Software The Plan Their methods of Implementation The final vendor selection should take not more than six months of the bid being announced

After Bid….  Commercial and Technical evaluation Basis  knowledge of vendor in the respective industry  Skill of the implementation team of vendor  Past implementation history of vendor  Now RFP is prepared with the help of consulting companies with all aspects of ERP Selection criteria i.e hardware,software,support,functionalities,implementation and cost.  Vendors are supposed to demonstrate how their product will meet the objectives.Here the Evaluation team should be careful enough .

Next….  A team of representatives collect the data of the clients of the vendor  Representatives meet the people of the clients and collect their feedback on vendor and the service provided by the vendor.  These meetings normally excludes the vendors  Contract is awarded on overall scores to a vendor

ERP Implementation

 “As-is” Process Study  “To-Be” Process Design  Simulation  Actual Implementation

Factors responsible for successful ERP Ipmlementation      

Understanding Corporate needs and Culture Complete Business Process Changes Communicate Across the Organization Strong Project Leadership Efficient and Capable Project Leader Balanced Teams

Operational Advantages of ERP Implementation

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Lead time Reduction Punctuality in Shipment Reduction in Cycle Time Improved Supplier Performance Flexibility and Reduction in Quality Cost Improved resource utility

Reasons for Failure    

Cultural Lack of commitment of top management Political Failure to follow “proper” system selection methodology  Lack of sufficient implementation planning/ project management

Next Generation ERP…  Provides IDSS and Integration capabilities  Supported by SCP Systems  SCP systems extracts data from each component of supply chain & present it in a proper format that helps the management understand the entire market scenario & get a clear picture of where the organization is heading  Management can develop a production plan and review it with the help of the SCP system  SCP helps management to analyze the impact of a plan across the supply chain as well as on the customer demand

Thank You