Research on the Design of Enterprise ERP Information Management

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1 Research on the Design of Enterprise ERP Information Management System School of Management Science, China University of Mining and Technology, Xuzhou , China Abstract The full investigation and rational planning of the informatization of enterprises is the key to determining whether the informatization of enterprises will succeed or not. The backward management of small and medium-sized enterprises in our country and the low level of informatization have become the main reasons for restricting their healthy development, so enterprises gradually begin to focus on its role. The ERP system is an advanced information technology. In this paper are described the important decision and the specific implementation of the ERP system as well as its far-reaching significance to the management of enterprises in enabling enterprises to reduce costs, integrating resources, and enhancing the competitiveness of enterprises. 1. Introduction Keywords: Informatization Management, ERP Systems, Integration Since the reform and opening up, the small and medium-sized enterprises in our country have developed rapidly. However, these small and medium-sized enterprises assume certain universal features: the funds are not very substantial, the management is not quite complete, the basis of informatization is generally poor, and they face fierce competition from the market. Small and medium-sized enterprises are an important part of the national economy and a dynamic economic group [1-3]. The sustained achievement of innovative development by small and medium-sized enterprises is directly related to the sustainable development of the national economy as a whole. Small and medium-sized enterprises are the basic units of the national economy of our country, so realizing the informatization of small and medium-sized enterprises will promote effectively industrial restructuring, industrial upgrading, and the forming of informatization of the national economy [4-7]. It is of great importance to the construction of a strong socialist country. Furthering the informatization of small and medium-sized enterprises is an important means of promoting the economic growth of our country and building a harmonious society, and is the only way to achieving leapfrog industrial development of our country. Popularizing the informatization of small and medium-sized enterprises is a solid foundation and strong driving force for improving the comprehensive competitiveness. Meanwhile, it will also promote the employment of university students, enhance the management level of enterprises, and optimize the structure of human resources in society. The informatization construction of small and medium-sized enterprises must be further promoted. Small and medium-sized enterprises must be helped to improve the application of information technology and modernized management. Technological progress must be sped up. Market competitiveness must be enhanced. And the sustained and healthy development of small and medium-sized enterprises must be promoted [8-10]. The informatization of enterprises is the process of supporting such links as the development, production, sale, and service of enterprises products through the use of computers, networks and communications technology, and of fully developing and using the human, financial, and material resources of enterprises as well as the internal and external information of enterprises to carry out production, business activities and the all-round transformation of various production and business activities to reduce production and management costs and improve economic efficiency. Eventually the systematic, networked, and integrated collection, processing and management of information, the efficient and real-time circulation of information, and the comprehensive supply chain management and e-commerce will be realized. ERP is a management platform which provides enterprise decision-makers and staff with the means of decision-making and operation. ERP is closely related to Journal of Convergence Information Technology(JCIT) Volume8, Number6,Mar 2013 doi: /jcit.vol8.issue6.46

2 the restructuring of enterprise business processes and the combination of the two is an inevitable trend. To improve the competitiveness of the supply chain management of enterprises, changes are bound to be introduced in enterprise business processes, information processes, organizations and agencies, and the use of system application programs must also be adjusted accordingly with the change of business processes. In ERP, the latest achievements in computer and network communication technology are used. Apart from the technology such as the commonly-used graphical user interface technology, the SQL structured query language, the relational database management system, the object-oriented technology, inter-operation of different platforms must also be realized, and programming software appropriate for network technology must be used to strengthen users custom flexibility and configuration functions. Functionally, aside from the traditional manufacturing, supply and marketing, and financial functions, it supports the storage and transportation management of the material circulation system, online analysis and treatment, after-sale service, and feedback. It supports the quality management of the production support system and the management of equipment. It can meet the requirements of different areas, various factories, many languages and many currencies. It supports remote communications, e-commerce, and data exchanges. It supports dynamic changes in working models, enterprise capital operation management, and standard management and so on. ERP is a media which carries advanced management thoughts. It is the software package of advanced management philosophy, theory and method. It is the high integration of enterprise business flow and multidimensional information. ERP is not only oriented towards supply chains, it is also an embodiment of the spirit of lean production, agile manufacturing and concurrent engineering. Moreover, it is bound to be combined with all-round quality management to ensure quality to satisfy customers. It is bound to be combined with timely production to eliminate invalid waste. And it is bound to be combined with the theory of constraints to define bottleneck links to eliminate restricting factors. In practice, the relationship of enterprises to their sales agents, customers and suppliers has turned into that of benefit-sharing cooperation partners from simple business dealings objects. This is a significant change in the concept of modern management. This cooperation partnership makes up the supply chains of enterprises, and has become the core idea of lean production. When basic cooperation business partners fail to meet the production requirements of a specific product, short-term supply chains will be organized synchronically to carry out agile manufacturing. Therefore, the current competition of enterprises is not the competition between enterprises, but the competition of the supply chains of an enterprise with those of a competitor. In short, informatization has caused continued improvement in enterprise management, a sustained strong market competitiveness, and better economic efficiency. 2. ERP System Overview ERP software, enterprise resource planning software, is a kind of application software servicing the production and operation and management of the enterprise directly. It uses advanced information technology, such as database/data warehouse technology, network technology and Internet technology. It is developed on the basis of the MRPII system. It sets enterprise supply chain management, financial management and manufacturing management functions in one body. It is a highly integrated computer information management system. ERP software system services directly to the production and operation and management decision-making. Advanced computer information processing and communication technologies as the core, it is a highly integrated information management system. The direct service goal of ERP software is to help companies achieve their business processes, their management and decision-making, reduce production and operation costs and economic risks to achieve operating profit, market share and development goals of the enterprise. From the 1960s, after nearly 40 years of development and evolution, ERP software system is very mature both from the theoretical and technical views. So far the mature ERP software that has already been put into the market, include dozens of companies in Europe and America which provide dozens of systems, such as the R/3 system from the SAP Corporation in German and the ORACLE application systems from ORACLE Corporation in the United States. The predecessor of ERP software system should be MRP and MRPII systems used in manufacturing, production, supply, marketing and financial management of the enterprise, with the main line of production planning and control. Historically, ERP software system is basically gone through four major stages of development. The MRP stage, the first stage, from the 1960s to the 1970s, focused mainly on material requirements planning, using the bill of

3 materials (BOM), inventory data, and master production plans to calculate material needs. The experiment and development of this stage ware mainly in manufacturing enterprises. MRP made enterprise manufacturing to have the preliminary requirements planning of materials, thus greatly improving the supply chain management. The closed-loop MRP stage, the second stage, from the 1970s to the 1980s, on the basis of the MRP, integrated rough capacity planning, capacity requirements planning. The production and procurement in this stage came into a feedback to form a closed loop cycle. MRPII stage, the third stage, from the 1980s to the 1990s, did resource planning, on the basis of the closed-loop MRP, integrating financial, supply chain management and manufacturing, so as to constitute a complete business process. The ERP stage, the fourth stage, from the 1990s to present, on the basis of MRPII system, has greater integration capabilities and more adaptable. ERP systems can be applied to a variety of industries and globalized business operations. 3. ERP system decision-making Every enterprise should have a long-term IT system planning, and basing on it, make the scope and content of the implementation of the ERP system clear. The lack of IT support makes ERP projects imply a great risk. Therefore, in the preparation of the project, a good hardware and network solutions should be chosen and good ERP system and assessment consulting partners should be selected. Besides, the application of ERP is not a general sense of enterprise informatization construction, nor should be regarded only as a simple construction of computer hardware, application software and Internet system, or its implementation will be a lack of strategic significance. ERP application shall be combined with the characteristics of the enterprise. ERP project needs analysis, to seriously study the role of ERP, its characteristics and applicable conditions and scope. In the conditions of economic shortage, enterprises desperately promote technological transformation, grab projects, construct infrastructure, change equipments, resulting in the excess manufacture capacity, very week sales and supply capacity however. Figure 1 describes how ERP system manages production, sales process. Figure 1 the operating procedure of ERP systems ERP software selection is particularly important in ERP decision-making. First of all, the software selection is not just a matter of the technology sector. There must be the

4 participation of business personnel and senior management. Software selection problem stems from that the requirement of the enterprise is not well-defined and no proper assessment of the ERP system is done. The problem arises when the two does not match. The lack of a clear implementation expectations and business goals are the root causes of the failure of ERP implementation. Secondly, ERP software itself also has many deficiencies. Foreign ERP software is more mature, better on system integration and stability. So they are easy to meet the demand of enterprises. Domestic ERP software is more localized, more in line with China's accounting system. The choice must be well thought out Finally, for ERP systems there is the problem of customer adapting. Enterprises of various types of production differ in the scale. Especially when comparing Chinese enterprises with foreign enterprises. The differences in enterprise management mechanisms, quality of personnel, foreign ERP software does not match Chinese enterprises in national conditions. Enterprises will absolutely change, so ERP systems must have good flexibility, user-friendly secondary development, otherwise the enterprise is just sleeved with shackles. Before making secondary development, the enterprises should consider carefully, and do serious analysis, to make a choice on modifying the software or reforming the existing enterprise management systems. This shows that if the enterprises want to reduce the decision problem, it is necessary to clear the requirements of them, to clear management objectives to be achieved and to see the problem exists in the actual management. When choosing the software, the openness of the system and the suitability of the software to the enterprise should be considered, based on the current business and future development requirements. That is, commercial software should be equipped with a full range of documentation, in order to meet the needs of users and secondary development. What also needs to consider when choosing the software is the credibility and strength of the supplier. They should have good after-sales service support. At the same time, in the implementation of the ERP software, the original enterprise resources should be protected. 4. ERP system implementation Problems encountered in the implementation process of ERP system implementation are mainly problems of team organization, cost control, quality management, and outcome evaluation. (1) The organization of the implementation team The members of ERP project implementation team should include consultants having extensive management experience, enterprise management staff, business staff, and technical staff. Fully outsourcing the system or carried out only by internal staff will increase the risk of system implementation. Management stuffs lacking leadership is also one of the sources of risk. Coordinating the implementation of the work of various departments to coordinate the arrangements for all participants, to improve work efficiency and to avoid passing phenomenon is a necessary condition for reducing the number of problems. (2) Cost control The implementation of cost must be controlled. The implementation costs include hardware costs, software costs, training costs, consulting fees, and maintenance costs. How to reasonably arrange expenses, control costs within the budget, reduce costs is the problem enterprises should seriously consider. The investments of ERP project are large, so the costs of it are difficult to control, and companies often do not take certain costs into account. Firstly, the training fees are the most difficult thing to control. The unchanged rule of ERP training fees is that training fees and time will be far more than you expected, and almost every employee must learn a new set of procedures. The most important thing of ERP project is that is forcing you to do a lot of changes in management. If the training fees are not in place, the companies will pay a higher cost in the future. Secondly, the connected integration testing costs of ERP and enterprise software will be missed; connecting the work will consume more time and costs than expected. Thirdly, data conversion and analysis also takes a lot of money, the data in the original system must be corrected to match with the ERP implementation procedures. Data updates will be an onerous task and needs analysis based on the requirements of enterprises. Fourthly, consulting fees will be expensive. Enterprises must be careful to hire a consultant, and define clearly the target the consultant should reach. (3) Quality management and result evaluation

5 The quality and results of the implementation of the ERP project should be evaluated. In the evaluation of the effect of the implementation, the implementation objectives should be controlled, objective evaluation criteria and scientific evaluation methods should be used, and no link can be ignored. Particularly in the project procedure, management system and operation mechanism of the ERP project should be sounded, project management techniques to control and management of the implementation process should be used, plans should be implemented scientifically, stage results should be made clear, audit of results should be rigorous, transmission of information should be smooth, both the control and efficiency should be taken into account. Therefore, the scientific implementation of methods and procedures is the main aspects to reduce the implementation issues. It is in the implementation of ERP projects that overall planning, full implementation, clearance of the modules, making breakthroughs in key areas (promotional product, main product) and working in an orderly manner should be done. A special agency should be set up. The highest decision-makers should be participated in the leading group which has sufficient authority and coordination ability as well as a wealth of management experience. ERP project personnel involved will need project training, making management technology and information technology to combine. Preparing the basic data for simulation tests is an indispensable link after the users of the system is determined. When getting out of the run-in period, the system can be switched to run. 5 The significance of ERP to enterprise management 5.1 The integration and sharing of enterprise information and data The traditional information processing mode of enterprise management mode based on manual processing is in a backward state. It is slow in such aspects as the collection, processing, transmission and storage of information, small in storage capacity, and unable to guarantee information processing quality. In manually-managed enterprises, the information of each department can only be stored in the computers of their own departments after being collected and processed as the result of the difficulty in the exchange of information. This results in the fact that the production, operation and management information of enterprises are owned by departments or individuals privately and that the sharing of information cannot be achieved. This state of "private owning" of information has turned every department into isolated islands of information one after another. In this case, it will be difficult if a department or a person needs to learn about and use certain information of another department (or person), for these information must go through complicated transmission paths and complex approval procedures, from one level to another level and from one department to another department on the travel of official documents. Thus the speed of information transmission is slowed down and, moreover, the level of management and decision-making is reduced as distortion will inevitably occur in the long process of delivery. After the introduction of the ERP system, enterprise integration platforms of external and internal information came into being through the computer database and network system. They enabled enterprises to share enterprise data and broke the state of information isolation of traditional enterprises and isolated information islands. They resulted in the unified maintenance of information and the timely, accurate, and dynamic updating of data and information. The ERP system, which is an integrated system, completed integration at two levels: the information level and the function level. Information integration is the base, that is to say, it is on the basis of information integration that the ERP system has got its functional integration completed. Manufacturing enterprises can get the cash flows, the logistics and the work flows of an enterprise integrated into information flows by using the ERP systems implemented in an enterprise. Thus the basic management of enterprises can be integrated, and existing management systems can be optimized. Ultimately, scientific decision-making and working procedures can be achieved, and the production efficiency, the resource allocation efficiency and the competitiveness of enterprises can be further improved. If the ERP system is implemented in enterprises, it is guaranteed to be the nervous system of enterprises. Enterprises can get all of their information integrated through the ERP system, and can raise their own level of management through the reasonable control of information. Enterprise information comes from various departments and levels of an enterprise, so importance must be attached to the basic data of the various modules of the ERP system if it is wished to be accurate and real-time. Basic data of manufacturing enterprises

6 consists of materials, bill of materials, routings, processes, lead times, manufacturing calendar, and work center and so on. The enterprise resources associated with these basic data are the material factors essential for the normal production and operation activities of enterprises. The core of the management concepts of an enterprise is the optimization and rational allocation of its resources. Enterprise resources are found in the ERP system in the form of basic data. The process of the various processing and treatment of basic data by the ERP system is actually the process of the management and configuration of corresponding enterprise resources. An effective control of the information of a manufacturing enterprise requires the clarification of the features and functions that bring these basic data into being and an understanding of the relationship between them. And finally, the location of data in the ERP system must be recognized to ultimately achieve the correct, full and effective use of these basic data to improve the effect of production accuracy. 5.2 Integrating enterprise tasks Apart from being able to integrate enterprise information, the ERP system can also carry out the effective management of various tasks of an enterprise. For manufacturing enterprises, management tasks are mainly divided into three categories: namely sales tasks, production tasks and procurement tasks. Among them, sales tasks determine production tasks, while production tasks determine procurement tasks. These three tasks are actually a logistics process that is driving an enterprise. The ERP system sees production and management aspects like supply, production, and marketing of an enterprise as a closely related organic whole. Therefore, ERP's plans form a complete planning system. Sales plans, which act as the leader of production and operation activities, reflect the needs of customers orders and the changes in the market. It is what enterprises base on in arranging production and operation activities. ERP systems combine sales plan with production plan closely. Customers orders and market predictions drive the production planning system with master production schedules (MPS) and demand plans as the core. It truly reflects the produce according to sales customer-demand pulling mechanism. According to master production schedules, ERP systems automatically produce through demand-planning modules production schedules for completing master production schedules, outsourcing schedules and schedules for the purchase of parts and raw materials. This is what workshops base on in working out production schedules and what procurement departments base on in working out outsourcing schedules and purchase schedules. From this we can see that ERP is an integrated system of various schedules. Seen from the horizontal perspective, ERP is a close combination of sales schedules with production schedules and production schedules with procurement schedules. Seen from the vertical perspective, ERP systems link automatically in one go three plans, namely product-level plans, part-level plans and process-level plans. Therefore, ERP systems changed effectively the disjointed state of various programs in traditional management models and greatly improved the scientific quality and effectiveness of the planning system and the planning of enterprises. MRP, which is an important component of the ERP system, is built on the basis of the master production schedules. According to technical and management features such as bills of materials (BOM), process routes, batch policies, and lead times of products, it produces procurement plans for raw materials, blanks and purchased parts as well as production plans for producing, processing and assembling spare parts so as to realize the micro-plan for the effective management and control of the flow of materials of an enterprise. 5.3 The control of capital flow and cost The ERP system can also control the capital flow of enterprises and make the production costs of enterprises rational. With the constant change of patterns of the world economy, the enterprises of the present must have the ability to adapt to the changes of the external and internal environment of enterprises if they are to gain a firm foothold in the fierce competition of markets. This requires that enterprises must strengthen cost management, and carry out cost management throughout the entire process of production and operation. The first thing to do in controlling production costs is to control the rational circulation of the capital flow of enterprises. As the information integration platform for enterprises, the ERP system provides fund management fields of enterprises with powerful control and rich analysis functions. The standard cost system in the

7 ERP system can optimize the cost control process, reducing the tedious day-to-day accounting and checking work. In the ERP standard cost system, products that are being produced, finished products, and sales costs are all priced by their standard costs, and at the same time the cost differences are recorded, which can greatly reduce the final cost-calculating workload and simplify the day-to-day accounting treatment. Meanwhile, after the removal of related cost data or the entry of manual data through the inventory system, the payroll system, the fixed assets system and the like, the use of ERP cost management enables the system to calculate costs automatically, produce such statements as cost statements of finished products, cost statements of products that are being produced, cost difference analysis statements, and guarantee the uniqueness of the various data sources to ensure the correctness of the relation between data, thus avoiding the heavy workload of hand-made statements. 6 Conclusions The informatization of enterprises is the process of supporting such links as the production and sale of enterprises products through the use of computers, networks and communications technology to carry out production and business activities using internal and external information, and transforming various production and business activities in a all-round way to reduce production and management costs and improve economic efficiency. Eventually the networked, and integrated collection, processing and management of information, the efficient and real-time circulation of information, and the comprehensive supply chain management and e-commerce will be realized. How to enhance the management and technological innovation capability through the use of information technology, how to draw up informatization development strategies to enhance the core competitiveness of enterprises, and how to integrate informatization systems into routine management work to bring benefits to enterprises are the direction of long-term research for future informatization builders. 7 Acknowledgments This research was supported by the Fundamental Research Funds for the Central University (NO. JGJ101487), the Ph.D. Programs Foundation of Ministry of Education of China (No ) and the Social Science Foundation of Jiangsu Provence of China (No. 10GLB001). 8 References [1] Zhang Meili, Shi Chunsheng, "Research on Matching Effect of Market-oriented Organizational Innovation and Technological Innovation", JDCTA, Vol. 7, No. 1, pp. 204 ~ 212, 2013 [2] Wu CHEN, Yan CHANG, Yunfeng LI, "The Application of Enterprise Group Management &Control Mode in The Energy Company: The Distinctive Management & Control Mode in State Grid Corporation of China", JDCTA, Vol. 7, No. 1, pp. 66 ~ 73, 2013 [3] Chenghua Shi, Honglei Zhang, "An Integrated Approach For Supplier Evaluation And Selection Based On Rough Set Theory And Unascertained Measure", IJACT, Vol. 4, No. 6, pp. 192 ~ 200, 2012 [4] Byung-Ki Hong, Seung-Joong Shin, Jae-Woong Choi, and Kae-Dal Kwack, "Error Resilient Interlace to Progressive Conversion Algorithm for Noisy Image", RNIS, Volume 2, pp. 15 ~ 20, 2008 [5] S. M. Riazul Islam, Kyung Sup Kwak, "On Channel Estimation in MB-OFDM UWB Systems with Time Varying Dispersive Fading Channel", JDCTA, Vol. 4, No. 2, pp. 18 ~ 24, 2010 [6] M. R. Aliabadi, Mohammad Reza Ahmadi, "Proposing a Comprehensive Storage Virtualization Architecture with Related Verification for Data Center Application", AISS, Vol. 2, No. 3, pp. 68 ~ 75, 2010 [7] Yanjie Lu, Hongming Cai, Lihong Jiang, "Construction of BPMN-based Business Process Model Base ", IJIIP, Vol. 1, No. 2, pp. 32 ~ 38, 2010 [8] Mohammad Reza Moohebat, MIT. Asefeh Asemi, PhD Mohammad Davarpanah Jazi, "A Comparative Study of Critical Success Factors (CSFs) in Implementation of ERP in Developed and Developing Countries", IJACT, Vol. 2, No. 5, pp. 99 ~ 110, 2010 [9] Wang YU, Zhu FENG, Geng HUA, Zhuwang Jing, "The Partner Selection in Virtual Enterprise

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