ERP & WEB BASED SUPPLY Chain Management. Chapter 1 Introduction to ERP

Transcription

1 ERP & WEB BASED SUPPLY Chain Management Chapter 1 Introduction to ERP

2 Introduction to ERP Concept ERP is short of Enterprise Resource Planning,which is business management system that integrates all facets of the business such as manufacturing operations,supply chain, customers, human resource & finance.

3 Introduction to ERP Concept

4 ERP Simplified view

5 ERP Simplified view

6 Introduction to ERP Concept

7 ERP s Full potential Manufacturing units Customers Corporate Office Vendors Regional Office

8 Introduction to ERP Concept The salient features of above definition is that ERP refers to in house developed or commercially available software solutions which provide an integrated suit of IT applications.that support the activities of the organization as a whole. ERP Systems are the information backbone of the company.it serves as central nervous system & termed as digital nervous system of the company.

9 Introduction to ERP Concept ERP (enterprise resource planning) is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business.

10 Introduction to ERP Concept ERP in manufacturing sector was primarily to address to know : 1) Stock of finished goods 2) Understand material movement In 1970 the focus of manufacturing systems shifted to MRP MRP Software applications have emerged to translate the Master Schedule built for the end products into Time phased net requirement

11 Introduction to ERP Concept In 1980 the concept of MRPII was evolved All the resources such as People, Infrastructure, Process to various user group necessitate planning & utilization of such resources MRP was further extended to cover areas like Engineering,Projects,Management etc & led to what is known as ERP

12 Introduction to ERP Concept

13 Introduction to ERP Concept Key Terms Integration: Integration of operations with accounting result in converting the physical units into rupee value.erp integrates all facets of business including 1) Planning 2)Manufacturing 3) Sales Software applications have emerged to help business managers implement ERP in business activities such as Inventory Control, Order tracking, Customer service

14 Introduction to ERP Concept Key Terms ERP finds useful application in human resource management,warehousing. ERP implies the use of the Shelf packed Software rather than proprietary software written for one customer The cost of developing & maintaining ERP modules become cost prohibitive & Time Consuming

15 Introduction to ERP Concept Key Terms ERP modules are generally expected to have the capability to interface with organizations own software Depending upon business requirement, ERP modules may be altered using vendor s Proprietary tools,programming languages A good business strategy drives everything that comes in its way including its IT & IS resource

16 Introduction to ERP Concept Key Terms Systems: The systems view of business or enterprise is a holistic view. A system consists of Input,Process, Output & feedback For example production system has input of Men(labor),material,money(finance).The output is goods and or services. The processing converts input to value added outputs

17 ERP Across Business System Financial Systems Accounts receivables & payable Cash planning & Management Cost accountancy General ledger Product Cost accounting Profit center analysis Profitability analysis Executive Information system Asset accounting Standard costing Human Resources Payroll,Manpower planning Travel Expenses,HR accounting Operational logistics Inventory Management MRP Plant management Production Planning Project management Purchasing Quality management Routing Dispatching vendor analysis Sales & Marketing Sales Order,Pricing Sales planning Sales management

18 Process view/ Model of Business Process Model defines entity or a set of activities that together respond to a set of inputs to produce desired output The process of converting input to desired output is governed by factors such as performance standards,knowledge,procedures,material,machine,,constraints,& control points Material Machines Input Processing Output Knowledge & Training Methods & procedures

19 Process view/ Model of Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. process innovation, encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions.

20 Process view/ Model of Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. process innovation, encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions.

21 Process view/ Model of Business Diagram illustrate basic philosophy of business process reengineering Understand Existing Processes Methods Diagramming Story boarding Brainstorming Simplifying Processes by Eliminating wastes Methods Elimination Combination Rearrangement Automate The process Methods EDI ERP

22 Preparing for the ERP Inter Company Integration To begin with,an enterprise has framed departments,with some minimum interface with one another.organizations then adopt systems approach where the output of one system became input for other system and so on to form integrated system. The isolated systems of yester years were called management systems(mis) later DSS or decision support systems were developed.executive Support system is a step beyond both MIS & DSS that collates information from different sources

23 Preparing for the ERP Before implementing ERP,an organization has to decide where it is right now,where it would like to be,& what methods could be used to get there. The data captured is of immense value in ERP in Finance,HR,SCM and enables such as data warehousing,eis,workflow ERP is not just an IT project.it changes the organization in terms of authority responsibility relationship It brings discipline to the organization.

24 Preparing for the ERP Business process reengineering focuses on transformation of business process to make them more efficient whereas ERP focuses on automating The business process using & some objective in mind. A project team is drawn from IT,Sales, Purchase, Production & Finance. The outside consultant can be hired. ERP being an enabling tool help us to do things better

25 Journey of ERP SYSTEM MIS DESCRIPTION Management Information Systems.No decision support IIS EIS CIS EWS EDI,JIT, EFT Integrated Information Systems.No decision support Executive Information Systems.Decision support Corporate Information Systems.Decision support Enterprise Wide System. No decision support Logistics are considered as part of system Electronic Data Interchange,Just in Time, Electronic fund transfer inter company integration

26 ERP maturity Levels ERP like living organization passes through different stages of development & maturity.a the business grows,erp has to adopt itself to the changing processes,organizational structure & demand patterns to deliver effectively. The ERP team takes a lot of effort after the Go-Live at three different stages of growth & maturity.

27 ERP maturity Levels Stage 1 Chaos The organization takes the Go-Live decision. It requires streamlining of the processes In stage 1,the attention is focused on administration and information stability.roles and responsibilities are fixed.the organization starts utilizing the information generated through ERP It has to cope with change in organization culture. It is likely that alignment between the ERP and the process prevailing is lost.

28 ERP maturity Levels Stage 2 Stagnancy After the Implementation of the ERP organization expects a whole lot of benefit from it. However it does not happen immediately. Organizations expect higher ROI. There two ways to improve situation First manual activities are eliminated and are replaced by automated ERP system.this results in overall transaction complexity.secondly,the intelligence of the system is enhanced by using Advanced planning engines& schedules

29 ERP maturity Levels Stage 3 Growth At this stage,management seeks strategic support from the ERP.The system is aligned with the overall Corporates vision & strategies. The focus is on profit and Working Capital Management.The organization is committed to growth of human resources. This improves the value chain.capital management becomes becomes better.there is optimization between customer product mix.

30 ERP maturity Levels Streaming Operations Chaos Strategic transformation Optimization Stage1 Stage2 Stagnancy Enhancement Operational Improvements Stage3

31 Organization of ERP Projects There are three common ways to implement ERP projects. Big Bang is an approach that casts off all the legacy system in one go & installs a single ERP system across the company. Franchising approach believes in implementing independent ERP system in each unit while linking common processes across the enterprise.it is one of most common method to install ERP. Slam dunk is an approach where the ERP dictates the process.a few key processes are selected for focus

32 Introduction to ERP End of Chapter 1