TERM PAPER

ON
ERP SYSTEM & FUNCTIONAL MODULES

Neha Farheen
Department of computer science & engineering
School of engineering & technology
Sharda University, Greater Noida, UP, INDIA
nneha193@gmail.com

CONTENTS
Abstract
1. INTRODUCTION......3
2. BACKGROUND ......4
3. SCOPE OF ERP.....5
4. LIMITATIONS OF ERP...6
5. ANALYSIS OF TECHNIQUES AND METHODOLGY..8
5.1. -Human Resources.......8
5.2. -Quality Management......9
5.3. -Sales Modules....9
5.4. -Finance Modules..10
5.5. -Production Planning Module....10
6. CONCLUSION....11
7. REFERENCE...12

Abstract
In todays era of fast growing organization, every organization is facing the problem of
resource utilization, is one of the most difficult and challenging job for the organization. An
organization needs an automatic tool for the resource utilization activities. ERP is one of the
latest technologies that many organizations have undertaken. Typically, Enterprise Resource
Planning (ERP) systems are software packages composed of several modules, such as human
resource, sales, finance and production providing cross-organizational integration of
transaction-based data management throughout embedded business processes support. ERP
supports in different levels of management and different modules are implementing. This
Term paper is highlighting the important features of ERP in the perspective of effective
resource utilization tool for organization.

1. Introduction
In any industry, some of the demands managers face is to be cost effective. In addition to
that, they are also faced with challenges such as to analyze costs and profits on a product or
consumer basis, to be flexible to face ever altering business requirements, and to be
informed of management decision making processes and changes in ways of doing business.
However, some of the challenges holding managers back include the difficulty in attaining
accurate information, lack of applications that mimic existing business practices and bad
interfaces. When some challengers are holding a manager back, that is where Enterprise
Resource Planning (ERP) comes into play.
Over the years business applications have evolved from Management Information Systems
with no decision support to Corporate Information Systems, which offer some decision
support to Enterprise Resource Planning. Enterprise Resource Planning is a software
solution that tackles the needs of an organization, taking into account the process view to
meet an organization's goals while incorporating all the functions of an organization.

Its purpose is to make easy the information flow between all business functions within the
boundaries of the organization and manage the organization's connections with its outside
stakeholders.
In a nutshell, the Enterprise Resource Planning software tries to integrate all the different
departments and functions of an organization into a single computer system to serve the
various needs of these departments.
The task at hand, of implementing one software program that looks after the needs of the
Finance Department together with the needs of the Human Resource Department and the
Warehouse, seems impossible. These different departments usually have an individual
software program that is optimized in the way each department works.
However, if installed correctly this integrated approach can be very cost effective for an
organization. With an integrated solution, different departments can easily share information
and communicate with one another.
The following diagram illustrates the differences between non-integrated systems versus an
integrated system for enterprise resource planning.

Production Sales Marketing Human Relations Accounting

Plants

Customers

Plans

Employees

Payments
Machines

Prospects

Strategy

Departments

Receivable
Products

Sales order

Materials

New Products
Products

Units

Payables

Markets

Skills

Liabilities

ERP is an integrated software system consisting of multi-module applications and a common

database.
ERP systems help in coordinating the business activities and facilitate the flow of
information across the enterprise.
The ultimate aim of ERP is to integrate the various departments within an organization based
on enterprise wide data model. This eliminates data redundancy; enhances accuracy and
facilitates online information retrieval.

2. BACKGROUND
History of ERP System is 54 years old. Its idea came in 1960 when manufacturers wanted a
perfect system for controlling the inventory. In past, inventory was calculated only physical
counting every time for controlling it. So, manufacturing industry started to demand the
MRP (material requirement planning). So, after invention of MRP in 1970, traditional
inventory control system had shifted to MRP System. Second part of MRP was launched in
1980, which was perfect for controlling inventory in workshop, shop, and all the other areas
where was the inventory for production or sale.

Now, MRP part 2 started to apply on the area of engineering and management's other areas
like finance, accounting, marketing, human resources and project management. From this
utilization of MRP second part, ERP came into existence.
Gartner Group that was associated in information technology research had used the word
ERP first time in 1990 when it was using MRP through effective use of computer in
manufacturing database. After this, ERP word started in all type of industries for managing
all work systematically.
After increasing the use of internet in 2000, ERP got success in e-business, e-finance and egovernment management. It became easy to collaborate different departments and branches
employees through a unique ERP system for performing their work on real time.
Now in 2014, ERP system has become multi-billion dollar industry. Big IT corporations have
entered in this industry which used high level computer hardware, network configurations
and databases for every type of industry. No one escape from using of ERP system in 2014.
Both small and big business organizations are using ERP.
Once again, we retouch its history :

3. Scope of ERP
Better organizational control, especially in large companies, where the volume of
information is more than in a small company.
Duplication of information is avoided.
Improved communication, both internally and externally.
Company profitability analysis can be carried out to analyze where costs are higher and
where there are more sales.
Improved decision-making process within the company.
The company is able to react better to any unforeseen problem or situation.
Better use of time.

4. Limitations of ERP:
The high cost of implementation and maintenance. (High initial investment)
Adaptation to the hardware in the company.
It is necessary to train all employees in the company so that the system is used efficiently.
This is a cost for the company as well as the time and effort needed for it.
Integration with other applications in the enterprise needed.
Inflexibility of the system, because this is a generic system.
If the system is not applied correctly, it can be very detrimental to the company.

5.ANALYSIS OF TECHNIQUES AND METHODOLOGY

Modules of ERP:
5.1 Human Resource (HR):
Though the pay rolls preparation through spoke systems is one of the early adoptions of
application software in many organizations, HR module was mostly left out by them, during
their early phase of implementation of ERP system, apparently due to routine nature of HR
functions, involving mostly some staffing activities. However, need of a human resource
department has changed dramatically from payroll and document management to
organizational management and personnel development, during the course of last decades

and necessity of adoption of an ERP system evolved. Now, the functionality of HR modules
is more and more used for the management of human capital and human resources.

Some of the basic functionalities of ERP module are listed below:

Personnel Management: This basically comprise a common database of all personnel
master data. The system, often, comprises workflow tools which assist in administering
various HR functions. Personnel management facilitate recruitment process which involves
notification of vacant jobs including job description, internal job posting, external job
advertisement, matching of applicant qualification with requirement of jobs and selection of
candidates. The travel management segment of this functionality, helps to control the process
from initial travel request right through to posting of final expenditure in financial ledger.
Benefit administration component provides capability and flexibility to administer
employees participation in various benefit programe such as health insurance, annual bonus,
performance bonus, gratuity, and other compensations.
Payroll management: The basic function of this component is to generate pay checks
periodically, produce related reports and posting to relevant financial ledgers. Attendance
records of the employees are entered in the system (often through an access control system).
The system provides facility to record overtime data and generate reports involving leave,
attendance and absenteeism.
Time Management: This component enables analyzing of data related to the time spent by
employees on their jobs. Management of work schedule by automating schedule generation
is done by this functionality. Time management schedule also enables individual and group
piecework calculation for employees incentive wages.

5.2 Quality Management:

In every organization, raw material, work in progress and end products are regularly
inspected. This is basically to ensure that nothing goes wrong during the process of
procurement, production or distribution. Thus, quality management module engages entire
supply chain quality operations. As a part of logistics application, quality management
module handles the traditional task of quality planning, inspection and quality control.
Quality Planning Before a quality inspection is carried out, it is necessary to define
prerequisite information of which product is needed to be inspected. The inspection of
selected product is done based on some of its characteristic, of which method of inspection/
testing is to be determined in advance. Quality inspections are not always a simple
measurement of characteristics but may involve complex calculations, for which requisite
algorithm is entered in the system for automatic calculation of quality score during
inspection. The effect the inspection will have on the product and location where inspection
is done is also entered in the system.
Inspection Process Inspection orders may be order specific and can be created for a sales,
purchase or production order. However, there may be standard inspection procedure where
inspection orders are triggered both for moving products as well as products held in storage.
Standard inspection orders are automatically generated for purchase order, sales order and
production order as per a pre defined quality grouping.
Quality Control This functionality helps in determining sample sizes and adoption of
Statistical Quality Control (SQC) techniques. The controlling tools such as quality control
charts, quality scores for inspection lots, are part of this process. This procedure also helps in
generating quality notifications for external and internal problems and initiating corrective
action. The inspection results are also archived for future analysis through this process.
5.3 Sales Modules:
This module automates the sales tasks, customer orders, invoicing and shipping of products.
It is integrated with the company's ecommerce websites and many vendors provide with
online storefront as a part of this module. The sales department is an important area for the
organization.

5.4 Finance Module:

It is one of the main functional modules in traditional and customized ERP software
solutions. Non-profit and profit organizations benefit from implementation of Finance
module. It is core module of enterprise system application and its main function is to gather
financial data from all departments of an organization. The data is used to generate different
financial reports such as general ledger, quarterly statements, trail balance and other
important financial reports.

Production Planning Module:

The Enterprise Resource Planning system has evolved from Material Resource Planning
which was used for the manufacturing requirements of the companies. ERP is more robust
software for production planning as it optimizes the utilization of the manufacturing capacity,
material resources and the parts using production data and sales forecasting.

6. Conclusion:
While employing an ERP system may be expensive, it offers organizations a cost efficient
system in the long run.
ERP software works by integrating all the different departments in on organization into one
computer system allowing for efficient communication between these departments and
hence enhances productivity.
The organizations should take extra precautions when it comes to choosing the correct ERP
system for them. There have been many cases that organizations have lost a lot of money
due to selecting the 'wrong' ERP solution and a service provider for them.

7. Reference:
i. Waldner, Jean-Baptiste (1992). Principles of Computer Integrated Manufacturing.
Chichester: John Wiley & Sons Ltd.
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Jean-Baptiste

(1990). Les

nouvelles

perspectives

de

la

production.

Paris:DUNOD BORDAS. ISBN.

iii. Lequeux, Jean-Louis (2008). Manager avec les ERP, Architecture Oriente Services
(SOA). Paris: EDITIONS D'ORGANISATION.
iv. Clemons,

E.K.;

Kimborough

(1986).

Advantage". Information & Management 11 (3):

"IS

for

Sustainable

Competitive