PP 02

02.
Introduction to ERP
Enterprise Resource Planning (Second Edition) By Alexis Leon
What is ERP?
ERP is an abbreviation for Enterprise Resource Planning and means, the techniques and concepts for integrated management of businesses as a whole from the viewpoint of the effective use of management resources to improve the efficiency of enterprise management. ERP packages are integrated (covering all business functions) software packages that support the ERP concepts. ERP software is a mirror image of the major business processes of an organization, such as customer order fulfillment and manufacturing. ERP integrates all business functions into a single, integrated software program that runs on a single database so that the various departments can more easily share information and communicate with each other. The integrated approach of ERP has tremendous power and potential in improving the efficiency, productivity, and competitiveness of the organization.
Enterprise Resource Planning (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
Common Myths about ERP

1. 2. 3. 4. 5. 6. 7. 8. 9. 1. 1. 2. ERP means more work and procedures ERP will make many employees redundant and jobless ERP is the sole responsibility of the management ERP is just for the managers/ decision-makers ERP is just for manufacturing organizations ERP is just for the ERP implementation team ERP slows down the organization ERP is just to impress customers ERP package will take care of everything One ERP package will suit everybody ERP is very expensive Organizations can succeed without ERP
History of ERP
Origins in the manufacturing industry 1960s Inventory management and control systems 1970s Materials Requirement Planning (MRP) and Closed-loop MRP 1980s Manufacturing Requirements Planning (MRP II) 1990s Enterprise Resource Planning (ERP) 21st century ERP II
Inventory Management and Control

Inventory management and control is the combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. The activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status.
Materials Requirement Planning (MRP)

Outgrowth of bill of material (BOM) processing Uses the master production schedule (MPS) to find out what products are going to manufactured. Gets the details of the materials required to make the products from the bill of materials (BOM). Searches the inventory records to find out what items are in stock. Calculates the items that need to be purchased for producing the goods. MRP solves manufacturing and production planning problems and made manufacturing of goods easier.
Closed-loop MRP
Merger of capacity planning techniques with MRP Tools developed to support the planning of sales and production levels, development of production schedules, forecasting, sales planning, capacity planning and order processing. Various plant, production, and supplier scheduling techniques for automating the processes inside and outside the organization, were built into the MRP system to create the closed-loop MRP. Closed-loop MRP is a series of functions for automating the production process. It contains tools and techniques to address both priority and capacity and supports both planning and execution.
Manufacturing Resource Planning (MRP II)

Evolved from closed-loop MRP Contains additional capabilities like sales and operational planning, financial interface and simulation capabilities for better decision-making MRP II is a method for the effective planning of all the resources of a manufacturing company Utilizes software applications for coordinating manufacturing processes, from product planning, parts purchasing, inventory control to product distribution.
Enterprise Resource Planning (ERP)

Fundamentals of ERP are the same as that of MRP II. ERP is broader in scope and is capable of dealing with more business functions and has a better and tighter integration with the finance and accounting functions. ERP is an enterprise-wide set of forecasting, planning and scheduling tools, which links customers and suppliers into a complete supply chain. The goals of ERP include high levels of customer service, improved productivity, cost reduction, better inventory turnover (just-in-time inventory), etc. ERP is more powerful because it applies a single set of resource planning tools across the entire enterprise, provides real-time integration of sales, operating and financial data and connects resource planning approaches, to the extended supply chain of customers and suppliers.
Reasons for the Growth of ERP

ERP improves business performancecycle time reduction, inventory reduction, faster response times, streamlined and faster order fulfillment, etc. ERP supports business growth requirements like new products, product lines, customers, multiple language and multiple currency support, etc. ERP provides flexible, integrated, real-time decision support ERP eliminates limitations in the legacy systems ERP takes advantage of the untapped mid-market of medium-sized organizations
Advantages of ERP
Business integration - ERP packages integrates the information processing and automates data updating (automatic data exchange among applications) between related business components. Flexibility - Diverse multinational environments such as language, currency, accounting standards, etc. are covered in one system, which makes the ERP systems very flexible. Better analysis and planning capabilities ERP systems enables the comprehensive and unified management of related businesses and its data. This unification makes it possible to fully utilize many types of decision support systems and simulation functions. Use of latest technology - ERP vendors uses the latest developments in the field of information technology. This technology adoption benefits the organizations using the packages as they get better products and with better capabilities. Planning (Second Edition). Copyright 2008, Alexis Leon. All rights reserved. Enterprise Resource
Why ERP?
Why ERP?
ERP offers solutions for all business functions Packages available for organizations of all sizes and types Global nature (multi-lingual and multi-currency support)
Over Expectations abut ERP (One of the main reasons for failed implementations)
Insufficient pre-implementation preparation Lack of awareness among employees Lack of awareness among management about costs Wrong concepts about ROI and payback period Conduct Gap analysis to find out company requirements and the functions a package possesses. Select experienced and professional consultants Select the right package Select employees with the right attitude for implementation team Ensure that knowledge transfer happens between consultants and employees as well as between vendors and employees Ensure that there is enough in-house consultants and integrators during the operation and maintenance phase
Successful ERP Implementations

PP 02

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PP 02

Uploaded by

Copyright:

Available Formats

02.

Enterprise Resource Planning (Second Edition) By Alexis Leon

Common Myths about ERP

Inventory Management and Control

Materials Requirement Planning (MRP)

Manufacturing Resource Planning (MRP II)

Enterprise Resource Planning (ERP)

Reasons for the Growth of ERP

Successful ERP Implementations

You might also like