2. What is ERP?
• The practice of consolidating an
enterprise’s planning, manufacturing, sales
and marketing efforts into one management
system.
• Combines all databases across
departments into a single database that can
be accessed by all employees.
3. Evolution of ERP
1960s: software packages with inventory control
1970s: MRP systems
Production schedule with materials management
1980s: MRPII systems
Adds financial accounting system
1990s: MRPII
Integrated systems for manufacturing execution
Late 1990s: ERP
Integrated manufacturing with supply chain
4. Major Reasons for Adopting ERP
• Integrate financial information
• Integrate customer order information
• Standardize and speed up operations
processes
• Reduce inventory
• Standardize Human Resources information
5. How do ERP System Work
5
Employees
Managers and
Stakeholders
Central
Database
Reporting
Applications
Human
Resource
Management
Applications
Financial
Applications
Manufacturing
Applications
Inventory
And Supply
Applications
Human
Resource
Management
Applications
Service
Applications
Sales and
Delivery
Applications
Sales Force
And Customer
Service Reps
Customers Back-office
Administrators
And Workers
Suppliers
6. Components of ERP System
Finance: modules for book keeping and making
sure the bills are paid on time. Examples:
General ledger
Accounts receivable
Accounts payable
HR: software for handling personnel-related tasks
for corporate managers and individual employees.
Examples:
HR administration
Payroll
Self-service HR
9. 9
An ERP Example: After ERP
Database
Customers Sales Dept.
Purchasing
Warehouse
Accounting
Vendor
Inventory Data
If no parts,
order is placed
through DB
Orders
Parts
Order is submitted
to Purchasing.
Purchasing record
order in DB
Order is placed
with Vendor
And invoices accounting
Financial Data exchange;
Books invoice against PO
Books inventory
against PO
Ships parts
10. Potential Benefits of ERP
Internal Benefits
Integration of a single source of
data
Common data definition
A real-time system
Increased productivity
Reduced operating costs
Improved internal communication
Foundation for future improvement
11. Potential Benefits of ERP
External Benefits
• Improved customer service and order
fulfillment
• Improved communication with suppliers and
customers
• Enhanced competitive position
• Increased sales and profits
12. Benefits of ERP
Direct benefits include:
1. improved efficiency
2. information integration for better
decision making
3. Faster response time to customer
queries
14. Potential Benefits are
1. Reduction of Lead-Time
2. On-Time Shipment
3. Reduction in cycle time
4. Better customer satisfaction
Others are
1. Improved supplier performance
2. Increased Flexibility
3. Reduction in quality costs
4. Improved resource utility
5. Improved information accuracy and decision-
making ability
15. Risks with ERP Implementation
Expensive (can costs 100 thousands to
millions of dollars)
Time-consuming (can take months to years)
Great risk for the organization
Transfer of Knowledge
Acceptance with the company
16. Before ERP & After ERP
Stand alone System.
Lack of coordination
among business
function(Manufacturing &
sales)
Non Integrated data: Data
have different meanings.
System are maintained on
a procedural basis
Redundant data and
inconsistent information.
Difficult to manage.
Integrated System.
Support coordination
among business functions.
Integrated Data: Data have
the same meaning across
multiple functions.
Changes affect multiple
functions or Systems
Common interfaces across
systems.
17. Modules of ERP
Finance
Material
Sales
Marketing
Personnel
19. ERP Finance Module
In This Data is collected From
various functional departments
and generate financial reports
ledger, Trail Balance, Balance
Sheets etc.
20. ERP HR(Human Resource) Module
HR Module routinely maintain a complete
employee database including contact information,
Salary details Attendance, Promotions of all
employees.
Produce pay check Reports
Maintain personnel Record
Training
Time and Attendance Benefits
24. ERP Implementation Approaches
The big bang – install a single ERP system across
the entire organization
Franchising – Independent ERP systems are
installed in different units linked by common
processes, e.g., bookkeeping.
Slam dunk – install one or several ERP modules
for phased implementation of key business
processes
25. Major Phases of ERP Implementation
Initiation – develop business case, project scope,
and implementation strategy
Planning – establish implementation team,
determine goals and objectives, establish metrics
Analysis and process design – analyze and
improve existing processes, map new processes to
be adopted by the system
26. Major Phases of ERP Implementation
Realization – install a base system,
customization, and test the system
Transition – replace the formal system with
the new system, data conversion
Operation – monitor and improve system
performance, provide continued training and
technical support
27. Major Challenges to ERP Implementation
Limitations of ERP technical capabilities
Inconsistency with existing business processes
Costs - implementation (hardware, software,
training, consulting) and maintenance
Changes in employee responsibilities
28. Major Challenges to ERP Implementation
Flexibility of software system upgrades
Implementation timelines
Availability of internal technical knowledge
and resources
Education and training
Implementation strategy and execution
Resistance to change
29. New Developments In ERP
Availability of web-based and wireless ERP
systems
Adoption of easy-to-install ERP systems
Linkage to other software systems, e.g., supply
chain management system, e-commerce, customer
relationship management system
30. Advantages of ERP
Quicker completion of Processes
Single system
Modular software
Database
Easier to track various tasks
Manage globally Data
