In this presentation, we will discuss the concept of ERP, scope and potentials of ERP software, meeting the business needs with ERP implementation, key terminologies and use of ERP across a complete business system. To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html

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 Customers
units
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 Operational logistics
Accounts receivables & payable Inventory Management
Cash planning & Management MRP
Cost accountancy Plant management
General ledger Production Planning
Product Cost accounting Project management
Profit center analysis Purchasing
Profitability analysis Quality management
Executive Information system Routing
Asset accounting Dispatching
Standard costing vendor analysis
Human Resources Sales & Marketing
Payroll,Manpower planning Sales Order,Pricing
Travel Expenses,HR accounting 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 Simplifying
Processes by Automate
Existing
Eliminating The process
Processes
wastes
Methods Methods Methods
Diagramming Elimination
EDI
Story boarding Combination
ERP
Brainstorming Rearrangement

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 DESCRIPTION
MIS Management Information Systems.No decision support
IIS Integrated Information Systems.No decision support
EIS Executive Information Systems.Decision support
CIS Corporate Information Systems.Decision support
EWS Enterprise Wide System. No decision support
Logistics are considered as part of system
EDI,JIT, Electronic Data Interchange,Just in Time,
EFT 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 Strategic transformation
Chaos
Chaos Optimization
Optimization
Stage1
Stage2
Stagnancy
Stagnancy Enhancement
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

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