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CHAPTER 1 Enterprise Resource Planning Notes

CHAPTER 1 Enterprise Resource Planning Notes

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Published by saudgazali

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Published by: saudgazali on Aug 31, 2009
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Enterprise resource planning
Semester 5
BSc (IT)
Chapter: 1Content:
1. Introduction to ERP2. Evolution of ERP3. What is ERP?4. Reason for the growth of ERP5. Scenario and Justification of ERP in India6. Evaluation of ERP7. Various modules of ERP8. Advantages of ERP
1. Introduction to ERP
Short for 
a business management system that integrates allfacets of the business, including planning, manufacturing, sales, and marketing.As the ERP methodology has become more popular, software applications have emergedto help business managers implement ERP in business activities such as inventorycontrol, order tracking, customer service, finance and human resources.Enterprise resource planning's true ambition is to integrate all departments and functionsacross a company onto a single computer system that can serve all those differentdepartments' particular needs.Thus ERP attempts to integrate all departments and functions across a company onto asingle computer system that can serve all those different departments' particular needs.ERP systems are IT systems which are meant to serve all the IT needs of a manufacturingcompany. ERP stands for "Enterprise Resource Planning". This type of system hasevolved from earlier MRP and MRPII systems.MRP stands for "Material Requirements Planning", and is a computer technique for taking a product schedule as input and generating works and purchase orders as output.MRP II was a later development of MRP which arose because MRP needed a set of  business processes surrounding it to make it effective. Not all of the business processesneeded IT support, but others did, hence MRPII systems supported a wider range of  business processes than MRP. The name MRPII came about because the new set of  business processes was called "Manufacturing Resource Planning", and because theinitials were the same as MRP, the II was tagged on.
MRPII systems tended to be so wide in scope that eventually systems developed towardsgiving IT support to all parts of a manufacturing company. This is when the term ERPcame into use to signify its enterprise-wide scope.
2. Evolution of ERP
The history of ERP can be traced back to the 1960’s, when the focus of systems wasmainly towards inventory control. Most of the systems software were designed to handleinventory based in traditional inventory concepts. The 1970’s witnessed a shift of focustowards MRP (Material Requirement Planning).This system helped in translating the master production schedule into requirements for individual units like sub assemblies, components and other raw material planning and procurement. This system was involved mainly in planning the raw materialrequirements.Then, in 1980’s came the concept of MRP-II i.e. the Manufacturing Resource Planningwhich involved optimizing the entire plant production process. Though MRP-II, in the beginning was an extension of MRP to include shop floor and distribution managementactivities, during later years, MRP-II was further extended to include areas like Finance,Human Resource, Engineering, Project Management etc.This gave birth to ERP (Enterprise Resource Planning) which covered the cross-functional coordination and integration in support of the production process. The ERP ascompared to its ancestors included the entire range of a company’s activities. ERPaddresses both system requirements and technology aspects including client/server distributed architecture, RDBMS, object oriented programming etc.
Evaluation Criteria
1.Some important points to be kept in mind while evaluating ERP software include2.Functional fit with the Company’s business processes.3.Degree of integration between the various components of the ERP system4.Flexibility and scalability5.User friendliness6.Ease of implementation7.Ability to support multi-site planning and control8.Technology - client/server capabilities, database independence, security9.Availability of regular upgrades10.Amount of customization required11.Local support infrastructure12.Reputation and sustainability of the ERP vendor 13.Total costs, including cost of license, training, implementation, maintenance,customization and hardware requirements.
Why ERP?
1. To Enhance Profitability:
a)Increase in sales b)/or Reduce Procurement Cost
2. for Healthy Operations:
a)Integration of Systems across the Functional Departments in aCompany as well as across the Enterprise as a Whole. b)Better Customer Service.c)Introduction of Latest Technologies as and when the are ready for theIndustry acceptanced)Expertise databasee)Avoids data redundancy
3. Competition in the Market:
a)Manufacturing Challenges. b)Manufacturing Globally.c)Distribution network spread.d)New Product introduction.e)Lower manufacturing lead time.f)Focus on industry markets.g)Satisfying the needs of customers.h)Develop specific business methods and processes.i)Integration with third party products.
4. Demands on the Industry:
a)Better products at lower costs b)Tough competitionc)Need to analyze costs / revenues on a product or customer basisd)Flexibility to respond to changing business requirementse)More informed management decision making
5. Solving the Problems:
a)Unable to get accurate, timely information b)Applications not complete for existing business practicesc)Modifications are time consuming or not feasible
Solving these Problems will the company ahead of competition!

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