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ERP (enterprise resource planning): business software for running every aspect of a company including managing orders, inventory

, accounting, and logistics. Well known ERP software providers include BAAN, Oracle, PeopleSoft and SAP, collectively known to industry insiders as the "BOPS". ERP software deployments are usually associated with very large companies such as those in the Fortune 500, but as competition drives technology forward, accounting and industry-specific business management software is entering the ERP market space.
Enterprise Resource Planning (ERP) Definition

Enterprise resource planning (ERP) is the industry term used to describe a broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business. These parts can include 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. Some of the bigger players in the ERP outsourcing market are SAP, Peoplesoft, and J. D. Edwards. New comers include Oracle, IBM, and Microsoft.

Customer Relationship Management (CRM) Definition

Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner. In many cases, an enterprise builds a database about its customers. This database describes relationships in sufficient detail so that management, salespeople, and customer service reps can access information; match customer needs with product plans and offerings; remind customers of service requirements; know what other products a customer had purchased; etc.

Title Definition

Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service. Supply chain management flows can be divided into three main flows:

• • •

The product flow The information flow The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties.

According to the American Production and Inventory Control Society. component. (APICS). MRP II is a method for the effective planning of all resources of a manufacturing company. manufacturers. The current evolution of manufacturing resources planning (MRP and MRPII) systems. e-mail. or EDI (Electronic Data Interchange). manufacturers integrated MRP and other manufacturing and business functions. . etc. Some MRP software applications can automatically place those raw material orders to the preferred supplier by fax. software. ‘ A methodology for defining the raw material requirements for a specific item. that goes into that unit. and has a simulation capability to answer "what if" questions. and includes key suppliers. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP. metal. and provide financial and planning reports. financial planning in dollars. This shared data may reside in diverse database systems. will indicate what additional items need to be ordered to fulfill this order. and inventory projections in dollars. procurement. sales and operations planning.. shipping budget. MANUFACTURER RESOURCE PLANNING Computing Dictionary Definition: (MRP II) A system based on MRP which allows manufacturers to optimise materials. screws. or sub-assembly ordered by a customer. Output from these systems is integrated with financial reports such as the business plan. reduce costs. manufacturing processes. MRP systems will usually define what is needed. By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients). The basis of MRP is usually accomplished by a "one-to-many" relationship. A number of major Web sites offer e-procurement marketplaces where manufacturers can trade and even make auction bids with suppliers. ERP provides the foundation for integrating enterprise-wide information systems. material requirements planning (MRP). It includes business planning. it addresses operational planning in units. Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. MRP II has been replaced in some cases by the even more complex & comprehensive ERP (Enterprise Resource Management). production scheduling. linking one SKU (Stock Keeping Unit) to all the nuts. and by having access to current inventories and pre-existing commitment of that inventory to other orders to other customers. at several different sites and companies. or required by a business process. In the late 1970s and early 1980s. This renaissance is commonly known as Manufacturing Resource Planning (MRP II). Inc. This is usually defined by a hiearchial Bill of Materials (BOM) system. Ideally. MRP has been mostly replaced by the super-set MRP II. capacity requirements planning. when it is needed. and allow all parties in the supply chain to better manage current resources and plan for future needs. ERP is Enterprise Resource Planning. and the execution support systems for capacity and material. SCM applications have the potential to improve the time-to-market of products.Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise. or data warehouses. and end customers of a specific company). etc. purchase commitment report.

fundamentally. 5. the ERP system includes reporting tools for main reports as well as ad hoc reporting. it had become a business processing and business emulation tool. 3 Allows customization . A/P. as well as connect the organization to its customers and suppliers. IT is in the midst of yet another change. DB2/Unix. MS SQL Server. what have we done and did we make or lose money. ERPS (Enterprise Resource Planning Systems) comprises of a commercial software packages that promises the seamless integration of all the information flowing through the company . Based on reliable file structure. and Sybase. This . ERP Systems provide information management and analysis to organizations. Finally. and distribution. human resources. Database platforms to chose from are: DB2/400. 2. 3. ERP systems. DB2/MVS. Best-practices or optimized solutions are included in the applications. Benefits. and applicable to the core areas of our businesses. Manufacturing. and Sales. Oracle. integrate the different processes necessary in a business into a centralized pool that facilitates data sharing and eliminates redundancy. In implementation. Information Technology (IT) has always played a key role in providing businesses a competitive edge. In other words. They are installed on a Database Management System. A/R.These systems will link all aspects of a company's operations including human resources. 5. 4. Information entered once into system . SQLBase. ERP is a business tool. Over time. On-line/real time information throughout all the functional areas of an organization. 4. Provides functionality to interact with other elements in the process. manufacturing. invoicing etc. the more the information was accurate. Distribution. They require initial setup according to the organization's process. Once installed. IT has evolved. Advantages of an ERP system: 1. Examples of ERP packages are HRMS. the more we could dynamically plan our strategies and make concrete business decisions from it. IT could no longer live in its own kingdom of data processing. The analysis and reporting that can be used for long-term planning. the user only enters data at one point. IT performed mainly financial functions such as payroll. and thereby had to create a solid bridge with the business imperatives as its foundations. supply chain and customer information. accounting. This is where we started seeing concepts of Materials Requirement Planning (MRPII) come into light which over the 80s evolved into Enterprise Resource Planning (ERP). and the information is transferred through processes to other modules. This reduction of processing time together with the proliferation of IT beyond financial functions and into sales and Marketing and Manufacturing. There are five major benefits of ERP: 1. Its overall reporting capabilities have become awesome with the surreal performances of computing power. Creates efficiencies that organizations would not otherwise have. In the beginning. Each ERP Package may offer different functionality for different industries. financial planning. Informix. They may be customized according to the organization's process through the ERP's tool set. and the refinement of software operating systems and application packages today. have pushed IT from the strict business reporting realm to the much larger and dynamic realm of business planning. Forces use of the best practices. and was used mainly as a reporting tool. Data standardization and accuracy across the enterprise. Work flow can be setup to automate approval processes through chains of command. ERP systems include several basic features. available when needed. 6 Provides tools for ad hoc queries. 2.

ERP is an opportunity for business re-engineering. Depending on the levels of the . One gets the opportunity to restructure and reorganize people and departments to meet new challenges and global competition. Today. Prerequisites for effective implementation and usage of IT. ERP is in vogue. Hence one can assume its accuracy and reliability to a great extent. Also. In most cases. It is this consistency of information that is one of the greatest advantages of integrated ERP packages. While training users. importance of 'password' and 'controlled access' must be emphasized. You can't enter transactions unless all cross business rules have been fully defined. MRP II is a management concept while ERP is its technical subset. A lot of software companies and client organizations see IT as an end in itself. WAN technologies etc. and delivery to establish competitive advantage. ERP re engineers business. First and foremost is the top management's commitment. can in some cases become a costlier situation. It is possible to implement the package in three broad segments-manufacturing. or is he more interested in the initial licence revenue. these changes will reap good profits in a short time. Differences between ERP and MRP II. IT as a resource We see IT is seen as . IT cannot be looked at as an expenditure. As such. supply chain rapport (internal and external links between all activities). it is not possible to run both old and new systems simultaneously. ERP (all enterprise and 100% accuracy of data). ERP is a mere subset of MRP II.time though we facing a revolution rather than an evolution. in most cases errors are on account of incorrect data. finance. Information is a vital factor along with quality. To get the maximum benefit from a technology. Major problems faced by the user companies in implementing IT. This approach calls for building bridges from and to legacy systems and. Thus the importance of a tightly integrated package spanning every areas of the business. No doubt. It has to be considered as a resource. Does the vendor have the wherewithal to support a rigourous implementation: proven implementation method. Lack of commitment and availability from the client’s organization’s key people (executive commitment and availability of key users go hand in hand). The aim should be to deploy IT for gaining business advantage. It must be remembered that ERP is an opportunity for business re engineering. poor understanding. learning best practices. the entire organization-right from the sales people to the guy on the shop floor-has to be educated (about IT). The combination of on-line/real-time information. industry experts on staff. there has to be a change in attitude. welldefined procedures must be adopted to monitor access to the information. and is selling as there is a push from the ERP vendors to sell their software. as such. But once data is accepted. However. strong track record. While our vendors incorporate the latest in E-commerce/internet. and adopting them into the business. the complete benefit can only be gained if the entire re engineering process is followed. ERP versus SAP As we mentioned before. we strictly promote our systems as a business tool. The other issue could be the nature of commitment of the software vendor. it calls for attitudinal changes which will help in a smooth transition.. Java-client. However. We are now fast approaching the era of enterprise knowledge system.a resource and not as an expenditure. it will furnish the right information at all levels and at all places. cost. mere software implementation cannot be seen as a complete solution. and advanced planning and scheduling systems are causing a revolution in transforming a reporting and planning tool into an intelligent business execution tool. The software is tested and used in many organizations in different situations across boundaries. some packages like SAP do not allow such an approach. or improper tuning of the package. Further. This ensures discipline in the working of the entire organization. While ERP can be implemented in isolation. and distribution. which is a company-wide management system aiming at lowering costs and inventories and increasing productivity and customer service. ecommerce.

people. or both). when a business crosses the boundaries of the nation and becomes multinational. write. it has no other option but to use ERP so as to standardize operations worldwide. It is observed that. various privileges should be allocated (read. The periodic dumps of data and consistency of databases and their fine tuning must be ensured as in the case of legacy systems. Close linkage to business must be reviewed and monitored to ensure that the required information is made available to the right people at the right cost and in the right format so as to gain competitive edge in the era of global competition. In Summary Finally. The authorization to approve a transaction is also a requirement for certain critical functions. . it is always remembered that these packages are tools to support the business.