Introduction

to ERP
ERP Week 1

Draft by: Selma Oktavia Widayat

Check and edit: Kristanto Agung Nugroho, S.T., M.Sc.
 OBJECTIVE
● To introduce the concept of Enterprise
Resource Planning (ERP).
● To describe benefits of ERP.
● To describe the limitations of ERP.
● To describe “What an integrated system is.”
 ERP = Enterprise Resource Planning
The software tools used to manage enterprise
data.
What is A packaged business software system to:

ERP? ● automate and integrate the majority of

business processes
● share common data and practices
● produce and access information in a real-
time environment
 BENEFITS OF AN ERP SYSTEM

DIRECT • Business Integration

improved efficiency, • Flexibility

information integration for
• Better Analysis & Planning
better decision making, faster
Capabilities
response time to customer
queries, etc • Use of Latest Technology

INDIRECT
better corporate image,
improved customer goodwill,
customer satisfaction, and so
on.
Other Benefits of an ERP System
1. Reduction of lead-time
2. On-time shipment
3. Reduction in cycle time
4. Better customer satisfaction
5. Improved supplier performance
6. Increased flexibility
7. Reduction in quality costs
8. Improved resource utility
9. Improved information accuracy
10. Enhanced decision-making capability
Benefits of an ERP System Illustration
Benefits of an ERP System Illustration
Before & With ERP
Before & With ERP
LIMITATIONS OF THE ERP SYSTEM
1. Can’t analyze business situations to provide insight into future courses of
action.
2. Too rigid in their ability to continually reshape and restructure workflows as
business challenges and opportunities arise.
3. Lack the ability to expand their scope to multiple enterprises.
4. Too expensive to install and maintain.
5. Difficult to adapt to the specific Workflow and Business process of some
companies.
6. There are some risks to watch out for in implementing an ERP system
 ● User Resistance/Revolt.
● Mismatch between ERP system
and Organizational Culture.
Some Risks to
● Inability to manage technology.
Watch Out for in ● Illogical processing.
Implementing an ● Inability to stop processing
ERP System quickly.
● Cascading errors.
● Repetition of Errors.
● Concentration of data.
 WHAT DO ERP SYSTEMS COVER?

• Reduces the complexity in the business

processes.

Planning
• Delivers requirements satisfactorily.

and • Has common “ways of working” (uses

Execution standard processes for transactions).
• Adheres to a common set of financial
standards and product coding.
• Integrated across a large portion of the
organizations internal procedures.
Some of ERP Vendors
ERP & Business Processes

To understand ERP, you must

understand how a business
works:
• Functional areas of operation
• Business processes
Functional Areas / Functional Structure
 ● The Silo Effect refers to the lack of cross-
departmental communication.
● Focusing on functional objectives
without regard to process objectives

Silo Effect ● Optimizing functional goals vs. process

goals
● Process execution requires
1. Communication and coordination
among functions
2. How is this achieved?
 ● Impossible to manage processes that
are geographically dispersed without
utilizing modern information systems
● Enterprise systems (ES) support end-to-
ENTERPRISE end processes

SYSTEM Investments in ES have provided

● Increased profitability
● Increased productivity
● Competitive edge
 Business Processes
• Sequence of tasks or activities that
produce desired outcomes
Generic Business Process
• Key processes:
1. Procurement
2. Fulfillment
3. Production
• Processes interrelated with other
processes
• Processes may have sub-processes

Key Business Process

Procurement Process
Production Process
Fulfillment Process
Inventory and Warehouse Management Process
Asset Management Process
Customer Service Process
Project Management Process
 Global Bicycle, Incorporated (GBI)
• Fictional company
• Background on GBI can be found in the overview document on the SAP
University Alliance Community (http://uac.sap.com)
• GBI data is used throughout the book to illustrate key concepts and
processes
• Hands-on exercises and demos use GBI data
GBI Organizational Structure
 Daftar Pustaka
Magal, S. R. Integrated Business Processes with ERP Systems. [VitalSource Bookshelf]. Retrieved
from https://bookshelf.vitalsource.com/#/books/9780470571675/

Parthasarthy, S. (2007). Enterprise resource planning (ERP) a managerial and technical perspective. New Age
International (P) Ltd., Publishers.
Thankyou!