If there is a comment next to the audio file saying, “Please use the embedded time”

or “burned-in time”, whENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS

In recent years MRP II has evolved into large suites of software called ERP systems. ERP integrates
departments and functions across a company into one system of integrated applications that is con
nected to a single common database. This enables various departments to share information and com
municate with each other. An ERP system is composed of function-specific modules that reflect
industry best practices. Designed to interact with the other modules (for example, accounts receivable,
accounts payable, purchasing, and so on), these commercial packages support the information needs
of the entire organization, not just the manufacturing functions. An ERP can calculate resource
requirements, schedule production, manage changes to product configurations, allow for future planned
changes in products, and monitor shop floor production. In addition, the ERP provides order entry,
cash receipts, procurement, and cash disbursement functions along with full financial and managerial
reporting capability.
A lean manufacturing company will have an ERP system that is capable of external communica
tions with its customers and suppliers through electronic data interchange (EDI). The EDI communi
cations link (via Internet or direct connection) will allow the firm to electronically receive sales
orders and cash receipts from customers, send invoices to customers, send purchase orders to
FIGURE

7-24
THE INTEGRATION OF MANUFACTURING AND FINANCIAL SYSTEMS WITHIN THE MRP II
ENVIRONMENT
Sales
Orders
Management
Reporting
System
Purchases
System
Payroll
System
Billing
System
Performance
Information
Sales Order
Processing
System
Completed
Work Orders
Raw Materials
Requirements
Employee Time
Information
RM and FG
Inventory
Inventory
Control
System
Cost
Accounting
System
Manufacturing
Resources
Planning II (MRP II)
System
Completed
Move Tickets
CHAPTER 7
The Conversion Cycle
333vendors, receive invoices from vendors and pay them,
as well as send and receive shipping documents. EDI
is a central element of many electronic commerce
systems. We will revisit this important topic in Chap
ter 12.
Similarities in functionality between ERP and MRP
II systems are quite apparent. Some argue that very little
real functional difference exists between the two con
cepts. Indeed, the similarities are most noticeable when
comparing top-end MRP II systems with low-end ERP
packages. A primary distinction, however, is that the
ERP has evolved beyond the manufacturing market
place to become the system of choice among nonmanu
facturing firms as well. On the other hand, cynics argue
that changing the label from MRP II to ERP enabled
software vendors to sell MRP II packages to nonmanu
facturing companies.
The market for ERP systems was for many years
limited by high cost and complexity to only the largest
companies and was dominated by a few software ven
dors such as SAP, J.D. Edwards, Oracle, and People
Soft. In recent years this market has expanded
tremendously with the entry of many small vendors tar
geting small and mid-sized customers with less expen
sive and more easily implemented ERP systems. The
importance of the ERP phenomenon warrants separate
treatment that goes beyond the scope of this chapter. In
Chapter 11, therefore, we will examine ERP systems
and related topics, including supply chain management
(SCM) and data warehousing.
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