ERP Business Processes

A business process can be thought of as a collection of

activities happening in an enterprise during the day to day
functioning.

Through these business processes, enterprises achieve their

objectives.

Each business process starts with a trigger. As shown in the

below pic, Sales business process starts with a Sales order
creation.

Important Business processes which occur in a typical

manufacturing company
The below are the important Business processes occur in a
typical manufacturing company.
  Procurement process (buy)
 Production process (make)
 Fulfilment process (sell)
 Financial Accounting process

Procurement

Procurement business process includes all activities of buying

the raw materials to make products. Procurement can also
include purchase of consumables, equipment and assets.

Steps of a typical procurement cycle

1. Determining what to buy and how much—Procurement

planning:
2. Determination of the source of supply and selecting
vendor:
3. Purchase order creation:
4. Goods receipt:
5. Processing vendor payment and invoice verification:

Production process

Production or making process includes all activities or events to

produce products in an enterprise.

i. Routing
Routing determines the path from which the raw materials
flow within the factory. Once, the sequence is followed, raw
materials are transformed into finished goods.
ii. Scheduling
Scheduling is the second step that emphasizes on “When”
 the operation will be completed. It aims to make the most of
the time given for completion of the operation.
iii. Dispatching
the third step ensures that operations are done successfully
and everything is loaded on. Dispatching includes the
release of orders, in accordance with the scheduled charts.
iv. Follow-up
Also known as expediting, follow-up is the final step that
finds faults or defects, bottlenecks and loopholes in the
entire production process. In this step, the team measures
the actual performance from start till the end and then
compares it with the expected one.

Fulfilment process

Selling or fulfilment process includes all activities of creating

sales orders, sales invoices and delivering products to
customers.

i. Receiving inventory

Receiving inventory effectively means creating a safe, fast,

and organized process for handling received
inventory. Accurately tracking your goods from the moment
they arrive in your warehouse to the time they are shipped
to your customer.

ii. Inventory Storage

Once goods are received in the fulfilment centre, they are
inventoried and either immediately disbursed or sent to
short- or longer-term storage.
iii. Order Processing
An order processing management system dictates the
product picking and packing activities per each newly
received customer order.

iv. Picking
A picking team select items from the warehouse according
to a packing slip’s instructions. The packing slip contains
specific information, such as a list of item SKUs, product
colours, sizes, number of units and location in the
distribution centre’s warehouse.

v. Packing
Packing materials are selected by a packing team to achieve
the lowest practical dimensional weight. packing teams often
include return shipping materials and labels in case the
customer wishes to exchange or return the item for a refund
later.

vi. Shipping
The order is sent to a transportation channel or shipping
node to be shipped to the customer.

Financial Accounting process

Financial Accounting process includes all activities to

manage accounts payable, accounts receivable, assets and
G/L accounts in an enterprise.

Key Business Processes

1. Human capital management

2. MRP
3. Procurement
4. Retail inventory management
5. Project life cycle

Human capital management

Personal management is the part of management concerned

with people at work and relationship with an enterprise.

Human resource management is to obtain the greatest benefit

from the employees obtain materials & psychological rewards
from their work.

MRP

This is most comprehensive approach to manufacturing

inventory and other dependents which demand and efficient
inventory management system.

The MRP system determines item- by- item, what is to be

processed and when, as well as what to be manufactured when.

Procurement

Procurement is the act of obtaining goods and services,

typically for business processes. Procurement generally refers to
the final act of purchasing but it can also include the
procurement process overall which can be critically important
for companies leading up to their final purchasing decision.

Retail inventory management

Retail is the general term used to describe businesses that sell
physical products to consumers. While not exclusive to retail,
inventory management tends to play more of a role in this
industry than any others.

Project life cycle

Project life cycle is a framework for managing any of the

projects.

Initiating: Those processes performed to define a new project

or a new phase of an existing project by obtaining a new start
the project or phase.

Planning: Those processes required to establish the scope of a

project, refine the objectives, and define the course of action
required to attain the objectives that the project was
undertaken to achieve.

Executing: Those processes performed to complete the work

defined in the project management plan to satisfy the project
specifications.

Controlling: Those processes required to track, review, and

regulate the progress and performance of the project; identify
any areas in which changes to the plan are required; and initiate
the corresponding changes.

Closing: Those processes performed to finalize all activities

across all process to formally close the project or phase.
What is Business Process Management (and What
Does it Have to do With ERP)?

Business process management is the roadmap to the

destination of a successful ERP implementation. Like all
roadmaps, there are multiple routes to consider.

Within an ERP implementation there are various levels of

business process management to consider as you design your
new system:

Business Process Management (BPM) – Business process

management is a holistic approach used to evaluate, improve
and align business processes to an organization’s overall goals
and strategy. It enables businesses to be more efficient and
flexible to change.
Business Process Improvement (BPI) – There are a variety of
approaches within business process management; the first
being business process improvement. In this approach, it’s
important to examine the key processes within an organization
that are competitive differentiators.
 First, organizations identify the current state and primary
key performance indicators to measure success.
 Next, organizations determine root cause, validate root
cause and improve processes to optimize ultimate
efficiency.
 Finally, organizations put a control plan in place to monitor
the on-going process and ensure checks are put in place to
trigger appropriate responses if key metrics fall out of
control.
Business Process Reengineering (BPR) – Business process
reengineering identifies the current process but requires a more
radical change. It is used when current processes can’t be
improved with minor changes but need to be redesigned from
scratch, creating a new process from start to finish.
Business Process Optimization (BPO) – Optimization looks at
all of the existing processes within the business and seeks to
improve them to reduce the company’s overall cost to produce.
It tells the ERP vendor how you want your processes designed
so they can select the configuration that accurately aligns with
those processes.
Choosing the right level of business process management is
critical to designing a roadmap for your ERP implementation.