ERP: The Conclusion

Session-10
Organizational level
Enterprise

Ledger Ledger

Legal Legal Legal

Business Business
Legal
organization organization

Business Business Inventory

organization organization management

Inventory Inventory
management management

Inventory
management

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Document Analysis Module
What is a process document?
A process document outlines the steps necessary to complete a task or process.
It is an internal, ongoing documentation of the process
Documentation cares more about the “how” of implementation than the “what” of process
impact.
Who is involved in process documentation?
Business process documentation involves three parties: The Internal team (project team) The
stakeholders. The external parties.
The goal of process documentation is similar to that of business process management. It
improves business performance and operational agility by optimizing core processes.

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Document Analysis Module (Cont.)
Creation of Documents in ERP
Document and Analysis and Click on document or write content
Title
Content
Chapter
URL
Category
Comments
Priority or weightage
In inoERP, two tabs for documentations are provided: 1. Process Document 2. System Document.
The tabs can be seen from “issue Logs” pages as well.

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What is inventory?
Inventory or stock refers to the goods and materials that a business holds for the ultimate goal
of resale, production or utilization. Inventory management is a discipline primarily about
specifying the shape and placement of stocked goods.
What is smallest element of inventory?
Item (Check Item master Inventory----→ Item master ---→ Upload Item)
How to save the items?
Classification based on item types.
What is IC (Inventory Count)? How to manage IC?
What is IT (Inventory transaction)?
Inward and outward IT
UOM and Sub-inventory

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Inventory: Item Master
Create an item and then assign it to the organization.
What is Item Master?
An item master is a record of all the key information about a particular item of inventory. This
could include the date of manufacture, a short description of the inventory item, its dimensions
(size, weight etc.), its cost, as well as information about current stock levels.
What is Item Master Maintenance?
Item Master Maintenance, is used to add new item numbers to the system and to delete item
numbers from it. You can also maintain certain pieces of information about each item.
Item master data is at the heart of almost every process in ERP

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Inventory: types of items
Product
Expense
Expense quantity
Non product
MRO inventory (Maintenance, Repair and operation)
Finished
Raw
Sub-assembly

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Inventory: Inventory Count
What is an inventory count?
The inventory count or stocktaking procedure refers to the physical verification of the quantities
in an inventory or warehouse, and what kind of condition they're in.
In your ERP, you can verify the physical quantity and system quantity.
In ERP, organizations can maintain schedule for inventory count.
Approval and rejection of inventory count is also possible using ERP.
One can search items and inventory through ERP inventory count section.

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Inventory: ABC Valuation and Analysis
In materials management, ABC analysis is an inventory categorization technique.
ABC analysis divides an inventory into three categories
◦ "A items" with very tight control and accurate records,
◦ "B items" with less tightly controlled and good records, and
◦ "C items" with the simplest controls possible and minimal records.

The ABC analysis provides a mechanism for identifying items that will have a significant impact
on overall inventory cost.
It also providing a mechanism for identifying different categories of stock that will require
different management and controls.

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Inventory: Inventory Transaction
ERP can also manage on hand inventory
Inventory transactions are used to track the quantities and movements of inventory items.
Transaction records are created by the applications that interface with the inventory system,
such as Purchasing, Receiving, and Task Management.
You can also create transactions from actions on inventory items.
Inventory receipts are used to list and record the inventory items that you receive from your
suppliers.

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Inventory: UOM
It stands for Unit of Measure.
UOM are used to quantify the inventory items and enables to track them.
It's a physical unit (like kg, dozen, meter etc.) in which we measure and manage different items.
Different UOMs can be used for different transactions i.e. purchasing UOM will be different from
storing UOM.
The unit of measure class is Quantity. The From UOM is Case (CS). The base unit of measure is
Each (EA).

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Inventory: Sub-Inventory
What is sub inventory?
A sub-inventory is a subdivision of an organization representing either a physical area or a logical
grouping of items such as a store-room or receiving dock. Every organization needs at least one
sub-inventory. When an item is defined it is allocated to particular sub-inventories.
What are the types of Sub-inventories available?
There are two types of sub-inventories within Warehouse Management, storage and receiving.
Storage sub-inventories are intermediate or final put away locations for material. Receiving is
used before consumption.

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13
 Payment lifecycle
1. Validation: Financial validation of
Suppliers
3. 1. 2. Reservation: Ensures that funds are
Finalization Validation
available before shipment of the goods. The
reservation amount is the sum of all order
release amounts. This process occurs during
2. Reservation
a release to fulfillment.
3. Finalization: Final release of the fund
after verification of received goods

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Purchase: Requisition
What is a requisition?
A requisition refers to the process of formally requesting a service or item, typically using a
purchase requisition form or other standardized document. The requisition process is a
standardized way of keeping track of and accounting for all requisitions made within a business.
Inventory requisition: External and internal.
Internal requisition will be from child organization and external will be from outside
organization.
Who prepares purchase requisition?
The purchase requisition process starts with a purchase requisition or purchase request form, a
document that is created by the purchaser and submitted to the department that controls
finances. Consider this the part of the purchasing process where you get the thumbs up to
purchase the goods and services you want.

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Internal Requisition

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Purchase: PO
How does a purchase order work?
A purchase order is used by a buyer to place an order and is issued before delivery. An invoice is
issued by a seller using invoicing software after an order is delivered. It defines the amount the
buyer owes for the purchased goods and the date by which the buyer needs to pay.
What purchase order means?
A purchase order is a commercial source document. Whether checks are written to be that is
issued by a business' purchasing department when placing an order with its vendors or
suppliers.

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Purchase: RFQ
What does RFQ mean in purchasing?
request for quote
A request for quote (RFQ), also known as an invitation for bid (IFB), is a process in which a
company solicits select suppliers and contractors to submit price quotes and bids for the chance
to fulfill certain tasks or projects.

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Purchase: BPO
What is meant by blanket purchase order?
A Blanket Purchase Order (BPO) is the preferred method for placing orders which will require
multiple payments over a period of time. Examples of BPO's are: standing orders,
maintenance/service contracts, and open orders.
A blanket release is an actual order of goods or services you issue against a blanket purchase
agreement.
The blanket purchase agreement determines the characteristics and the prices of the items.
The release can be created manually or automatically. Amount Agreed: amount of the
agreement to buy goods or services.

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Purchase: ASL and Sourcing rule
You can define sourcing rules that specify how to replenish items in an organization, such as
purchased items in plants.
ERP helps maintain Approved Supplier List.
It helps maintain Supplier volume and supplier balance.

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Sales
Lead
Opportunity
Quote
SO

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Sales and Distribution: Lead
A good lead distribution system will allow a business to easily assign its leads to its sales team.
These leads will then have to be automatically distributed to the sales or tele-calling team.
This could be based on criteria like geography, product, industry or level of expertise.
A sales lead is a person or business who may eventually become a client.
Sales lead also refers to the data that identifies an entity as a potential buyer of a product or
service.
Businesses gain access to sales leads through advertising, trade shows, direct mailings, third
parties, and other marketing efforts.

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Sales: SO and DP
Sales order picking is a generic business process that represents picking inventory to fulfill a
sales order, which is a common task for most businesses.
PO vs SO: Purchase orders are used by buyers to initiate the purchasing process with a supplier.
Sales orders are sent by suppliers to buyers after receiving a purchase order from the buyer –
verifying details and the confirmation of the purchase.
A Delivery Process is a special process describing a complete and integrated approach for
performing a specific project type. Its phases are inception, construction, transition, production
and retire.
It describes a complete project lifecycle end-to-end and is used as a reference for running
projects with similar characteristics.

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Sales Report
Gross margin is a company's net sales revenue minus its cost of goods sold (COGS).
In other words, it is the sales revenue a company retains after incurring the direct costs
associated with producing the goods it sells, and the services it provides.
A shipment is an amount of a particular kind of cargo that is sent to another country on a ship,
train, airplane, or other vehicle.
The sales funnel (also known as a revenue funnel or sales process) refers to the buying process
that companies lead customers through when purchasing products.
Customer Sales means sales of Goods by Licensee directly or through its authorized wholesalers,
representatives or distributors to retail establishments for eventual resale to the consumer.

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BOM
A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies,
subassemblies, parts and components, as well as the quantities of each, needed to manufacture
a product.
In a nutshell, it is the complete list of all the items that are required to build a product.
BOM Level—Assign each part or assembly a number to detail where it fits in the hierarchy of the
BOM.
Part Number—Assign a part number to each part or assembly in order to reference and identify
parts quickly.
Part Name—Record the unique name of each part or assembly.

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BOM
Sales and marketing overheads are costs incurred in the marketing of a company's products or
services to potential customers.
Examples of sales and marketing overheads include promotional materials, trade shows, paid
advertisements, wages of salespeople, and commissions for sales staff.
An indented bill of materials (BOM) differs from a single-level bill of materials in that it includes
the lower level components of the subassemblies of a product.
The indented BOM lists all components of the product from the finished article to the raw
materials.
Overhead BOM: To support the BOM, cost needs to be incurred.

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Rollup Cost
The purpose of cost rollup is to include the cost of goods manufactured of all the materials in a
multilevel production structure within the costs of the material located at the top of the
structure.
The costs are rolled up automatically using the costing levels.
Cost Types:
Fixed Cost – It is the cost of fixed inputs used in production. ...
Variable Cost – It is the cost of variable inputs used in production. ...
Semi Variable Cost – It refers to costs which are partly fixed and partly variable. ...
Total Cost – It refers to the total cost of production.
Preferred resource group

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Work Order
A work order is usually a task or a job for a customer, that can be scheduled or assigned to
someone.
Such an order may be from a customer request or created internally within the organization.
Work orders may also be created as follow ups to Inspections or Audits. A work order may be for
products or services.

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Work In Progress
What WIP means?
work-in-progress
The term work-in-progress (WIP) is a production and supply-chain management term describing
partially finished goods awaiting completion.
WIP refers to the raw materials, labor, and overhead costs incurred for products that are at
various stages of the production process.
What is WIP time?
The inventory between the start and the end points of a production system (not counting crib
inventory or finished goods inventory) is called work-in-progress time (WIP).

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Learning Management
A learning management system is a software application for the administration, documentation,
tracking, reporting, automation and delivery of educational courses, training programs, or
learning and development programs.
The learning management system concept emerged directly from e-Learning.
The module is useful for training of the employees.
The module is useful for academic institute.

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Process Manufacturing
Process Routing manufacturing sometimes referred to as production routings, is the route to be
followed during each step of the manufacturing process when transforming components and
raw materials into a final product.
Routings show the production flow that needs to be achieved.
Batch manufacturing is a style of manufacturing which compiles the different components of a
product through step by step processes.
This basically means that the raw materials move through the production line in batches, so that
there is a pause between each step as a batch moves through.
The recipe refers to the ingredients, equipment needed for production, procedures of combining
the ingredients, and instructions on how to configure the equipment (e.g. a required mixing
time and temperature).
The bill of materials of the process industry is the formula

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Forecast and Planning
The Kanban Method suggests an approach of managing the flow of work with an emphasis on
continuous improvement without overburdening the development team that focuses on
productivity and efficiency.
It is a method designed to help you optimize workflow and use your team's full capacity. The
diagram of Kanban practices is shown in the figure below:

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Forecast and Planning
The diagram shows the Kanban Method implementation:

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Forecast and Planning
You can use min-max planning to maintain inventory levels for all your items or selected items.
With min-max planning, you specify minimum and maximum inventory levels for your items.
When the inventory level for an item drops below the minimum, ERP Inventory suggests a new
requisition or job to bring the balance back up to the maximum.

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Accounts Payable Vs. Accounts
Receivable
Accounts Payable: Accounts payable (also referred to as AP) is an account on your company’s
general ledger that represents an obligation to pay off a debt to creditors or suppliers.
In short, it’s the money owed by your business to third parties.
Accounts receivable: (also known as AR) refers to outstanding invoices that are owed to your
company by customers.
It represents a line of credit that has been extended from the client to the customer.
Accounts payable and accounts receivable are two sides of the same coin.
Whereas accounts payable represents money that your business owes to suppliers, accounts
receivable represents money owed to your business by customers.

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E-commerce
E-commerce (electronic commerce) is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet.
These business transactions occur either as business-to-business (B2B), business-to-consumer
(B2C), consumer-to-consumer or consumer-to-business.
Sales orders are vital to inventory and order management systems.
When a customer sends you a purchase order or places an order on your eCommerce store,
your business becomes obligated to fulfil the order.
A sales order gives you information on your inventory.

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Cash Management
Cash management is the process of collecting and managing cash flows.
Cash management can be important for both individuals and companies.
In business, it is a key component of a company's financial stability.
ERP manages cash by connecting system to the organizational bank accounts.
Finally, it matches account statements and generates the cashflow.

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General Ledger
A general ledger represents the record-keeping system for a company's financial data with
debit and credit account records validated by a trial balance.
The general ledger provides a record of each financial transaction that takes place during the life
of an operating company.
The general ledger holds account information that is needed to prepare the company's financial
statements, and transaction data is segregated by type into accounts for assets, liabilities,
owners' equity, revenues, and expenses.
A general ledger is the foundation of a system used by accountants to store and organize
financial data used to create the firm’s financial statements.

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Asset Maintenance
Asset Maintenance refers to any activity done on Assets to maintain their performance or
condition.
ERP provides features to track the details of individual maintenance/calibration tasks for an
asset by date, the person responsible for the maintenance, and future maintenance due date.
To perform Asset Maintenance in ERP:
1. Enable 'Maintenance Required' from the Asset master.
2. Create an Asset Maintenance Team.
3. Create the Asset Maintenance.
4. An Asset Maintenance Log is created.
5. Create Asset Repair Log.

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Point of Sales
Point of sale (POS), a critical piece of a point of purchase, refers to the place where a customer
executes the payment for goods or services and where sales taxes may become payable.
It can be in a physical store, where POS terminals and systems are used to process card
payments or a virtual sales point such as a computer or mobile electronic device.
Points of sale (POSs) are an important focus for marketers because consumers tend to make
purchasing decisions on high-margin products or services at these strategic locations.
Traditionally, businesses set up POSs near store exits to increase the rate of impulse purchases
as customers leave.
However, varying POS locations can give retailers more opportunities to micro-market specific
product categories and influence consumers at earlier points in the sales funnel.

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Fixed Asset
A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in
its operations to generate income.
Fixed assets are not expected to be consumed or converted into cash within a year.
Fixed assets most commonly appear on the balance sheet as property, plant, and equipment
(PP&E). They are also referred to as capital assets.

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