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Sanjoy Barman Ray

ERP stands for: Enterprise Resource Planning systems This is what it does: attempts to integrate all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

Why ERP?
For Management to know what is happening in the company One solution for better Management For cycle time reduction To achieve cost control & low working capital To marry latest technologies To shun the geographical gaps To satisfy the customers with high expectations To be Competitive & for survival

ERP - Definition
Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform

Evolution of ERP
1960s - Systems Just for Inventory Control 1970s - MRP Material Requirement Planning (Inventory with material planning & procurement) 1980s - MRP II Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.) Mid 1990s - ERP Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards ERP II Collaborative Commerce (Extending ERP to external business entities)

At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system

ERP systems automate business processes

ERP The organization before ERP

ERP bringing the organization together

SAP boasts 20,000 installations and 10 million users worldwide

ERP solutions are growing because:
ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses ERP addresses the need for global information sharing and reporting ERP is used to avoid the pain and expense of fixing legacy systems

Step 1 : Brazilian retailer orders, via the Internet, 1,000 shoes from International Shoe Co. A sales rep takes the order, routes it to ERPs ordering module, ERP checks the retailer credit, price, etc. The order is approved.
Step 2 : Simultaneously ERPs inventory module checks the stocks and notifies the rep that half the order can be filled immediately from stock. The other half will be manufactured and delivered in 5 days directly from the factory in Taiwan.


Step 3 : ERPs manufacturing module schedules the production in Taiwan and instructs the warehouse (in Chinese) to ship the shoes to Brazil and print up an invoice (in Portuguese).
Step 4 : ERPs human resources module calculates labor requirements. Due to a shortage, the personnel manager in Taiwan is instructed to get temporary workers. Step 5 : ERPs material planning module notifies the purchasing manager about a shortage of purple dye. A purchase order is automatically issued.

Step 6 : The customer logs on via the extranet to the companys sneakers division. He can see that 500 shoes were shipped from the regional warehouse. This is done with ERP tracing capabilities.
Step 7 : Based on data from ERPs forecasting and financial modules, the CEO can determine both demand and profitability per product. The financial module also converts all foreign moneys to $U.S., whenever needed


Founded 1972 in Waldorf, Germany Largest market share (30% - 60%) Revenues exceed $5 Billion Used by approx. 60% of multinationals Fourth largest supplier of software trailing Microsoft, Oracle and Computer Associates Over 2.5 million users Over 9,000 implementations of R/3 at over 6,000 companies Industry specific solutions

From SAPs website


ERP systems now attempt to cover all core functions of an enterprise, regardless of the organization's business or charter. These systems can now be found in nonmanufacturing businesses, nonprofit organizations and governments.


Financial Accounting

Quality Mgmt.

Project System

Plant Maint.


Prod. Planning

Sales & Distrib.

Materials Mgmt.

Human Resources

Asset Mgmt.



ERP delivers a single database that contains all data for the software modules across an entire company. People in different departments all see the same information and can update it.

Computer security is included within an ERP system to protect against both outsider and insider crime

ERP systems tie together varied processes using data from across the company. For instance, a typical ERP system manages functions and activities as different as the bills of materials, order entry, purchasing, accounts payable, human resources, and inventory control, to name just a few of the modules.

ERP software combined the data of formerly separate applications. This made the worry of keeping information in synchronization across multiple systems disappear. It standardized and reduced the number of software specialties previously required.

ERP systems allow companies to replace multiple complex computer applications with a single integrated system. ERP systems replace two or more independent applications and eliminate the need for external interfaces previously required between systems and provide additional benefits that range from standardization and lower maintenance to make reporting capabilities easier.

There are several disadvantages to enterprise resource planning: Cost

Implementing ERP is very expensive, price can range from $30,000 - $500,000, depending on the size of the company. ERP vendors can charge a license renewal fee annually which can also be costly for any business. Consultants may need to be used for installation or to maintain the ERP. Employees may need to be trained in ERP so they can fully utilize the system. Training times takes away from work time and can also cost additional funds.


Success of ERP depends on the skill level and experience of the companys work force. Enterprises view cutting training funds as a way to cut costs. Smaller companies may even need to underfund training this means their ERP system is often operated by personnel with inadequate education in ERP and the ERP vendor package being used. Proper training of the workforce is dependent to success with ERP. New employees must be trained before they can properly start working because of the ERP system

ERPs can be very rigid and may not fit the business flow of the company trying to use it. Companys may need to customize their ERP package which isnt allowed by most ERP vendors.

Employees may be needed to change the way they work to become more efficient. They maye feel resistant to change which can be a negative.