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Enterprise Resource Planning
ERP is planning philosophy enabled with software
that attempts to integrate all the business processes of different departments and functions across a company on to a single computer system that can serve particular needs of the different departments Before ERP implementation, each department had its own computer system optimized for the requirements that a department needs. Each department maintained separate databases and deign applications as per their functionalities. ERP combines all the business requirements of
General Model for ERP .
Strategic and business planning – Resources * Intelligent resource planning •Human resource planning •Quality management E L E C T R O N I C D A T A I N T E R C H A N G I N G * Order Management * Distribution Management Organization Payroll / Employee Cost accounting Accounts receivable General Ledger Job/Project Management Fixed assets Accounts Payable Budgeting Inventory Logistics/Distribution Materials Data Model IMAGING * Facilities maintenance / Planning and implementation 2. Operational planning and materials – Resources * Payroll •Recruitment •Costing and budgeting •Job evaluation and performance appraisal •Quality control and planning •Maintenance engineering and scheduling •Fixed assets management •Resource MIS MULTI-MODE MANUFACTURING MULTI-CURRENCY MULTI-LINGUAL MULTI-PLATFORM MULTI-FACILITY General Model for ERP . Operational planning and execution – Materials * Routing •Order processing •Supplier management •Inventory / warehouse management •Forecasting •Distribution management •Scheduling and WIP management 4.WORKFLOW AUTOMATION 1.Strategic and Business Planning .Materials * New Product introduction •Bill of materials •Product Pricing •Long range forecasting and capacity planning •Engineering change management ELECTRONIC MAIL DATABASE CREATION 3.
General Model for ERP The figure is assumed to consist of four quadrants The circle at its centre represents the entities that constitute the central database shared by all functions of the enterprise The border represents the cross-enterprise functionality that must be shared by all systems. representing the capability required by it to compete and succeed globally multilingual and multi-currency multi-mode or mixed mode . The most important part of this crossenterprise border will be known as “multi”.
with the general ledger stated in US Dollar or Japanese Yen. splitting the payment into German Mark and Belgian Francs.General Model for ERP Multilingual be flexible enough to have customer service representatives in different countries taking orders in different languages and at the same time on a single host platform Orders must be printed or returned to customers in their native languages Multi currency functionality Must be capable of. billing in Italian Lire. receiving invoices in Indian Rupees. for instance. . receiving cash in British Pounds.
assemble-to-order or design-to-order. and not satellite software. a single manufacturing strategy of either discrete or continuous process is no longer practical. Enterprises now employ a mix of approaches including make-to-stock. grown through alliance and merger.General Model for ERP Multi-mode or mixed mode manufacturing In the enterprise of today. efficiently passing data . A single integrated software solution. should handle all these concurrently. highly-repetitive.
production units. Each and every transaction must flow seamlessly to be divisions’ or corporate set of books. and planning units but each usually has a set of accounts. Each of these may or may not have independent stores. assembly lines. The software should also seamlessly integrate operating platforms as the corporate database and departmental level applications may be required to run on a variety of hardware and software platforms .General Model for ERP Multi-facility The total solution must support multiple division or companies under a corporate banner. Multiple facilities are logical or physical entities linked to divisions. overhead centre.
The activities of inventory management include inventory requirements.Evolution of ERP Time line System 1960’s Description 1970’s Inventorymanagement and control is the Inventory management combination of information technology and and Control business processes of maintaining the appropriate level of stock in a warehouse. reconciling the inventory balances. MRP generates schedules for the operations and planning (MRP) raw material purchases based on the production requirements of finished goods. providing replenishment techniques and options. MRP utilizes the software applications for Material requirement scheduling production processes. the current inventory level and lot sizing procedure for each operation . and reporting inventory status. monitoring item usages. the structure of the production systems. setting targets.
ERP system integrate business activities across functional departments. accounting and human resources. . .Evolution of ERP Time line System 1980’s Manufacturing requirements planning (MRP II) Description 1990’s Manufacturing requirements planning(MRP II) utilizes software applications for coordinating manufacturing processes. parts purchasing. inventory control to product distribution Enterprise resource planning or ERP uses Enterprise Resource multi module applications software for Planning (ERP) improving the performance of internal business processes. product distribution. ERP software systems may include application modules for supporting marketing. inventory control. from product planning. from product planning. parts purchasing. fulfillment to order tracking. finance.
CRM. whether within the supply chain or an industry.Evolution of ERP Time line System Description 2000 . . workflow management. KM and workflow management ERP II have led to the advent of collaborative 2005 ERP II onwards commerce. ERP II includes project management.Commerce is the electronic interaction of businesses. with ERP II the customers. distribution and order entry functionality strengthened by capabilities like CRM.2005 Extended ERP Extended ERP includes the traditional materials planning . KM. integrated financials and internet and WWW integration. HRM. C. portal capability. HRM. suppliers and the company all work in union.
Business Engineering Business engineering is the re-thinking of business processes to improve the speed. quality and output of materials or services .
.Significance of Business Engineering In the early nineties. consultants provided guidelines on how to restructure leaner.. more efficient companies Such insights then paved a way for a new company infrastructure based on combination of process oriented business solution with information technology Contd………. downsize became the battle cry for consultants and managers in corporate America An urge to consolidate new organizations flourished. While many pro-downsizing commentators spoke of obliterating existing organizations. business engineering came to replace the outdated and overly simplistic views implied by downsizing.
this shift has created major social. Many companies have created special groups. all of which have led to the . technological and market changes. we live in the age of information. often led by senior executives. The reason why so many companies are engaged in extensive reengineering efforts is that society is shifting from an age where labourand machinery drove productivity to an age where productivity depends on knowledge and information in short. business engineering has gained acceptance throughout the world. that focus solely on BE.Significance of Business Engineering This new company infrastructure was designed to meet the challenge of creating a business environment that would optimize the performance and remain flexible enough to accommodate change Now.
products. BE enables the companies to realize these goals . by maximizing individual and team creativity and emphasizing process oriented approach. Only companies with innovative staff.Principles of Business Engineering Customer focused Responsive to changes in the market Achieves results by reshaping corporate structures around business processes implements change not by the complete automation of a business but rather by the redefinition of company tasks in holistic or process – oriented terms. will be able to retain their share of the market or hope to get a bigger slice of the pie. and services as well a short development cycles.
IT users. Next those processes should be reengineered to improve their effectiveness contd . and the IT experts must get together to chart out a company’s goals and identify the key processes that affect its success. the management.Business intelligence with IT Business engineering is effective only when it is combined with IT There are guidelines for deciding how. when and whether to apply Information Technology Before deciding upon a BE project.
Business intelligence with IT Other potential benefit of IT is very helpful in business strategy formulation to match or exceed the performance of a company’s competitors IT helps in streamline business processes to have a maximum effect with minimum resources in supporting company goals Along with implementation costs. the long term financial advantages of information technology are of major interest to numerous companies Some of the financial benefits are: Increased revenue per business call Decreased inventory. administrative and operating costs Recaptured market share Reduced or eliminated overtime . hardware.
Business engineering as the development of business processes with the .Business intelligence with IT Companies take best advantage of information technology if they already have an underlying business model and an extensive process engineering in place The effective integration of processes and their expansion in to new areas become decisive factor in maintaining a company’s competiveness The implementation of process – based software aims to achieve the full benefits of integration early on through the immediate realization of full process chains. To conclude.
Blue Print of Business Model .
Benefits of ERP Information integration Reduction of lead time On – time shipment Cycle time reduction Better customer satisfaction Improved supplier performance Increased flexibility Reduced quality costs Improved resource utility Better analysis and planning capabilities Improved information accuracy & decision making capability Use of latest technology .
Risks of ERP People issues Process risks Technological risks Implementation issues Operation and maintenance issues .
People issues Change management Internal staff inadequacy Project team Training Employee relocation and retraining Staffing (includes turnover) Top management support Consultants Discipline Resistance to change .
Process risks Program management Business process reengineering stage transition Benefit realization .
Technological risks Software functionality Technological obsolescence Application portfolio management Enhancement / Upgrades .
Implementation issues Project size Length implementation time High initial investment Unreasonable deadlines Insufficient funding Interface Organizational politics Scope management Unexpected gaps Configuration difficulties .
Operation and maintenance issues ERP process never ends in implementation phase There will always be new modules / features and versions to install New persons to be trained New technologies to be embraced New training to be conducted Requires Life long commitment by the company management and users of the system .
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