ERP Implementation

Methodologies
 ERP?
• ERP stands for

• Enterprise Resource Planning

 Enterprise
• A business organization
• This word most likely refers to the scope of
business process involved – not the scope of
organization because a lot of ERP system has
been implemented in Small and Medium
business today.
 Resource
• Any entity used to run the Enterprise.

Examples:-
Human Resource
Inventory
Machinery/Plant
Cash, etc
 Resource Planning
• Establish a plan so that Resources can be
utilized effectively and efficiently. ERP
software has capability to maintain as well as
plan the resources
 What is ERP?
• ERP, which is an abbreviation for Enterprise
Resource Planning, is principally an integration
of business management practices and
modern technology. Information Technology
(IT) integrates with the core business
processes of a corporate house to streamline
and accomplish specific business objectives.
 What is ERP? - II
• Consequently, ERP is an amalgamation of
three most important components;
Business Management Practices,
Information Technology and Specific
Business Objectives.
 ERP History
• ERP (Enterprise Resource Planning) is the evolution
of Manufacturing Requirements Planning (MRP) II.
From business perspective, ERP has expanded from
coordination of manufacturing processes to the
integration of enterprise-wide backend processes.
From technological aspect, ERP has evolved from
legacy implementation to more flexible tiered client-
server architecture.
 ERP History
1960s Inventory Management & Control

• Inventory Management and control is the

combination of information technology and business
processes of maintaining the appropriate level of
stock in a warehouse. The activities of inventory
management include identifying inventory
requirements, setting targets, providing
replenishment techniques and options, monitoring
item usages, reconciling the inventory balances, and
reporting inventory status.
 ERP History
1970s Material Requirement Planning (MRP)

• Materials Requirement Planning (MRP) utilizes

software applications for scheduling
production processes. MRP generates
schedules for the operations and raw material
purchases based on the production
requirements of finished goods, the structure
of the production system, the current
inventories levels and the lot sizing procedure
for each operation.
 ERP History
1980s Manufacturing Requirements Planning (MRP II)

• Manufacturing Requirements Planning or MRP

utilizes software applications for coordinating
manufacturing processes, from product
planning, parts purchasing, inventory control
to product distribution.
 ERP History
1990s Enterprise Resource Planning (ERP)

• Enterprise Resource Planning or ERP uses

multi-module application software for
improving the performance of the internal
business processes. ERP systems often
integrates business activities across functional
departments, from product planning, parts
purchasing, inventory control, product
distribution, fulfillment, to order tracking.
 Advantages
1. ERP systems connect the necessary software in
order for accurate forecasting to be done
2. Integration among different functional areas to
ensure proper communication, productivity and
efficiency
3. Design engineering (how to best make the product)
4. Order tracking, from acceptance through
fulfillment
 Advantages II
1. The revenue cycle, from invoice through
cash receipt
2. Managing inter-dependencies of complex
processes bill of materials
3. Tracking the three-way match between
purchase orders (what was ordered),
inventory receipts (what arrived), and
costing (what the vendor invoiced)
 Advantages III
1. The accounting for all of these tasks: tracking the
revenue, cost and profit at a granular level
2. ERP Systems centralize the data in one place.
Benefits of this include:
1. Eliminates the problem of synchronizing changes
between multiple systems
2. Reduces the risk of loss of sensitive data by consolidating
multiple permissions and security models into a single
structure
3. Provides top-down view of the enterprise
 Advantages IV
Summary
1. Integration
2. Efficiency
3. Cost reduction
4. Less personnel
5. Accuracy
 Disadvantages
1. Customization of the ERP software is limited
2. Re-engineering of business processes to fit the
"industry standard" prescribed by the ERP
system may lead to a loss of competitive
advantage
3. Business Users need to change according to ERP
4. ERP systems can be very expensive (This has led
to a new category of "ERP light" solutions)
 Disadvantages II
1. Consultants are limited
2. Quality of Consultants
3. On-going cost is very high
4. Data security issue
5. Once a system is established, switching costs
are very high for any one of the partners
(reducing flexibility and strategic control at
the corporate level)
 Disadvantages III
1. Includes multiple costs:
a) Product License Cost
b) Implementation Cost
c) Development of in-house team
d) Yearly Maintenance Cost
2. Localization issue
 ERP Options
1. In-house Development
2. Custom Development
3. Use As Standards
 Open Source ERP
Adempiere Openbravo
BlueErp OpenERP
Compiere Opentaps
Dolibarr Tryton
Fedena WebERP
 Proprietary ERP
 SAP
 Oracle Applications
 The Sage Group
 Microsoft Dynamics
 SSA Global Technologies (acquired by Infor
Global Solutions)
Thank You