Enterprise Resource Planning

Bhanu Prakash
 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 2
 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 3
What is ERP?

•Enterprise resource planning is an integrated software solution

used to manage a company’s resources and operations.

•ERP systems integrate all business management functions,

including planning, inventory/materials management, engineering,
order processing, manufacturing, purchasing, accounting and
finance, human resources, and more.

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Some ERP Characteristics

• Typically a Packaged Software

• Integrates majority of business processes
• Processes the majority of an organization's transactions
• Allows access to data in “Real Time”.
• Integrates transaction processing and planning activities

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 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 6
 i
t
I

r
a

n
o
e
g
n

planning

20-70
Mathematical
programming
Evolution of ERP

techniques focused on

80
MRP
Needs planning

MRP II
Needs and capabilities planning

90
ERP
MRP II extended to other business areas

00 ERP II
Industry Specific Functionality

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 Paper / Spread sheet solutions
• Business problem – Small and Manageable

• All material and capacity problems modeled in spread

sheets
• Every planner has his/her own spread sheet

• No concurrent planning

– Planning process moves from one spread sheet to the

next and back
• No standard interface/data format

• Not scaleable

• One spread sheet for every problem and we have infinite

problems

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Re Order Point Based Planning

Stock

EOQ

LT
ROP

Safety Level

Time

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 Reorder Point Based Planning

• Business problem: Minimize Ordering, Transportation and inventory

carrying cost
• Automatic purchase or production when stock reaches reorder point
• Focused on the past demand rather than the future demand
• When there is a deviation between past and future

– Excess inventory of unwanted parts

– Shortfall of needed parts
– Need for large safety stock
– Ramp ups and Ramp downs have to handled manually
– Useful only for very stable demand
• Requires lot of manual expediting to meet unexpected demand

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Material Requirements Planning (MRP)
• Followed ROP based planning

• Main change in philosophy - Dependent demand

– Demand of raw material is determined by demand for parent part.

• Did not look backward at receipts, but rather forward to project when the material were
required.
• Create Planned Work Order or Procurement for the remaining.

• Use standard production lead times to compute estimated time needed for dependent
demand.
• Improvement over re-order point

• But

– No visibility into capacity

– Resulted in excess raw material when Capacity < Demand
– No production planning, all material procured at the beginning of planning bucket leading to
excess inventory
– Demand promising is not possible
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Material Requirements Planning (MRP)

• Improvement over re-order

Item
point Demand Inventory
Master
BOM

• Dependant demand
Netting
• Time based Netting against
the supply Explosion
• Create Planned Work Order
or Procurement for the Requirements
remaining.
P.O.s W.O.s
• Explode Planned Work
Order and with the lead time
estimate compute the time
for dependent demand.

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MRP II

• Adds MPS (Master production schedule)

• Adds rough cut capacity check (Capacity Resource
planning)
• Adds shop floor feedback
• Iterative process

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MRP II

Market demand MRP run

Loop Adjusting
MPS MPS

Problems ?
Rough-cut
Loops capacity planning
adjusting Yes No
production
plan Requirements
Problems ? Top down schedules
Yes
MRP II
No planning
process
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ERP

• Transition from MRP-II to ERP happened during 1980 to 1990.

• The key advancements over MRP II are

– Integrated solution.
– Client-server environment and later on web-based architecture (thin
client)
– Other modules like Financials, HR management, Supply chain
management,Process manufacturing, Projects etc are introduced.
– Common Database built on RDBMS

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ERP II

• Came into being around year 2000

• Focus is around
– Planning as opposed to Execution
– Industry specific solutions
– Collaboration outside the company (suppliers and customers)
– Business Intelligence

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 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 19
 Typical ERP modules
Financials Projects Internet Procurement

Strategic
Internet Human Resources
Financial
Procurement
Management
& Exchanges

Business
Human Resources
Intelligence
Supply Chain
Management
Supply Chain
Business Intelligence Applications Technology Management

Discrete Process
Manufacturing Manufacturing

Applications Technology
 Typical ERP modules
Financials Projects Internet Procurement
Assets Activity Management Gateway Purchasing Self-Service Purchasing
Cash Management Project Analysis Collection Pack Purchasing Connect for TPN Supplier Scheduling
Financial Intelligence Purchasing Intelligence iSuppliers Portal
General Ledger Project Billing Requisite Management Content Services
Global Accounting Engine Project Connect
Project Costing
Global Consolidation System
Global Intercompany System
Payables
Strategic
Internet Human Resources
Financial Advanced Benefits
Property Manager Procurement
Management Human Resources
Receivables & Exchanges
Human Resources Intelligence
Self-Service Expenses
Business Payroll
Self-Service Time Human Resources
Intelligence Self-Service Human Resources
Travel Intelligence
Supply Chain Time Management
Treasury Management
Management Training Administration
Supply Chain
Business Intelligence Applications Technology Management
Financial Analyzer Advanced Supply Chain
Sales Analyzer
Warehouse Builder Discrete Process Planning
Strategic Enterprise ManagementManufacturing Manufacturing
Bills of Material Formula Management Advanced Pricing
ABM Analyzer
Activity Based Costing (Activa) Capacity Inventory Management
Cost Management Laboratory Management Configurator
Balanced Scorecard
Engineering Process Costing
Business Intelligence System Flow Manufacturing Process Mfg. Intelligence Configurator Engineering
Manufacturing Scheduling Process Quality Mgt. Edition
Applications Technology Operations Intelligence Process Scheduling Constraint-based
Alert XML Gateway Project Manufacturing Production Management Optimization
e-Commerce Gateway Quality Regulatory Management Demand Planning
Workflow Work in Process Global ATP Server
 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 22
Advantages of ERP

• A single integrated system

• Reduce redundant data entry and processes
• Information sharing across departments
• Improved workflow and efficiency
• Improved customer satisfaction based on improved on-time
delivery, increased quality, shortened delivery times

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 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 24
Key ERP Vendors

• SAP
• ORACLE
• MICROSOFT
• BAAN
• RAMCO

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 SAP

• Founded in 1972 in Waldorf, Germany

• SAP is a leading global provider of business applications
• SAP solutions fall under manufacturing and service categories.
• SAP product range
– R/2 and R/3, mySAP, Business One.
• R/2 applications for the mainframe environment
• R/3 applications for open client/server applications
• mySAP – Web based architecture and current main product suite
• Business One – Acquired product; targeted at Small Businesses

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ORACLE

• Oracle is the second largest software company

• Originally started as a Database company and later on moved into
Enterprise Applications
• Has seen rapid growth recently through acquisitions – Notable
acquisitions being Peoplesoft and Siebel
• Now has an enterprise package solutions in almost all business areas
• Main Product Lines
– Ebusiness Suite, Peoplesoft, JD Edwards, Siebel
• Oracle revenue from applications software licenses and application-
related services is growing rapidly

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MICROSOFT

• Product Lines
– Axapta, Navision
• Axapta is the main product line
• Navision – aimed at Small Businesses

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BAAN

BAAN is a business application and consulting company whose

headquarters is in Netherlands and California.

BMCS(Baan manufacturing Control System)was the first package

developed by Baan for MRP-I,CRP(Capacity Requirements Planning)
and MRP-II

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RAMCO

•Founded in 1989 by P.R.Ramasubrahmaneya Rajha with expertise in

Enterprise Solutions and Services, Custom Solutions,CRM,Networking
And Information Security.

•Main product of the company is branded as Ramco Marshall

•It divides the processing load between the client and the server

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 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 31
How do we sell ERP ?

Identifying a
Generate a Lead Discovery
prospect

Proposal submission
Presenting Demo

Negotiation

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 Agenda

• What is ERP
• Evolution of ERP
• Typical Modules in an ERP
• Advantages of ERP
• Key ERP Vendors
• How do we sell ERP

Page 33
Q&A
 Additional
Information
Challenges in Today’s environment

•Complexity - number of products, Raw materials, intermediates,

processes etc
•Size of Organization - people, sites etc
•Demanding Customers
•Competition - local and Global
•Rapid rate of change in technology and products
•Departmental echelons & Hierarchical structures

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Evolution of ERP Systems
Hi gh
Rapid Execution


MRP I / MRP II

Basic planning systems (Reorder point etc.)

Paper processing
Lo w

Low Intelligence High

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Next-Generation SCM
Solution framework

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Organizations without effective ERP software run the
risk of company-wide inefficiencies:
•Uneconomical use of resources
•Miscommunication between departments
•Errors in financial maintenance and production cost tracking

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Typical Modules in an ERP

•Item control Module

• BoM Module
•Financial Accounting Module
•Master Production Scheduling Module in ERP
•Material requirement planning(MRP) Module in ERP
•CRP Module IN ERP
•Purchase control Module in ERP

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Advantages of ERP

•Reduced inventory costs resulting from better planning,

tracking and forecasting of requirements
•Turn collections faster based on better visibility into accounts
and fewer billing and/or delivery errors
•Decrease in vendor pricing by taking better advantage of
quantity breaks and tracking vendor performance
•Track actual costs of activities and perform activity based
costing
•Provide a consolidated picture of sales, inventory and
receivables

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ITEM CONTROL MODULE:
This is classified in to six generic types:
Purchased item
Manufactured item
Subcontracted item
Cost item
Service item
Generic item

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BoM Module:
BoM system provides for the maintenance and analysis of
information regarding the structure of manufactured items.
Financial Accounting Module:
The overall performance of the management of the enterprise.
Assets
Cash Management
Financial Intelligence
Treasury Management
General ledger

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Master Production Scheduling Module(MPS) in ERP:
It is an Anticipated build schedule for manufacturing end items or
product options by quantity per planning period.

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Identifying a
Generate a Lead Discovery
prospect

Proposal submission
Presenting Demo

Negotiation

Page 45
What is ERP?

•Efficient handling of order processing and production scheduling

•Management and analyses of business processes within an interactive

environment

•Synchronization of departmental activities (e.g., within human

resources or finances) with the needs and output from production
facilities

•Monitoring, sharing, and tracking of information throughout the

organization

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Evolution of Planning Systems
Hi gh


Rapid Execution

ERP II

ERP / APS

MRP I / MRP II

Basic planning systems (Reorder point etc.)

Paper processing
Lo w

Low Intelligence High

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INDIA version of specific ERP software :

•The software vendor must incorporate India specific features before

selling the software.
•The specific ERP software that has been adopted to suit to Indian
statutory laws is called India specific ERP.

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