ERP Modules | Quality Management | Enterprise Resource Planning

Session 4

Enterprise Resource Planning
for B.Sc. (IT) Third Year 5th Semester
By

Vinod Vaze
B.Tech.(IIT/Kanpur), PGDFM(Bom.) C.C.N.A. CISCO Certified Network Associate Tel. No. 9820358746 Res. 25441310 Email: vinod_vaze@hotmail.com
Centre for Excellence in Education, Thane

Session 4

Enterprise Resource Planning

Session 4 ERP Modules

Centre for Excellence in Education, Thane

Session 4

Agenda
• • • • • • ERP Modules, Introduction, Finance, Plant Maintenance, Quality Management, Materials Management

for the Day

4
Centre for Excellence in Education, Thane

Session 4

ERP Modules - Introduction
• Various ERP packages consists of various modules • They vary from package to package • The most common are: – Finance, – Manufacturing & Production Planning, – Sales and Distribution – Plant maintenance – Quality Management – Materials Management etc
Centre for Excellence in Education, Thane

Thane .Session 4 Introduction • The entire concept of information technology is based on the premise that providing: – The right information – To the right people – At the right time – Can make a critical difference to the organisation. • We have already seen that processed data is information • What are the characteristics of information? Which properties should it have? Centre for Excellence in Education.

Session 4 Characteristics of Information • • • • • • • • • True Accurate In a given format Relevance Timeliness (Not expired) Completeness Purpose Reliable Validity • Information is not consumed by use. • It can be shared by many • Details v/s Summary • Internal v/s External • Concreteness: • Hard (objective) • Soft (subjective) depending more on intuition rather than facts Centre for Excellence in Education. Thane .

Thane • Redundancy: • Repeated information • Duplicating • Having Graphic as well as tabular format • Scientific • Mythological • Normal – Biased • Manipulated . – Blurred – Deterministic Centre for Excellence in Education.to suit someone /something .Session 4 Characteristics of Information • Logical: – Yes or no – True or false • Probabilistic: – Having attached a probability of occurrence. • Fussy: – Not sharply demarked.

Thane .ERP and the world Session 4 Natural Languages Easy for a human being to communicate but difficult for any machine to automate. Example: Cassette recorder Answering Machine Dictaphone Voicemail box Sound recording Man Natural Language Computer Database query Database Database result Computer Man Natural Language Natural Language Comprehension Centre for Excellence in Education.

dispatch • No duplication Centre for Excellence in Education. implementation and training cost • Increase the efficiency and productivity • Cost of space and Interior decoration • Transaction automation • Operational cost System. Thane routine . order – Information system entry.Session 4 Characteristics of Information • Information Economics • Types of Information – Cost of Information Systems • Hardware cost • Office Automation System • System Analysis cost • Mundane work • Design. – Value of Information • Invoicing. billing.

Depreciation. controlling. Fixed Assets Accounting. Accounts Receivables/ Payable. Forecast Simulation Calculation) – Controlling • (Overhead cost controlling.Session 4 Finance – Sub systems • The finance module of most ERP system will have the following sub-system – Financial Accounting • (General Ledger. Thane . Activity based costing Product cost Accounting Profitability analysis) Centre for Excellence in Education. Legal consolidation) – Investment Management • (Investment planning. Budgeting.

Session 4 Finance – Sub systems • sub-system (contd. Thane . Market Risk Management. Profit centre Accounting) Now let us study one by one Centre for Excellence in Education. Treasury Management. Funds Management) – Enterprise Controlling • (Executive Information System (EIS).) – Treasury • (Cash Management. Business Planning and Budgeting.

Thane .Session 4 Finance subsystems Financial Accounting • Financial Accounting: – General Ledger: – serves as a central pool of financial data. Origin of a transaction can be traced. – Provides summary information of other components • Purchasing (Quantity and value) • Sales (order and bill) • Vendor (Payable) • Customer (Receivables) • Fixed assets • Employees (salary and wages) Centre for Excellence in Education. supports all the functional needs.

Thane .Session 4 Finance subsystems Financial Accounting • Financial Accounting: – Accounts Receivables/ Payable: – Keeps track of current assets and current liabilities – These subsystems are integrated with all other subsystems where financial data originates: both with • General Ledger and Sales and Distribution and • Material Management Electronic data – Important support of EDI processing Interchange: A method the corporate world use for exchanging data over Network & Internet Centre for Excellence in Education.

Thane . – Depreciation – Purchase to asset life cycle (Acquisition to retirement) – Assets accounting is also integrated with Plant maintenance Centre for Excellence in Education.Session 4 Finance subsystems Financial Accounting • Financial Accounting: – Asset Accounting: serves as a sub ledger to the General Ledger – Provides details regarding the transaction of Fixed Assets.

– Different valuation methods to suit the company’s policy and profit that year. – Legal consolidation is closely integrated with Financial Accounting system – This eases the workload of the staff – reduces data entry errors Combined into one summary statement Centre for Excellence in Education.Session 4 Finance subsystems Financial Accounting • Financial Accounting: – Legal consolidation: serves as a tool to make a consolidated financial statement. Thane .

Session 4 Finance subsystems Investment Management • Investment planning – Where to invest. Rising or declining? • Simulation Calculation: Making a mathematical model and deriving alternatives to choose from. Thane . Which department to need more investment? • Budgeting – Financial layout of new or existing project – Availability and cost of finance • Controlling – The expenses. the overheads • Depreciation . • Forecast – Speculation and forecast of market trend. Centre for Excellence in Education.Budgeted balance sheets and cost planning are always on current values. what is the expected profit of each ventures.

– Transparency is lacking – Cost center accounting – Overhead order subsystems • Activity based costing – Goals of the entire enterprise should come before the goals of individual activity • Product cost Accounting – Prime cost of product or services – Product cost controlling Centre for Excellence in Education. Thane .Session 4 Finance subsystems Controlling • Controlling: • Overhead cost controlling: – Reduce indirect cost.

Session 4 Finance subsystems Controlling • Controlling: • Cost Object Controlling: – Helps to monitor manufacturing orders – Integration with logistics – Actual cost – estimated cost – f(t) – Variance from the originally planned cost • Profitability analysis – Examine the source of returns. Thane . – Analysis as per market segment – last step in the cost based settlement Centre for Excellence in Education.

Medium term and long term cash position – Cash liquidity and availability – Cash Requirement time wise • Treasury Management – Current liquidity – Risk position – Conditions prevailing on the money and capital market – Securities and loans Centre for Excellence in Education.Session 4 Finance subsystems Treasury Module • Cash Management: – Controls incoming and outgoing cash – Short term. Thane .

Session 4 Finance subsystems Treasury Module • Market Risk Management – Ensures competitiveness – Complex feed back loop: from data collection. risk management analysis and simulation – Assessing the interest rates – Assessing the currency rates – Simulate market data – “what if” analysis • Funds Management – From budgeting to payment on one side and – From Billing to actual receiving on the other – Identify bottlenecks – Cost of non-availability Centre for Excellence in Education. Thane .

budget release and tracking • Profit centre Accounting – Overall profitability is algebraic total of individual profit centre Centre for Excellence in Education.Session 4 Finance subsystems Enterprise Controlling • Executive Information System (EIS) – Provides overview of critical parameters – Gets both internal and external data – Data mining to create new business equations – Exception management • Business Planning and Budgeting – Business targets such as Return on investment – Central investment planning. Thane .

Thane .Session 4 Plant Maintenance • Here we will study: – Preventive Maintenance control – Equipment Tracking – Component Tracking – Plant Maintenance Calibration Tracking – Plant Maintenance Warranty Claims Tracking Now let us study one by one Centre for Excellence in Education.

Session 4 Plant Maintenance subsystems Preventive Maintenance control • • • • • • Planning Scheduling Control of facilities Control of equipment Equipment lubrication Component replacement • Keeping track of • Hours of usage • Consumables • Spare parts • Life of each component A stitch in time saves nine Prevention is better than cure! Centre for Excellence in Education. Thane .

imported spare parts. Centre for Excellence in Education. Thane . special features. monitored and protected • History of equipment: acquisition to write off • Operational dependencies. their cost and expected life • Guarantee period • Next service due • Information for each equipment to be made available People are often transferred But Equipments is generally not.Session 4 Plant Maintenance subsystems Equipment Tracking • Equipment is an asset to be used.

E.Session 4 Plant Maintenance subsystems Component Tracking • Components are typically sub-assemblies of large equipment.: Beyond Economic repair The main idea is to minimise the down time Centre for Excellence in Education.R. • Heard of the story of Nepolean loosing war for a want a horse-shoe • Availability of components • Time schedule • Sufficient stock of spares • When would it become BER? What is B. Thane .

Session 4 Plant Maintenance subsystems Plant Maintenance Calibration Tracking • Allows organisation to leverage their investment in Plant Maintenance module by providing for tracking of equipment calibration in support of ISO 9000 requirement Centre for Excellence in Education. Thane .

Centre for Excellence in Education. Thane .Session 4 Plant Maintenance subsystems Plant Maintenance Warranty Claims Tracking • Administrative system designed to provide control of all items covered by manufacturer and vendor warranty • Recover imbursement to which they are entitled.

Thane What is ISO? International Organisation for Standardization ISO is not an acronym “ISO” is Greek means equal . Defines Functions and Elements of QMS What is QMS: Quality Management System No longer just post production “Inspection standards” But also the production process becomes the focus of attention. • Quality spreads to the entire loop: Product development – procurement of sales and distribution – (entire usage phase) Centre for Excellence in Education.Session 4 Quality Management • • • • • • • ISO 9000 series.

Thane Electronic Data Processing System .Session 4 Quality Management CAQ and CIQ • • • • • What is CAQ? Computer Aided Quality Management What is CIQ? Computer – Integrated Quality Management System in isolation cannot carry out the comprehensive task • ERP integrates these isolated CAQ systems • Process prescribed in Quality manuals can be implemented and automated in EDP system itself Quality is a part of the culture not only the product ! Centre for Excellence in Education.

Quality Planning 2.Session 4 Quality Management Quality Management Module • The quality Management Module fulfills the following functions: • Quality Planning – Management for basic data for quality planning and Inspection planning Material Specification Functions of QMM: 1. Inspection processing with inspection plan selection and sample calculation. Thane . – Records results and defects – Makes the usage decision and trigger follow up action Centre for Excellence in Education. Quality Control • Quality Inspection – Trigger inspections. Quality Inspection 3. – Print shop papers for sampling and inspection.

– Quality notification for processing internal or external problems and initiating corrective action to correct the problems – Inspection of lot processing – QMIS (Quality Management Information System) for inspection and inspection results and quality notification Centre for Excellence in Education. Thane .Session 4 Quality Management Quality Management Module Quality Control – Dynamic sample determination on the basis of Quality level history. – Application of statistical process control techniques using quality control charts – Quality scores for inspection lots.

Centre for Excellence in Education. Thane . • The Quality Management module supports the exchange of data with other application in order to: • Prevent related data from being recorded and stored redundantly.Session 4 Quality Management Computer Integrated Quality Management (CIQ) Only an integrated system can support all the elements of Quality Management System. • Any deviation from the norms could be identified and trigger raised. Quality Management function influence all the function of the organisation.

inventory management. Material requirement planning • Production: – Work scheduling. warehouse management. Thane . creation of quality certificates Centre for Excellence in Education. shop floor control • Sales and Distribution: – Delivery.Session 4 Quality Management Computer Integrated Quality Management (CIQ) The quality Management Module is integrated with the master data and processes of the following applications: • Material Management: – Purchasing.

Session 4 Materials Management • The Material Management Module optimises: – All purchasing process with work-flow driven processing functions – Enables automated supplier evaluation. What to buy and How much to buy! Centre for Excellence in Education.When to buy. – Lowers procurement and warehousing costs – Integrates invoice verification – Optimises the Quantity to be procured and stored by using “EOQ” (Economic Order Quantity) techniques – In short decides . Thane .

Session 4 Materials Management • The main Modules of Material Management Module are: – Pre-purchasing Activities – Purchasing – Vendor Evaluation – Inventory Management – Invoice Verifications and – Material Inspection Centre for Excellence in Education. Thane .

Thane .Session 4 • x Centre for Excellence in Education.

Session 4 • x Centre for Excellence in Education. Thane .

Thane .Session 4 • x Centre for Excellence in Education.

Thane .Session 4 Let us have a break ! • We shall meet here again after 5 minutes Centre for Excellence in Education.

64 to 117 • Section 5 from SS • Assignment 4: • Fill in the Blanks and Review questions • on page No.S. Thane . (Tata McGraw Hill ) Centre for Excellence in Education. Sadagopan. 117 in AL AL = Enterprise Resource Planning .Session 4 Home Work Read & understand • Section 5 from AL page Nos.Alexis Leon (Tata McGraw-Hill Edition) SS = A Managerial Perspective .

• Hope you enjoyed the presentation.Session 4 Thanks. Thane . • Have a nice day ! Volunteer for a RECAP ? Centre for Excellence in Education.

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