ENTERPRISERESOURCE

PLANNING

ERP

S. AMEER HASAN RIZVI

Instructor’s Profile

Name : Ameer Rizvi 1998-2001: Oracle Corp.

Presale, Business Consulting, Apps Trainer 2002-2003: Deloitte & Touché

ConsultingOracle Financials Training

2003-2005: Arthur ConsultingOracle Financials Consultant

2006-2009: IBAPermanent Faculty Member

Why Study ERP ?

Expectations from the Course?

Class Rules

?

Grading 1st & 2nd Term 30 Marks Final 30 Marks Term Report 30 Marks Class Attendance & Participation 10

Marks

Total 100 Marks

ERP Course Outline ERP Introduction (Lecture) Virtual Organization ( Group Exercise) Business Function Processes and Data Requirement (Lecture) ERP Selection Process ( Group Exercise + Lecture) ERP Major Vendors (Students Presentation) ERP Business Requirement ( Group Exercise + Lecture) ERP RFP Development ( Group Exercise +Lecture) Sales & Marketing SAP (Group Exercise + Lecture) Production & Supply Chain SAP ( Group Exercise +Lecture) Material Management SAP ( Group Exercise +Lecture) Financial SAP ( Group Exercise +Lecture) ERP & E- Commerce ( Group Exercise +Lecture) ERP Implementation Success & Failure ( Survey Presentation)

ERP

General Concepts

Definition of ERP

Business solution that addresses all the needs

of an enterprise with the process view of an

organization to meet the organizational goals

and integrate all the functions of the

Enterprise.

Business solution that addresses all the needs of an enterprise with the process view of an organization to meet the organizational goals and integrate all the functions of the Enterprise.

ERP software integrates all departments and functions onto a single system that can serve the needs of the entire company.

… complex mega packages (Gable et al., 1997) designed to support the key functional areas of an organization.

Definition of ERP

The American Production and Inventory Control Society (APICS) defines ERP as “an accounting oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders” (Watson & Schneider, 1999).

An ERP system can be thought of as a company-wide Information System that tightly integrates all aspects of a business. It promises one database, one application, and a unified interface across the entire enterprise Bingi et al., 1999 .

Definition of ERP

ERP links all areas of a company with external suppliers and customers into a tightly integrated system with shared data and visibility. ERP systems are designed to solve the problem of the fragmentation of information over many legacy systems in large business organizations (Chen, 2001, p. 374; Chen, 2001, p. 379)

Definition of ERP

History of ERP

Supply ChainManagement

Sales ForceAutomation

Internet Integration

Business Intelligent

CustomerRelationship ManagementKnowledge

Management

ElectronicCommerce

ERP IIERP

EnterpriseResourcePlanning

(+BPR， HR Logistics Service..)

MRP IIManufacturingResourcePlanning(+Cash flow)

MRPManufacturingResourcePlanning

(+Capacity)

mrpMaterial RequirementPlanning

Evolution of ERP

MRP: MaterialRequirement Planning

Payroll

GL: General Ledger

AP: Accounts Payable

AR: A/C Receivable

EDI-Electronic Data Interchange

Planning

Scheduling

Distribution

MRP :Ⅱ Mfg Requirement Planning

HR: Human Resource

FMIS:Financial Mgmt

Information Systems

E-Commerce

SFA: Sales ForceAutomation

CRM: Customer Relationship Mgmt

SCMSupply ChainManagement

ERPEnterprise ResourcePlanning

E-Business

ESCMExtended SCM

EERPExtended ERP

1970 1980 1990 2000*source: HP

Evolution of Business Systems

The Value Chain

Supportactivities

Primary activitiesInbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,

financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input

Functions of ERP System Attempts to integrate all departments

and functions across a company onto a single computer system servicing all of the different departments’ needs

  Allows the various departments to more

easily share information and communicate with each other.

  Maintain Corporate wide Information

under one Unified software program ( Single Data Base)

ERP ComponentAn ERP System includes Business Processes that ERP software

supports, Users of ERP systems Hardware and Operating Systems that run

ERP applications ERP software,

Note: The failures in one or more of those four components could cause the failure of an ERP project. The failures of multi-million dollar ERP projects are reported once in a while even after 20 years of ERP implementation.

Integrated ERP Solution

Finance Projects

Supply ChainManagement

Manufacturing

FrontOffice

HumanResources

Applied Technology

Subsystems of ERP Store and purchase Raw Materials Payroll and HRD Production Planning and scheduling Financial Accounting Sales and dispatch Export process Marketing Customer Relationship Inter office communication Event Tracking Inter office data synchronization Engineering & Maintenance

Why ERP?

Issues & Problems Availability of the Items cannot be checked

at the time of Accepting Sales order On-line Material Status is not available &

Shortages Poor Productivity Enhancements Poor Material Planning Poor Customer Service Poor Cash Management Mismanagement of Inventory Poor Quality Management

To Enhance Profitability

BY

Increase in Sales - Say 30%

And /OR

Reduce Procurement Cost - Say by 5-10 %

For Healthy Operations Integration of Systems across the

Functional Departments in a Company as well as across the Enterprise as a Whole.

Better Customer Service. Introduction of Latest Technologies as and

when they are ready for the Industry acceptance

Expertise database Avoids data redundancy

Competition in the Market. Manufacturing Challenges. Manufacturing Globally. Distribution network spread. New Product introduction. Lower manufacturing lead time. Focus on industry markets. Satisfying the needs of customers. Develop specific business methods and

processes. Integration with third party products.

Demands on the Industry Better products at lower costs Tough competition Need to analyze costs / revenues on a

product or customer basis Flexibility to respond to changing

business requirements More informed management decision

making

Authorization and Security User / Password level authentication User wise activity permission Tracking of changes made by users Facility of authorization/approval of

transaction Restriction in modifying the transaction

after approval is done

IT System Present Software does not meet

business needs Legacy systems difficult to maintain Obsolete hardware/software difficult to

maintain

Objectives of the ERP Systems

Facilitates Company-wide integrated Information Systems Covering all functional Areas.

Performs core corporate activities and increases customer service augmenting Corporate Image.

Organizes & optimizes the data input methodologies systematically.

To have a fully harmonised online system, which can integrate with Back Office

Objectives of the ERP Systems

To introduce proper systems and processes which will not be man dependent

To ensure full security by introducing adequate controls, checks and balances and also by maintaining audit Trails.

To minimize data redundancy by eliminating duplicate entries.

To enable the organizations to provide its customers a more value added service.

To create a flexible system so that future needs and changes in the business flow can be easily incorporated

Advantages of an ERP Package?

Highly Graphics based User Interface. Zero Down time/ planned down time. Readymade solutions for most of the

Problems. Integration of all functions ensured. Easy enterprise wide information sharing. Suppliers and Customers can be on-line

communication. Knowledge transfer between industries

guarantees innovation. Automatic adaptation to new technology.

Integrated Solution ONE DATABASE

MEANS: Less Management Less Complexity Less Integration Open Standards Customers,

Products,& Everything

Else!Service

Financials

HR

Procurement

Marketing

Sales

Supply Chain

OrderManagement

Savings

Today

Business Planning

Transaction Processing

and Reporting

}Measuring &Controlling Financial/

Accounting Risk

Tomorrow

Transaction Processing

and Reporting

Measuring andControlling Business Risk

Business Planning

20%

25%

55%

Strategic Solution

Generic Business Benefits of ERP

Improves access to accurate and timely information

Enhances workflow, increases efficiency, and reduces reliance on paper

Tightens controls and automates e-mail alerts

Provides user-friendly Web-based interfaces Streamlines processes and eases adoption

of best business practices Establishes a foundation for new systems

and integrates existing systems

Process Improvement Helps with order fulfillment process Integrates financial information (the truth of its

overall performance) Integrates customer order information (keeps

track of orders more easily) Standardizes and speeds up manufacturing

processes Reduces inventory (improves flow of supply

chain) Standardize Human Resource information

(employee benefits, hiring & firing, etc.)

Some documented Benefits of ERP

Myth and Reality of ERP Benefit Realization

Business Benefits

A Framework of Business Benefits Dimension Subdimension Explanation[1] Operational 1.1 Cost reduction

1.2 Cycle time reduction

1.3 Productivity improvement

1.4 Quality improvement

1.5 Customer services improvement

Because ERP systems automate business processes and enable process changes, one would expect ERP systems to offer all of these types of benefits.

Adapated from Shang and Seddon (2000)

A Framework of Business Benefits Dimension Subdimension Explanation[1] Operational 1.1 Cost reduction

1.2 Cycle time reduction

1.3 Productivity improvement

1.4 Quality improvement

1.5 Customer services improvement

Because ERP systems automate business processes and enable process changes, one would expect ERP systems to offer all of these types of benefits.

Adapated from Shang and Seddon (2000)

Business Benefits cont.

Business Benefits cont.[2] Managerial 2.1 Better resource

management

2.2 Improved decision making and planning

2.3 Performance improvement

With a centralized database and built in data analysis capabilities, it seems likely that ERP systems will provide informational benefits to management.

[3] Strategic 3.1 Support business growth3.2 Support business alliance3.3 Build business innovations3.4 Build cost leadership3.5 Generate product differentiation (including customization)3.6 Build external linkages (customers and suppliers)3.7 Worldwide expansion3.8 Enabling e-commerce

ERP systems, with their large-scale business involvement and internal and external integration capabilities, could assist in achieving these strategic benefits.

Business Benefits cont.

Business Benefits cont.[4] IT Infrastructure 4.1 Build business

flexibility for current and future changes4.2 IT cost reduction4.3 Increased IT infrastructure capability

ERP systems, with their integrated and standard application architecture, provide an infrastructure that could support this dimension.

Business Benefits cont.[5] Organizational 5.1 Support

organizational changes5.2 Facilitate business learning5.3 Empowerment5.4 Build common visions5.5 Change employee behavior5.6 Better employee morale and satisfaction

The integrated information processing capabilities of ERP systems could affect the establishment of organizational capabilities.

Traits of ERP System Some key traits in ERP solutions: ERP applications address a business process. ERP applications are modular. ERP applications are integrated. ERP applications include a company’s reach beyond its walls — to its suppliers, customers, and partners. The entire ERP suite will address all areas (or the great majority) of a company’s business functions.

Traits of ERP System Some key traits in ERP solutions: ERP applications address a business process. ERP applications are modular. ERP applications are integrated. ERP applications include a company’s reach beyond its walls — to its suppliers, customers, and partners. The entire ERP suite will address all areas (or the great majority) of a company’s business functions.

Process Driven Procure to Pay Cycle

Overview

ReceiveRequisition PO

Oracle Purchasing Oracle Payable

Supplier

Pay on Receipt

Traits of ERP System Some key traits in ERP solutions: ERP applications address a business process. ERP applications are modular. ERP applications are integrated.ERP applications include a company’s reach beyond its walls — to its suppliers, customers, and partners.The entire ERP suite will address all areas (or the great majority) of a company’s business functions.

Financials Application Suite

FinancialsCash

Management

AssetManagement

ExpenditureManagement

FinancialPlanning

Billing &Cash Collection

FinancialConsolidation

& Analysis

Financial Core Module General Ledger Purchasing Payables Receivable Cash Management Fixed Asset

Traits of ERP System Some key traits in ERP solutions: ERP applications address a business process. ERP applications are modular. ERP applications are integrated.ERP applications include a company’s reach beyond its walls — to its suppliers, customers, and partners.The entire ERP suite will address all areas (or the great majority) of a company’s business functions.

Oracle’s ERP Solution

ProjectsProject CostingProject BillingProject Time & ExpenseActivity Management GatewayProject ConnectProject Analysis Collection Pack

Supply Chain ManagementOrder Entry PurchasingProduct ConfiguratorSupplier SchedulingSupply Chain Planning InventoryWeb Suppliers

ManufacturingEngineeringBills of MaterialMaster Scheduling/MRPCapacityWork in ProcessQualityCost ManagementProcess ManufacturingProject ManufacturingFlow ManufacturingRHYTHM Factory PlanningRHYTHM Advanced Scheduling

FinanceGeneral LedgerFinancial AnalyzerCash ManagementPayablesReceivablesFixed AssetsWeb PurchasingWeb Expenses

Applied TechnologyBusiness Intelligence SystemApps Data WarehouseWorkflowAlertEDI Gateway

Human ResourcesHuman ResourcesPayrollTraining AdministrationTime ManagementAdvanced BenefitsWeb Human Resources

Front OfficeSales MarketingField Sales OnlineMobile Field SalesSales CompensationServiceMROContractsTelephony ManagerMiddlewareInternet Commerce ServerWeb Customers

FinanceProjects

Supply ChainManagement

Manufacturing

FrontOffice

HumanResources

Applied Technology

Strategic Enterprise ManagementActivity Based ManagementBalanced Scorecard

Traits of ERP System Some key traits in ERP solutions: ERP applications address a business process. ERP applications are modular. ERP applications are integrated.ERP applications include a company’s reach beyond its walls — to its suppliers, customers, and partners.The entire ERP suite will address all areas (or the great majority) of a company’s business functions.

ERP System

Supplier, Customers, Employees

Web Interface