Enterprise Resource

Planning

Manish Solanki
 ERP
 An Enterprise is a group of people
with a common goal, which has
certain resources at its disposal to
achieve that goal. Resources
included are money, material, man-
power and all other things that are
required to run the enterprise.
Planning is done to ensure that
nothing goes wrong. Thus Enterprise
Resource planning is a method of
effective planning of all the resources
2
 ERP
 ERP is primarily an enterprise-wide system,
which encompasses corporate mission,
objectives, attitudes, beliefs, values,
operating style, and people who make the
organization.
 ERP covers the techniques and concepts
employed for the integrated management of
businesses as a whole, from the viewpoint of
the effective use of management resources,
to improve the efficiency of an enterprise. It
is a mirror image of the major business
processes of an organization, such as
customer order fulfillment and
manufacturing. Its set of generic processes,
produce the dramatic improvements they are
capable of only, when used to connect parts3
of an organization and integrate its various
 ERP Market
ERP Market consists of the big 5 vendors (Sap,
Oracle, Peoplesoft, Baan, JD Edwards) and
others. The big 5 account for 61% of the market
share.
 

SAP (Systems, Applications and products in Data

Processing)
SAP ERP packages come in two versions: the
mainframe version (SAP R/2) and the
client/server version (SAP R/3)
SAP products feature a sophistication and
robustness unmatched by other business
software solutions. SAP has developed an
extensive library of more than 80 predefined
business processes, spanning each functional4
software requirement.
 Other Terminologies
• MRP (I&II)
• SCM - Supply Chain Management
• CRM - Customer Relationship
Management
• eCRM - Internet based CRM
•
 What a ERP is Not.
• Not a CAD/CAM Software
• Not a Designing Software
• Not an Emailing solution within a company -
although most ERPs now have emailing
facilities
•
 Why ERP
Helps in reduction of organization’s operating costs can
be reduced.
Integrates all parts of an organization
Increases the efficiency of operations as a result of this
integration
Integration of information systems which enables
seamless flow of information across the organization.
Enables consolidation of different software in the
organization
Helps in better customer service
•
 Technological Aspects
• VB/ASP.Net and Oracle
• Multi User
• Multi Level of Security
• Rapid Deployment
• Ease of Integration with other systems
• Modular approach
•
 Reasons for the growth of the ERP
market
 To enable improved business performance
through reduces cycle time, increased
business agility, inventory reduction, order
fulfillment improvement
 To support business growth requirements
through new product lines, new customers,
meeting global requirements
 To provide flexibility, integrated, real-time
decision support through improved
responsiveness across the organization
 To eliminate limitation in legacy systems of
century dating , fragmentation of data,
inflexibility to change etc
 To take advantage of the untapped mid-market
by increasing functionality at a reasonable9
cost, vertical market solutions etc.
• A typical ERP package solution has the
following modules :
1.Sales , Marketing , Distribution
2.Manufacturing
3.Stores Management
4.Finance
5.Personnel
6.Maintenance
7.Purchase Inventory
8.Planning and Control.
 ERP Modules

 Finance
– Financial Accounting e.g. General Ledger,
Accounts receivable and payable, Asset
accounting, legal consolidation,
controlling, overhead cost controlling, cost
centre accounting, overhead orders,
activity based costing, product cost
controlling, cost object controlling,
profitability analysis
– Investment Management e.g. Investment
Planning
– Controlling e.g. Overhead cost Control
– Treasury e.g. Cash Management, treasury
management, market risk management,
funds management
– Enterprise Controlling e.g. EIS 11
 ERP Modules

 Manufacturing
– Material and Capacity Planning
– Shop Floor Control
– Quality Management
– JIT/ Repetitive Manufacturing
– Cost management
– Engineering Data Management
– Engineering Change Control
– Configuration Management
– Serialization/ Lot Control
– Tooling

12
 ERP Modules

 Sales and Distribution

– Master Data Management
– Order management e.g. Sales Order
Management, Purchase Order Management,
– Warehouse Management includes inventory
planning, inventory handling, intelligent
location, inventory reporting, inventory
analysis, lot control, distribution data
collection, etc.
– Shipping
– Billing
– Pricing
– Sales Support
– Transportation
– Foreign Trade
13

 ERP Modules

• Plant Maintenance
– Preventive Maintenance Control
– Equipment Tracking
– Component Tracking
– Plant Maintenance Calibration
Tracking
– Plant Maintenance Warranty Claims
Tracking


14
 ERP Modules

 Quality Management
– Quality planning
– Quality inspection
– Quality control
 Materials Management
– Pre-purchase Activities
– Purchasing
– Vendor Evaluation
– Inventory management
– Invoice verification and material
inspection
15

 ERP Modules

 Human Resources
– Personnel Management includes
personnel administration, employee
master data, recruitment
management, travel management,
benefits administration, salary
administration
– Organizational Management includes
payroll accounting
– Payroll Accounting
– Time Management includes shift
planning
– Personnel Development includes training16
• The modules are designed for
1.Data capture,
2.Data transaction validation
3.Its analysis
4.Accounting upgradation and
5.Reporting.
•
• ERP Features :
1.Security Authorization
2.Referencing Responsibility
3.Implementation of business rules
•
§ These features are provided to
• 1. Safeguard the business of the
organization from illegal practice
• 2. To protect the valuable information from
misuse.
•
A u th o riza tio n is a feature provided for
e n su rin g th a t th e tra n sa ctio n is co m p le te d
w ith re g a rd s to th e b u sin e ss ru le s se t b y th e
m a n a g e m e n t.
R e fe re n cin g is a feature for tracking the
ch a in o f e ve n ts fo r m o n ito rin g , p ro g re ss
ch e ckin g a n d co n tro l.
T h e b u sin e ss o rg a n iza tio n ru n s th ro u g h th e
ru le s a n d re sp o n sib ility a llo ca tio n . A strict
a d h e re n ce to th e m is e sse n tia lfo r cre a tio n
o f co n tro lle d e n viro n m e n t.
T h e E R P sa tisfie s th is n e e d o f th e b u sin e ss.
• ERP Architecture :
•
• Any information system has three basic
components :-
1.Data Management
2.Application Logic
3.Presentation
•
T h e a rch ite ctu re o f E R P ca n b e a tw o tie r or
th re e tie r :

Data Management

Application Logic

Presentation
Two Tier Architecture
 Data Management Data Server
Function

Application Logic

Presentation

Three Tier Architecture

 Data Management

Server

Application Logic

Application Logic

Presentation

Client / Server Architecture

1. Better Management of resources reducing the cost of
operations.
2. Planning at function and process level . Simultaneous
increase in the productivity of the business possible.
3. Customer satisfaction increases due to shorter
delivery cycle. Closer contact with the customer.
4. As ERP is scalable architecture, it remains valid
solution with expansion of business.
5. The process becomes faster due to work group
technology and application of workflow.
•
 Advantages of ERP
• ERP systems connect the necessary software in order for accurate
forecasting to be done. This allows inventory levels to be kept
at maximum efficiency and the company to be more profitable.
• Integration among different functional areas to ensure proper
communication, productivity and efficiency
• Design engineering (how to best make the product)
• Order tracking, from acceptance through fulfillment
• The revenue cycle, from invoice through cash receipt
• Managing inter-dependencies of complex processes bill of
materials
• Tracking the three-way match between purchase orders (what was
ordered), inventory receipts (what arrived), and costing (what
the vendor invoiced)
• The accounting for all of these tasks: tracking
the revenue, cost and profit at a granular level.
• ERP Systems centralize the data in one place. Benefits of this
include:
• Eliminates the problem of synchronizing changes between
multiple systems
• Permits control of business processes that cross functional
boundaries
• Provides top-down view of the enterprise (no "islands of
 Disadvantages of ERP
• Disadvantages
• Customization of the ERP software is limited.
• Re-engineering of business processes to fit the "industry standard"
prescribed by the ERP system may lead to a loss of competitive
advantage.
• ERP systems can be very expensive (This has led to a new
category of "ERP light" solutions)
• ERPs are often seen as too rigid and too difficult to adapt to the
specific workflow and business process of some companies—
this is cited as one of the main causes of their failure.
• Many of the integrated links need high accuracy in other
applications to work effectively. A company can achieve
minimum standards, then over time "dirty data" will reduce the
reliability of some applications.
• 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).
• The blurring of company boundaries can cause problems in
accountability, lines of responsibility, and employee morale.
ERP Implementation Process
 Pre -se le ctio n Pro ce ss

Pa cka g e E va lu a tio n

Pro je ct P la n n in g

G a p A n a lysis R e e n g in e e rin g C o n fig u ra tio n

Im p le m e n ta tio n
Te stin g E n d - u se r Tra in in g
Te a m Tra in in g

G o in g Live

Po st –
im p le m e n ta tio n
P h a se
ERP implementation Life Cycle
 Pre evaluation screening
• Decision for perfect package
•
• Number of ERP vendors
•
• Screening eliminates the packages that
are not at all suitable for the company’s
business processes.
•
• Selection is done on best few package
available.
•
 Package Evaluation
• Package is selected on the basis of different
parameter.


• Test and certify the package and also check the

coordination with different department
•
• Selected package will determine the success or
failure of the project.
• Package must be user friendly


• Regular up gradation should available.

•
• Cost
 Project planning
• Designs the implementation process.
•
• Resources are identified.
•
• Implementation team is selected and task
allocated.
•
• Special arrangement for contegencies.
 Gap analysis
• Most crucial phase.
•
• Process through which company can
create a model of where they are
standing now and where they want to
go.
•
• Model help the company to cover the
functional gap
 Reengineering
• Implementation is going to involve a
significant change in number of
employees and their job responsibilities.
•
• Process become more automated and
efficient.
 Team Training
• Takes place along with the process of
implementation.
•
• Company trains its employees to
implement and later, run the system.
•
• Employee become self sufficient to
implement the software after the
vendors and consultant have left.
 Testing
•
•
• This phase is performed to find the weak
link so that it can be rectified before its
implementation.
•

 Going Live
• The work is complete, data conversion is
done, databases are up and running, the
configuration is complete & testing is
done.
•
• The system is officially proclaimed.
•
• Once the system is live the old system is
removed
 End User Training
•
•
• The employee who is going to use the
system are identified and trained.
 Post Implementation
• This is the maintenance phase.
•
• Employees who are trained enough to
handle problems those crops up time to
time.
•
• The post implementation will need a
different set of roles and skills than
those with less integrated kind of
systems.
•


• An organization can get the

maximum value of these inputs if it
successfully adopts and effectively
uses the system.
 Why do many ERP implementations
fail?

• Wrong product-
• Incompetent and hazardous
implementation.
• Lack of training for employees
•

40
 How ERP should Works in Apparel Industry
Style Sample
Buyer Sampling
Approvals Produce Samples Work Flow
Style
Costing

Receive PO Order Control

Pre - Production Sample P.O. Entry
Generate BOM
Approvals Generate T&A
Issue Raw Material for Processing
BOM

Send PO
Stores Accounts
Vendors Generate Raw Material POs A/P, A/R, GL
Receive
Raw Material
Receiving
Inspections

Raw Material

Production Line / Issue Production

Cutting, Fabrication,
Vendors Receive Finishing,
Other Production

Finished Goods

Shipping
Invoicing
Packing
Payroll
Salary
Dispatch Benefits/Deductions

Buyer
 •
•
• Thanks