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Enterprise Resource Planning

An Overview

Agenda
Appreciating ERP
What is ERP ? Why is it important ?

Oracle and ERP Oracle Applications - Functional Overview

What is ERP ?
MRP - Material Requirements Planning early 70s -

MRP-II Manufacturing resources planning - early 80s ERP Enterprise Resource Planning 1990s ENTERPRISE extends from CUSTOMERS to SUPPLIERS

What is ERP ?
MRP was all about accounting for what happened in the past while ERP is all about tying people together to co-ordinate the future.

In a nutshell ERP is MRP-II tying up all the links in the supply chain.

Functions covered by typical ERP software packages


SALES
Estimation & Quotation Resources Product Configurator Sales Order Management Invoicing Sales Analysis

FINANCE
Accounts Payable Accounts Receivable Fixed Assets Costing Contract Accounting Financial Analysis

OPERATIONS
Bill of

General Ledger

Inventory Management Purchasing Shopfloor Control Project Management Repetitive / JIT Maintenance Mgmt.

PLANNING

HRD

SYSTEM ADMIN.

Forecasting Human Resource Mgmt Installation Distribution Resource Planning Training Upgradation Sales & Operations Planning Recruitment/Appraisals Parameterisation Master Production Scheduling Payroll Security/Authorisation Material Requirement Planning Backup / Recovery Capacity Requirement Planning

Other Features of ERP Systems


INTERFACES FEATURES
Electronic Commerce CAD Data Collection Devices / MES Imaging Systems EIS / PC-based tools SPC / SQC Warehouse Mgmt Systems Internet / Intranet

GENERAL
Multi - Currency Universal Tax Structures Localisation Multi - Lingual Multi - Company Multi - Location Document Approval Transaction History Workflow

Agenda
Appreciating ERP
What is ERP ? Why is it important ? Business benefits of ERP Implementing ERP

Oracle and ERP Oracle Applications - Functional Overview

History of the Manufacturing Industry


EARLY ORGANISATIONS INDUSTRIAL REVOLUTION ( 1800s )

Work done by specialists - potters, blacksmiths, etc. Home & Family was the centre of activity Managing / Coordinating work was not difficult

Factories to produce goods. People were brought to the factories Concepts of shifts & standardisation Managing became important

History of the Manufacturing Industry contd.


SCIENTIFIC MANAGEMENT TODAYS ENVIRONMENT ( early 1900s - F.W.TAYLOR )

Standards & Division of Labour Demand of goods greater than supply Mass production Supervision became important

Customers demand flexibility Complex Organisations Time-based competition Need to co-ordinate activities rigorously

One Thing is very certain in todays business world , and that is UNCERTAINTY
TOM PETERS

Examples of Co-ordination
DESIGNER SUIT MAKER TYPICAL CAR MANUFACTURER

The customer selects cloth and gives measurements at Bond Street, London The suit is stitched at a low cost country like India or Korea Delivered in 5 days to the customer

Customer selects options in showroom Right items arrive at the right time on assembly line of manf. Car shipped out in 3-4 days Component inventories replenished every 2/4/8 hours (av. 120 inventory turns)

Business Reality is ...


Continuous change is key to your survival in the future competitive world. Leaders initiate change. Others, who want to survive, are forced to follow ...

Transformation to Best Practices


Domestic Standard Products Work Orders Vertical Integration Disparate Disconnected Forecast Driven Global Operations Mass Customization Flow Production Outsourcing Virtual Corporations Networked Customer Driven

Challenges in Todays environment


Complexity - number of products, Raw materials, intermediates, processes etc Size of Organisation - people, sites etc Demanding Customers - buyers market Competition - local and Global Rapid rate of change in technology and products Departmental & Hierarchical structures

The Fact is ...


New problems require new solutions. If you continue to do what you have been doing - you will continue to get what you have been getting ...

11! 3

Some Common Business Problems


Material Shortages High Inventory Poor quality Poor Customer Service Poor Productivity Poor Cash management

CONFUSION !!

Some root causes for these problems


Incorrect information on the material requirements Lack of visibility into stock on hand Inability to identify substitute materials Delayed reporting of obsolete material, lost material etc. Inability to track and control purchases Unable to control vendor shipments Improper inspection instructions No audit trail of incoming material inspection Inability to determine shelf life and expired material Inability to optimise lot/batch sizes

Some root causes for these problems contd.


Bill Of Materials, not structured and properly maintained Delays in implementing Engineering change orders No provision to maintain a Master Production Schedule Inability to schedule operations Not able to maintain shop floor routings and alternates No established work centres and check points for quality Delay in translating customer order into production order

Some root causes for these problems contd.


Missed shipments Inability to provide customers with timely and accurate information on order status Inability to implement ATP Inability to manage payment cycles No information on cash requirements Inability to prevent duplicate payments to vendors Incorrect pricing of customer orders Loss in transaction maintenance Duplication of data entry Lack of an integrated information system

Why is this happening ?


What is to be manufactured ? What resources are needed to manufacture ? What resources are currently available and hence ? What is the balance that is required ?

When do you need ERP ?


When you have co-ordination problems Customer service is of concern Non-uniform daily schedules Lead times are more than a day Lot size is greater than 1 You want to re-engineer you organisation and gain control of your business

ERP is the vision of the Champion !!

ERP is a tool to ..
Address the confusion element of cost Orchestrate all business activities by top down planning Improve Customer service Reduce time spent by material in waiting Provide basis for performance measurement Gain control over business, and accurate information

What is ERP ?
Resource availability check at each step: material, capacity, finance, manpower, suppliers, information, & time What-if simulation capability at each step Provide Plan vs Actual comparisions Uses computers to :
Break down the business plan to various levels of detail Simulate resource loads Communicate & co-ordinate results and operating information

The Business Planning/Control Cycle


FORECAST ORDERS BUSINESS PLANNING DEMAND MANAGEMENT SALES & OPS PLANNING MASTER PROD SCHED. MATL. REQ. PLANNING RESOURCE PLANNING

ROUGH-CUT CAP. PLNG.

CAPACITY REQ. PLNG.

PURCHASING

SHOPFLOOR CONTROL

PERFORMANCE MEASUREMENT BUSINESS PROCESS IMPROVEMENT

Supply Chain Management


SUPPLIERS CUSTOMERS

DISTRIBUTION CENTERS DISTRIBUTION CENTERS

PLANTS

PLANTS

CENTRAL

At the heart of the ERP : MRP II Systems Planning Manufacturing Distribution Financial

The Planning Modules


PRODUCT LINE PLANNING RESOURCE PLANNING MASTER SCHEDULE PLANNING

MATERIAL REQUIREMENTS PLANNING

FORECASTING

CAPACITY REQUIREMENTS PLANNING

The Manufacturing Modules

PRODUCT STRUCTURES

SHOP FLOOR CONTROL

ROUTINGS

WORK ORDERS

REPETITIVE

FORMULA/ PROCESS

REPETITIVE

The Distribution Modules


CONFIGURED PRODUCTS SALES QUOTATIONS SALES ANALYSIS

CUSTOMER SCHEDULES

SALES ORDERS

PURCHASING

SUPPLIER SCHEDULES

INVENTORY CONTROL

PHYSICAL INVENTORY

The Financial Modules


MULTIPLE CURRENCY

INVENTORY CONTROL

ACCOUNTS RECEIVABLE

CASH MANAGEMENT

ACCOUNTS PAYABLE

COST MANAGEMENT

GENERAL LEDGER

PAYROLL

Typical System Overview


Invoice Post Accounts Receivable Accounts Payable Purchase Receipts

Sales Shipments

General Ledger

Repetitive

Inventory Adjustments MultiCompany Consolidatio n

Shop Floor Control

Standard Cost Charges

Work Orders

Agenda
Appreciating ERP
What is ERP ? Why is it important ? Business benefits of ERP Implementing ERP

Oracle and ERP Oracle Applications - Functional Overview

Typical Business Performance Measures


Market share performance ROI performance Sales Plan performance Production Plan performance Master Schedule preformance Purchasing performance Manufacturing Schedule performance Order Fill Rate performance Order Due date performance

Typical Business Performance Measures


Delivery Lead Time performance Product Quality performance Service performance Inventory Turnover Inventory Record Accuracy Productivity performance Capacity Utilisation performance

Tangible Benefits
Quantifiable Benefit
Inventory Reduction ( matched sets, valid schedules ) Purchased Cost Reduction ( more time for sourcing ) Mfg. Productivity Increase Dist./Freight Expense Reduction ( from Better Planning ) Sales Increase 5% - 20% 15% - 26% ( from timely delivery & reduced returns )

WW Stat
20% - 40% 2% - 10% 10% - 30% 10% - 30%

Indian Stat
16% - 30% 7% - 13% 11% - 20% 5% - 16%

( matched sets, red. followup, overtime )

Intangible Benefits
Increased Market share Improved Customer satisfaction Improved Vendor performance Reduced obsolescence Increased flexibility Reduced premium freight Elimination of annual stock taking Floor space reduction Reduced quality costs

Intangible Benefits contd.


Improved Resource utilisation Improved information accuracy Improved Decision Making Capability Better Cost Visibility Improved co-ordination between all departments Reduced expediting Improved morale Power savings Reduction in stationary and supplies

Why ERP Fails ?


ERP does not fail - people fail to implement ERP successfully Top Management does not grasp the benefits and does not participate Inadequate planning - lack of vision ABC Classification of success criteria :
A : People 60 % B : Business Processes & Data 30 % C : Technology 10 %

Why ERP Projects fail


This is an I.T. department project We dont have time This technique is not suitable for us Our problems cannot be addressed Our business is different Our Organisation is different Our people are different This is India

Implementation Methodology
Implementation Strategy

Implementation Strategy Document Work Plan

Business requirements Document Fit Analysis Proposed Flow Conference Room Pilot Test Results Certified System

Operations Analysis Solution Design

Build

Custom Documentation

Installed Software Project Team Workshop Prototype models Application Setup Document List of Policies & Procedures List of Issues System Test Plans

Production Environment Cutover Plan Enduser Training

Transition

Procedure Content & Format Document

Production

Live System

Typical Project Schedules


PHASE Implementation Strategy Operations Analysis Solution Design Build Transition Production

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10

Project Structure

Project Team Organization Chart Steering Committee

Consultant Project Director

Client Project Director

Project Manager

Quality Manager

Project Manager Key Users IS Staff

Functional Consultant Technical Consultant