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ERP & WEB BASED SUPPLY
Chain Management



 Chapter 1
 Introduction to ERP
Introduction to ERP
Concept
ERP is short of Enterprise Resource
Planning,which is business management system
that integrates all facets of the business such as
manufacturing operations,supply chain, customers,
human resource & finance.
Introduction to ERP Concept
ERP Simplified view
ERP Simplified view
Introduction to ERP Concept
ERP’s Full potential


     Manufacturing    Customers
     units
               Corporate
                Office
     Vendors
                      Regional
                      Office
Introduction to ERP Concept



The salient features of above definition is that ERP
refers to in house developed or commercially
available software solutions which provide an
integrated suit of IT applications.that support the
activities of the organization as a whole.
ERP Systems are the information backbone of the
company.It serves as central nervous system &
termed as digital nervous system of the company.
Introduction to ERP Concept


ERP (enterprise resource planning) is an industry
term for the broad set of activities supported by
multi-module application software that helps a
manufacturer or other business manage the
important parts of its business, including product
planning, parts purchasing, maintaining inventories,
interacting with suppliers, providing customer
service, and tracking orders. ERP can also include
application modules for the finance and human
resources aspects of a business.
Introduction to ERP Concept


ERP in manufacturing sector was primarily to
address to know :
  1) Stock of finished goods
  2) Understand material movement
In 1970 the focus of manufacturing systems shifted
to MRP
  MRP Software applications have emerged to
translate the Master Schedule built for the end
products into Time phased net requirement
Introduction to ERP Concept


In 1980 the concept of MRPII was evolved
 All the resources such as People, Infrastructure,
Process
 to various user group necessitate planning &
utilization of such resources
MRP was further extended to cover areas like
Engineering,Projects ,Management etc & led to
what is known as ERP
Introduction to ERP Concept
Introduction to ERP Concept
Key Terms

Integration: Integration of operations with
   accounting result in converting the physical units
   into rupee value.ERP integrates all facets of
   business including
   1) Planning 2)Manufacturing 3) Sales
  Software applications have emerged to help
   business managers implement ERP in business
   activities such as
  Inventory Control, Order tracking, Customer
   service
Introduction to ERP Concept
Key Terms

ERP finds useful application in human resource
  management ,warehousing.
 ERP implies the use of the Shelf packed
Software rather than proprietary software written
  for one customer
The cost of developing & maintaining ERP modules
  become cost prohibitive & Time Consuming
Introduction to ERP Concept
Key Terms

ERP modules are generally expected to have the
  capability to interface with organizations own
  software Depending upon business requirement,
  ERP modules may be altered using
  vendor’s Proprietary tools ,Programming
  languages
A good business strategy drives everything that
   comes in its way including its IT & IS resource
Introduction to ERP Concept
Key Terms

Systems:
The systems view of business or enterprise is a
holistic view.
A system consists of Input,Process , Output &
feedback
For example production system has input of
Men(labor),material,money(finance).The output is
goods and or services.
The processing converts input to value added
outputs
ERP Across Business System
Financial Systems                Operational logistics
Accounts receivables & payable   Inventory Management
Cash planning & Management       MRP
Cost accountancy                 Plant management
General ledger                   Production Planning
Product Cost accounting          Project management
Profit center analysis           Purchasing
Profitability analysis           Quality management
Executive Information system     Routing
Asset accounting                 Dispatching
Standard costing                 vendor analysis
Human Resources                  Sales & Marketing
Payroll,Manpower planning        Sales Order,Pricing
Travel Expenses,HR accounting    Sales planning
                                 Sales management
Process view/ Model of Business


Process Model defines entity or a set of activities that together respond
to a set of inputs to produce desired output
The process of converting input to desired output is governed by
factors such as performance
standards,knowledge,procedures,material,machine,,constraints,&
control points
                     Material                Machines



   Input                        Processing              Output




           Knowledge & Training        Methods & procedures
Process view/ Model of Business



The fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvements in critical
contemporary measures of performance, such
as cost, quality, service, and speed”.
 process innovation,
”encompasses the envisioning of new work
strategies, the actual process design activity,
and the implementation of the change in all its
complex technological, human, and
organizational dimensions”.
Process view/ Model of Business



The fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvements in critical
contemporary measures of performance, such
as cost, quality, service, and speed”.
 process innovation,
”encompasses the envisioning of new work
strategies, the actual process design activity,
and the implementation of the change in all its
complex technological, human, and
organizational dimensions”.
Process view/ Model of Business


Diagram illustrate basic philosophy of business process
reengineering

Understand           Simplifying
                     Processes by       Automate
Existing
                     Eliminating        The process
Processes
                     wastes
  Methods             Methods              Methods
Diagramming        Elimination
                                         EDI
Story boarding     Combination
                                         ERP
Brainstorming      Rearrangement
Preparing for the ERP


Inter Company Integration
To begin with ,an enterprise has framed
departments,with some minimum interface with one
another.organizations then adopt systems approach
where the output of one system became input for
other system and so on to form integrated system.
The isolated systems of yester years were called
management systems(MIS) later DSS or decision
support systems were developed.Executive Support
system is a step beyond both MIS & DSS that
collates information from different sources
Preparing for the ERP



Before implementing ERP ,an organization has to
decide where it is right now,where it would like to
be,& what methods could be used to get there.
The data captured is of immense value in ERP in
Finance,HR,SCM and enables such as data
warehousing,EIS,workflow
ERP is not just an IT project.It changes the
organization in terms of authority responsibility
relationship It brings discipline to the organization.
Preparing for the ERP



Business process reengineering focuses on
transformation of business process to make them
more efficient whereas ERP focuses on automating
The business process using & some objective in
mind.
A project team is drawn from IT,Sales, Purchase,
Production & Finance.
The outside consultant can be hired.
ERP being an enabling tool help us to do things
better
Journey of ERP

SYSTEM     DESCRIPTION
MIS        Management Information Systems.No decision support

IIS        Integrated Information Systems.No decision support

EIS        Executive Information Systems.Decision support

CIS        Corporate Information Systems.Decision support

EWS        Enterprise Wide System. No decision support
           Logistics are considered as part of system
EDI,JIT,   Electronic Data Interchange,Just in Time,
EFT        Electronic fund transfer inter company integration
ERP maturity Levels


ERP like living organization passes through
different stages of development & maturity.a
the business grows,ERP has to adopt itself to
the changing processes,organizational
structure & demand patterns to deliver
effectively.
The ERP team takes a lot of effort after the
“Go-Live”at three different stages of growth
& maturity.
ERP maturity Levels


Stage 1 Chaos
The organization takes the ‘Go-Live’ decision.
It requires streamlining of the processes
In stage 1,the attention is focused on administration
and information stability.Roles and responsibilities
are fixed.The organization starts utilizing the
information generated through ERP
It has to cope with change in organization culture.
It is likely that alignment between the ERP and the
process prevailing is lost.
ERP maturity Levels

Stage 2 Stagnancy
After the Implementation of the ERP organization
expects a whole lot of benefit from it.
However it does not happen immediately.
Organizations expect higher ROI.
There two ways to improve situation
First manual activities are eliminated and are
replaced by automated ERP system.This results in
overall transaction complexity.Secondly ,the
intelligence of the system is enhanced by using
Advanced planning engines& schedules
ERP maturity Levels


Stage 3 Growth
At this stage ,Management seeks strategic support
from the ERP.The system is aligned with the overall
Corporates vision & strategies.
The focus is on profit and Working Capital
Management.The organization is committed to
growth of human resources.
This improves the value chain.Capital management
becomes becomes better.There is optimization
between customer product mix.
ERP maturity Levels


Streaming Operations      Strategic transformation

 Chaos
 Chaos                                     Optimization
                                           Optimization


 Stage1
                 Stage2


          Stagnancy
          Stagnancy             Enhancement
                                Enhancement


     Operational Improvements
                                  Stage3
Organization of ERP Projects

There are three common ways to implement ERP
projects.
Big Bang is an approach that casts off all the legacy
system in one go & installs a single ERP system
across the company.
Franchising approach believes in implementing
independent ERP system in each unit while linking
common processes across the enterprise.It is one of
most common method to install ERP.
Slam dunk is an approach where the ERP dictates
the process.A few key processes are selected for
focus
Introduction to ERP




     End of Chapter 1
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Introduction to ERP (Enterprise Resource Planning)

  • 1. ERP & WEB BASED SUPPLY Chain Management Chapter 1 Introduction to ERP
  • 2. Introduction to ERP Concept ERP is short of Enterprise Resource Planning,which is business management system that integrates all facets of the business such as manufacturing operations,supply chain, customers, human resource & finance.
  • 7. ERP’s Full potential Manufacturing Customers units Corporate Office Vendors Regional Office
  • 8. Introduction to ERP Concept The salient features of above definition is that ERP refers to in house developed or commercially available software solutions which provide an integrated suit of IT applications.that support the activities of the organization as a whole. ERP Systems are the information backbone of the company.It serves as central nervous system & termed as digital nervous system of the company.
  • 9. Introduction to ERP Concept ERP (enterprise resource planning) is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business.
  • 10. Introduction to ERP Concept ERP in manufacturing sector was primarily to address to know : 1) Stock of finished goods 2) Understand material movement In 1970 the focus of manufacturing systems shifted to MRP MRP Software applications have emerged to translate the Master Schedule built for the end products into Time phased net requirement
  • 11. Introduction to ERP Concept In 1980 the concept of MRPII was evolved All the resources such as People, Infrastructure, Process to various user group necessitate planning & utilization of such resources MRP was further extended to cover areas like Engineering,Projects ,Management etc & led to what is known as ERP
  • 13. Introduction to ERP Concept Key Terms Integration: Integration of operations with accounting result in converting the physical units into rupee value.ERP integrates all facets of business including 1) Planning 2)Manufacturing 3) Sales Software applications have emerged to help business managers implement ERP in business activities such as Inventory Control, Order tracking, Customer service
  • 14. Introduction to ERP Concept Key Terms ERP finds useful application in human resource management ,warehousing. ERP implies the use of the Shelf packed Software rather than proprietary software written for one customer The cost of developing & maintaining ERP modules become cost prohibitive & Time Consuming
  • 15. Introduction to ERP Concept Key Terms ERP modules are generally expected to have the capability to interface with organizations own software Depending upon business requirement, ERP modules may be altered using vendor’s Proprietary tools ,Programming languages A good business strategy drives everything that comes in its way including its IT & IS resource
  • 16. Introduction to ERP Concept Key Terms Systems: The systems view of business or enterprise is a holistic view. A system consists of Input,Process , Output & feedback For example production system has input of Men(labor),material,money(finance).The output is goods and or services. The processing converts input to value added outputs
  • 17. ERP Across Business System Financial Systems Operational logistics Accounts receivables & payable Inventory Management Cash planning & Management MRP Cost accountancy Plant management General ledger Production Planning Product Cost accounting Project management Profit center analysis Purchasing Profitability analysis Quality management Executive Information system Routing Asset accounting Dispatching Standard costing vendor analysis Human Resources Sales & Marketing Payroll,Manpower planning Sales Order,Pricing Travel Expenses,HR accounting Sales planning Sales management
  • 18. Process view/ Model of Business Process Model defines entity or a set of activities that together respond to a set of inputs to produce desired output The process of converting input to desired output is governed by factors such as performance standards,knowledge,procedures,material,machine,,constraints,& control points Material Machines Input Processing Output Knowledge & Training Methods & procedures
  • 19. Process view/ Model of Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed”. process innovation, ”encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”.
  • 20. Process view/ Model of Business The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed”. process innovation, ”encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”.
  • 21. Process view/ Model of Business Diagram illustrate basic philosophy of business process reengineering Understand Simplifying Processes by Automate Existing Eliminating The process Processes wastes Methods Methods Methods Diagramming Elimination EDI Story boarding Combination ERP Brainstorming Rearrangement
  • 22. Preparing for the ERP Inter Company Integration To begin with ,an enterprise has framed departments,with some minimum interface with one another.organizations then adopt systems approach where the output of one system became input for other system and so on to form integrated system. The isolated systems of yester years were called management systems(MIS) later DSS or decision support systems were developed.Executive Support system is a step beyond both MIS & DSS that collates information from different sources
  • 23. Preparing for the ERP Before implementing ERP ,an organization has to decide where it is right now,where it would like to be,& what methods could be used to get there. The data captured is of immense value in ERP in Finance,HR,SCM and enables such as data warehousing,EIS,workflow ERP is not just an IT project.It changes the organization in terms of authority responsibility relationship It brings discipline to the organization.
  • 24. Preparing for the ERP Business process reengineering focuses on transformation of business process to make them more efficient whereas ERP focuses on automating The business process using & some objective in mind. A project team is drawn from IT,Sales, Purchase, Production & Finance. The outside consultant can be hired. ERP being an enabling tool help us to do things better
  • 25. Journey of ERP SYSTEM DESCRIPTION MIS Management Information Systems.No decision support IIS Integrated Information Systems.No decision support EIS Executive Information Systems.Decision support CIS Corporate Information Systems.Decision support EWS Enterprise Wide System. No decision support Logistics are considered as part of system EDI,JIT, Electronic Data Interchange,Just in Time, EFT Electronic fund transfer inter company integration
  • 26. ERP maturity Levels ERP like living organization passes through different stages of development & maturity.a the business grows,ERP has to adopt itself to the changing processes,organizational structure & demand patterns to deliver effectively. The ERP team takes a lot of effort after the “Go-Live”at three different stages of growth & maturity.
  • 27. ERP maturity Levels Stage 1 Chaos The organization takes the ‘Go-Live’ decision. It requires streamlining of the processes In stage 1,the attention is focused on administration and information stability.Roles and responsibilities are fixed.The organization starts utilizing the information generated through ERP It has to cope with change in organization culture. It is likely that alignment between the ERP and the process prevailing is lost.
  • 28. ERP maturity Levels Stage 2 Stagnancy After the Implementation of the ERP organization expects a whole lot of benefit from it. However it does not happen immediately. Organizations expect higher ROI. There two ways to improve situation First manual activities are eliminated and are replaced by automated ERP system.This results in overall transaction complexity.Secondly ,the intelligence of the system is enhanced by using Advanced planning engines& schedules
  • 29. ERP maturity Levels Stage 3 Growth At this stage ,Management seeks strategic support from the ERP.The system is aligned with the overall Corporates vision & strategies. The focus is on profit and Working Capital Management.The organization is committed to growth of human resources. This improves the value chain.Capital management becomes becomes better.There is optimization between customer product mix.
  • 30. ERP maturity Levels Streaming Operations Strategic transformation Chaos Chaos Optimization Optimization Stage1 Stage2 Stagnancy Stagnancy Enhancement Enhancement Operational Improvements Stage3
  • 31. Organization of ERP Projects There are three common ways to implement ERP projects. Big Bang is an approach that casts off all the legacy system in one go & installs a single ERP system across the company. Franchising approach believes in implementing independent ERP system in each unit while linking common processes across the enterprise.It is one of most common method to install ERP. Slam dunk is an approach where the ERP dictates the process.A few key processes are selected for focus
  • 32. Introduction to ERP End of Chapter 1
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