Lars Vergote & Jonas Van Gucht

Technical
innovation
E-skills 2IBM04

Table of Contents
What is ERP all about?.....................................................................3
Introduction into the SAP software?.................................................4
Why is SAP useful?..........................................................................6
Who can benefit from it?..................................................................6
Where/how does it fit in a modern company?....................................6
What are the advantages?...............................................................7
What are the disadvantages?...........................................................7
Who already uses it?.......................................................................7
Bibliography...................................................................................8

For this part of the portfolio of E-skills we had to make a collaboration task about
a technical innovation. We (Jonas Van Gucht and Lars Vergote) also had a online
meeting to think of different possibilities that we could talk about. When we
thought about technical innovation we thought about a program that could be
helpful when having or working in a company, a program that minimizes the
input that employers or employees need to do. So after looking up some
possibilities we came up with the idea of presenting ERP.
But why did we chose ERP? Well, during the course of Operational Exellence, a
part of that course was about ERP. During this course we got 4 theoretical classes
and we also had to make 2 tasks where we had to follow the different steps into
the ERP system. And while we made these tasks and we got the theoretical
classes we got used of working with this useful program. We also learned that
having the knowledge of working with ERP is really useful in your further
professional career.

What is ERP all about?

ERP, also known as enterprise resource planning, is a software package that is
used by many companies and organizations to collect, store, manage and
interpret data from a lot of different business activities.
ERP is in fact the integrated management of the core business processes. This
means that while using a common database that is maintained by a database
management system, ERP gives an integrated and updated view of how the core
business of the company are going. While tracking the cash, raw materials,
production capacity, etc. and looking what the different orders and purchase
orders are and who they have on payroll, ERP makes this data available between
the different departments ( for example: purchasing, marketing, sales,
accounting, etc.) that provides data.
So we got to know what ERP is about, but how does it work?
ERP is divided in 3 categories:
1. Sales and distribution (SD)
2. Material Management (MM)
3. Product Planning (PP)
Lets start with the Sales and distribution category. Everything starts with a
customer inquiry. The customer wants to make an order and let us know. The
details that we receive from this inquiry are saved as master data, so whenever
the customer orders again we can re-use it. After the customer inquiry we have
to create a sales order, whenever this happens everything is final: we have an
agreement that we deliver the wanted goods and the customer will pay for these
goods.
After the order was made we have to check the availability: if we have enough
goods in stock we go to the pick & post where we take the goods from the
warehouse and send it to the customer. After this we send the invoice and
receive payment.

When we dont have enough goods in stock we go to material management. First

we will need to make a purchase requisition, this is a document generated by an
organization to notify the purchasing department of items it needs to order. After
we notified the purchasing department they will have to compare prices from
different suppliers. When we compared prices and products, we order. This will
generate a specific Purchase Order number. After this we receive the vendor
shipment, and the goods receipt, this is a piece of paper that confirm the fact
that the goods have entered our premises.
After the Material Management part we go to the Product Planning. Here in the
first part we receive the goods and take them to our production hall. After this we
start producing the goods that are needed. After the goods are made we take
them back to to warehouse.
Once the products are back in the warehouse, you go back to the Sales and
Distribution category and ship to the customer and send the invoice.

Introduction into the SAP software?

As for a good example of a good implementation of ERP in real life. We chose for
the SAP program we were introduced into during the classes of Operational
Excellence. It looked like a professional program and seemed like the logical
choice to make because we were already familiarized partly with the program.
Through using it we were very convinced about the capabilities of this program
and the interesting innovations it brings to make companies more efficient.
Now I will give a short introduction into what SAP is and which functions it
contains.
The company SAP was founded in 1972 in Walldorf, Germany. SAP stands for
Systems, Applications and Products in Data Processing. Currently it is one of the
leading providers of client/server business solutions, and known throughout the
business world for its outstanding services.
SAP is a system that embraces ERP completely, it holds every part that ERP
stands for. SAP is a program developed to help companies set up an ERP system
without needing an entire IT department to do this. SAP is also easy to use and
some schools offer it as a course to their students. So, companies who use it
might even already find employees familiar with the program because of its
popularity.
SAP is a software that embraces the ERP concept completely. SAP is a program
that integrates all parts of ERP. The program is developed to give companies the
option to start working with a program that is proven to be successful and
increase efficiency. Companies can scale back on their IT department. Because
the IT department will have a lower workload since they dont have to set up an
entire new system themselves. Since SAP will help them configure the system to
meet the needs of the company by using already existing data from the
company. Also, they will customize or adapt the system to the needs of the
company. They will look at the business process of the company and map SAP
out regarding the companys business process.

SAP contains several Business Processes like:

Operations
o Sales & Distribution
o Materials Management
o Production Planning
o Logistics Execution
o Quality Management

Financials
o Financial Accounting
o Management Accounting
o Financial Supply Chain Management

Human Capital Management

o Payroll
o E-Recruiting

SAP is also known for its high level of security, which makes it even more
interesting for companies. There are different layers of security. Before you can
start working with the program, you must first logon to a site hosted by SAP. This
will create a secure gateway on your network to access the system when you
want access it from a non-work environment. This step can be skipped because
normally the gateways in the workplace will be secured because SAP will be
running continuously. When you have a secure gateway, each employee must log
on with their personal user name and password.
The personal user name is a way of SAP to make sure people only give in
information theyre supposed to. People can only access modules in the system
theyre responsible for. For example, a sales person can only enter information
like a new customer or a sales order.
But still there will be some people in the company that have access to the entire
system. These people will most likely be the IT department in case someone
made an error or entered double information.

Why is SAP useful?

There are many things about SAP that make it such an interesting program to
use.
Some I already summed up like the cost benefits through the IT department. And
also, the way SAP helps companies setup their software so its able to use it
efficiently and not have a lot of useless options. Also, the security of the program
itself and the way they try to implement data validation through the limited
access to certain users. But this means users will also have to spend a little more
time to verify their input.
Another thing that makes SAP interesting is that all the users are connected to
only one real framework. All the information they need and data they might want
to put into the system can be done in one central hub. Not use a different
software for each application separately.
Also through the softwares planning system customers might be serviced a lot
quicker. Because the system will calculate how much inventory there must be
and how much of it there should be present to efficiently service customers.
Because of this when customers need to wait for a delivery the system will be
able to give a fairly accurate estimate when this will take place. Also, internally
people can easily track where a certain product is located in the production
chain.
As mentioned before the software will try to keep a cost-efficient stock of all
resources needed in the production chain. This will help the company with their
cost optimization, which is most of the times a trial and error process. But
because of the software that is SAP this process might be made a lot more
efficient.
When the company wants to track certain results like sales or how many times a
certain product was sold the software can assist with this. Because at any point
users can track summaries of the system which makes finding out points where
the company needs to do better a lot easier.

Who can benefit from it?

The most benefit of using SAP will be for big international companies till midsized
companies, who produce products themselves. The costs of maintaining a full
ERP system will vary from company to company because of their organizational
structure etc.
Some other people point out that the costs will also depend if there should be a
new customization code so it can be adapted to the companies business
processes and the cost of setting this up and maintaining it will certainly be very
different from company to company.
As for the Return of Investment studies show this will be greater if there are
sufficient users who use the program frequently enough.

Where/how does it fit in a modern company?

The scale of where SAP can be implemented in the company is in every business
process a company might have. It can be the planning of resources to making a
sales order.
It fits in a modern company because of its connectivity. SAP can be accessed
from every computer that has gone through the security checklist and has the
software installed. And everyone is connected to the system thus for everyone is
connected to each other. We believe this is how most modern companies want to
be going into the future.

What are the advantages?

International companies have an easy way of bridging certain aspects as

language and culture. Because the system works in different languages and
will look the same for everyone.
If changes need to made, the updates will be applied across the company at
the same time.
Its easy to track things even if for example products are still in a certain
phase the information will be available. Also, when the product goes to
another phase it will be updated in the system immediately so all information
is real time.
The system allows people to work more efficiently because all the
information is located in one location.
The UI of the system will be customized and can be changed at any time.
This allows the operational structure to be more flexible.

What are the disadvantages?

The company is stuck with the program because of contracts. If the product
doesnt prove to be successful for a certain company, they might not be able
to switch to another software because of the switching costs being too high.
It might be that the costs of the customization might be too high for certain
companies. This would most likely be the smaller midsized companies.
The Return of Investment might take too long because of the time
employees might need to become familiar with the program.
If data input is incorrect and not discovered they might bring risks to the
company. For example, creating too much products, because the sales order
was filled in incorrectly.

Who already uses it?

Unilever PLC
Pirelli & C. S.p.A.
BMW Brilliance Automotive Ltd. (BBA) in China
Diakonie Michaelshoven e.V.
Aquila Resources Pty Ltd.

Bibliography
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SAP SE. (2016, 12 10). SAP SE. Retrieved 12 10, 2016, from SAP SE Web site:
http://www.sap.com/about/customer-testimonials/finder.html
Wikipedia Foundation Inc. (2016, 11 8). Wikipedia Foundation Inc. Retrieved 12
10, 2016, from Wikipedia Foundation Inc. Web site:
https://en.wikipedia.org/wiki/SAP_ERP
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erpgreat Web site: http://www.erpgreat.com/sap-introduction.htm