What does a companys strategy consist of ?

Company strategies concern, How to grow the business

How to satisfy customers How to out compete rivals How to respond to changing in market conditions How to manage each functional piece of the business and develop needed organizational capabilities How to achieve strategic and financial objectives

Introduction
Manufacturing Organizations are complex `Systems' where

the interactions between the various functions Sales, Distribution, Manufacturing, Materials, Finance, Human Resources, Maintenance have to be managed towards a common purpose of delivering the customers maximum value at the optimum price. However, since most of these organizations have a `Functional Structure', each function/department works towards their own goals and objectives, rather than the organizational goals. These are the issues addressed by `Enterprise Resource Planning' software solutions providing a common, consistent system to capture data organization wide, with minimum redundancy.

What is ERP?
ERP integrates the information across functions, and

provides a set of tools for planning and monitoring the various functions and processes and ensuring progress towards a common purpose A business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing. ERP helps business managers to implement ERP in business activities such as inventory control, order tracking, customer service, finance and human resources

MRP the predecessor to and backbone of MRP II And ERP

a joint effort between J.I. Case, a manufacturer of tractors and other construction machinery, in partnership with IBM.

Initial MRP solutions were big, clumsy and expensive.(1960-1970)

Trends Demand management (Sales forecasting) objective

Strategic management & Business plan

plan Resource requirement planning

Master production
scheduling

Resource req.

Inventory Transaction

Reports

MRP : -BOM -Lead Time -Lot sizing -Planned purchase

Inventory level

MRPII Elements
Buy

report

-Performance reports

Capacity req.
Planning(CRP)

Realistic

Realistic

Factory coordination

Supplier

In 1972 five engineers in Mannheim, Germany, started up SAP (Systemanalyse und Programmentwicklung).

The purpose of the company was to produce and market standard software for integrated business solutions.

The term Enterprise resource planning (ERP) was

coined in the early 1990s by the Gartner Group (Wylie,

1990). Their definition of ERP included criteria for

evaluating the extent that software was actually

integrated both across and within the various functional

A typical Example

Data Flow Diagram to support Part product approval process

Transpotation
in ss ce s p ro g e a rt h a n P c g

Warranty Form Customer

pt Acce

or no

t.

ing neer Engi ges Chan

Production planning
Supplier performance

Ac ti

on

pla

En g Ch ineer an ing ge s

R&D

ility apab ny C ges A Chan pk) C (Cp&

Q.A

for st e q u ro l Re ont C e rs l o ct ri a ate rodu M p mi

Q.C

cti eA t v s cti rre e q u e Co R

on

Purchasing

ty ali Qu r ts lie pp epor Su R

Suplier

de Or

rs

How WIP could be improved by implementation of ERP (Work in Process )

Without using of any integrated system

using of integrated system

Some Questions What are the major types of systems in a business? What role do they play?
How do information systems support the major business

functions?
Why should managers pay attention to business processes?

Major Types of Systems

Executive Support Systems (ESS) Decision Support Systems (DSS)

Management Information Systems (MIS)

Knowledge Work Systems (KWS) Office Systems Transaction Processing Systems (TPS)

Transaction Processing Systems (TPS):

Basic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the business

Types of TPS Systems

Payroll TPS

Executive Support System (ESS): Strategic level Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers Example: 5-year operating plan

Management Information System (MIS): Management level Inputs: High volume data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting

Decision Support System (DSS): Management level Inputs: Low volume data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis

Knowledge Work Systems (KWS): Knowledge level Inputs: Design specs Processing: Modeling Outputs: Designs, graphics Users: Technical staff and professionals Example: Engineering work station

Decision Support System (DSS)

Decision Support System (DSS)

Relation Between 5 systems

(MIS)
With out any Integrated system

(ESS)

(KWS)

(TPS)

Using Integrated system

ERP elements

Enterprise resources planning software Supply Best Practice :

Chain management
Comparing your process with similar processes In higher companies

6 level of sys.(ESS,MIS,TPS,) +MRPII

ERP Software Companies & Marketshares

Software SAP Market Share 15.6

Peoplesoft
SAP; 15,6 Peoplesoft; 4,9 Oracle ; 4,8 Baan; 3 Others ; 59 CA; 3 JDE; 2,2 SSA; 2,1 GEAC; 2 IBM; 1,8 JBA; 1,7

4.9
4.8 3.0 3.0 2.2 2.1 2.0

Oracle Baan CA JDE SSA GEAC

IBM
JBA Others

1.8
1.7 59.0

TABLE 1.2 Business Functions Potentially Supported by ERP

source :T.H . Davenport, Putting the Enterprise into the Enterprise System. Harvard Business Review, July-August 1998.
Financial Accounts receivable and payable Human Resources Time accounting Operations and Logistics Inventory management Sales and Marketing Order management

Asset accounting

Payroll

Materials Requirement Planning (MRP)

Pricing

Cash forecasting Cost accounting Executive information systems

Personnel planning Travel expenses

Plant maintenance Production planning Project management

Sales management Sales planning

Financial consolidation General ledger Profitability analysis Standard costing

Purchasing Quality management Shipping Vendor evaluation

Modules Offered by Leading Vendors

Functional Description
Records sales orders and scheduled deliveries ,customer information Purchasing and raw materials inventory, work- in-process. customer information Production Planning and scheduling actual production Product inspections ,material certifications ,quality control Preventive maintenance, resource management Recruiting, hiring training ,payroll ,benefits
SAP Oracle People Soft JD Eswards

SD( Sales and Distribution)

Marketing Sales Supply Chain

Supply chain management

Order management

MM (Materials Management

Procurement

Supplier Relationship Management

Inventory Management Procurement

PP (production planning )

Manufacturing

Manufacturing Management

QM (quality Management)

Enterprise Performance Management

Technical Foundation

PM (plant Maintenance)

Service

Enterprise Service Automation Human Capital Management Workforce Management

HR (Human Resources

Human Resources

Reasons for Implementing ERP-Rating 1(Not Important) to 5(very Important)

Reason
Replace legacy systems Simplify and standardize systems Improve interactions with suppliers & customers Gain strategic advantage Link to global activities Pressure to keep up with competitors Ease of upgrading systems Restructure organization

United States
4.06 3.85 3.55 3.46 3.17 2.99 2.91 2.58

Sweden
4.11 3.67 3.16 3.18 2.85 2.48 2.96 2.70

Modules Offered by Leading Vendors

Functional Description Internal management, cost analysis by cost center Fixed-asset purchase and depreciation R&D ,construction, marketing projects SAP CO (Controlling) Oracle People Soft JD Eswards Time and Expense Management

AM (Asset Management) PS (Asset Management)

Asset Management Projects Contracts

Enterprise Asset Management Project Management Subcontract Management Real Estate Management

Automate system, task flow analysis, Prompt actions Best practices

WF (Workflow)

IS (Industry Solutions)

Relative ERP Module Use

Module Financial and Accounting Materials management Production planning Order entry Purchasing Financial control Distribution/logistics

Midwestern ERP Users 91.5% 89.2 88.5 87.7 86.9 81.5 75.4

Swedish ERP Users 87.3% 91.8 90.5 92.4 93.0 82.3 84.8

Asset management
Quality management Personnel/human resources Maintenance R&D management

57.7
44.6 44.6 40.8 30.8

63.3
47.5 57.6 44.3 34.2

Advantages and Disadvantages of Alternative ERP Development Methods

Method
Develop in-house

Advantages
Best fit with organizational needs

Disadvantages
Most difficult to develop Most expensive Slowest Difficult to develop Expensive slow Difficult to link modules Slow Slower Usually more expensive If expand, long run time and cost higher

In-house system With vendor supplements Best-of-breed Customized vendor system

Gain commercial advantages Combined with organizational fit Theoretically while keeping Retain flexibility while keeping Vendor expertise Less risk Relatively fast Least expensive

Selected vendor modules

Full vendor system

Fast Less expensive Efficient Least risk Least cost Fastest Least subject to vendor change

Inflexible

Application device provider

At the mercy of ASP provider No control Subject to price increases

Expected ERP Project Installation Time Requirements

Installation Time
12 months or less

United States
34%

Sweden
38%

13 to 24 months

45

49

25 to 36 months

11

35 to 48 months

Over 48 months

ERP Estimated Installation Project Cost

Installation Cost
Less than $5 million

United States
42%

Sweden
48%

$5 million to $25 million

33

35

$26 million to $50 million

10

18

$51 million to $100 million

Over $100 million

(in prior category)

ERP Installation Project Cost Proportions

Installation Cost Proportion Project Software Installation Cost Proportion in United States 30% Cost Proportion in Sweden 24%

Consulting

24

30

Hardware

18

19

Implementation team

14

12

Training

11

14

Other

A supply chain is characterized by the flow of materials and information both within and between business entities including suppliers, manufacturers and customers. The ultimate goal of supply chain management is to meet customers demand more efficiently. For a manufacturing company, it is to make the right product, for the right customer, in the right amount, at the right time.

ERP System Options and Selection Methods

Enterprise resource planning systems are very large IS/IT projects .The cost range is enormous, depending upon the size of the firm implementing the system ,as well as on how many modules are used.

ERP Implementation And Maintenance

ERP Systems Are Adopted In The Hopes That They Will Improve The Performance Of An Organization On A Number Of Key Performance Indicators , Such As Profitability , Efficiency , And Accuracy In Information System Data And Reports . ERP Vendors Typically Promise Gains Of 10 To 15 Percent In Revenue , Customer Satisfaction , And Other Measures Of Value . The Effort Required To Build These Systems Is Significant . Meta Group found that the average ERP implementation takes 23 months with total Ownership cost of $15 million .

Business Intelligence Systems And ERP

Enterprise Resource Planning Systems Offer Powerful Tools To Better Measure And Control Organizational Operations . Many Organizations Have Found That This Valuable Tool Can Be Enhanced To Provide Even Greater Value Though The Addition Of Powerful Business Intelligence Systems . Business Intelligence In This Context Is Supported By Sorting Data (Data Warehouse And Related Systems) And Conducting Studies Using This Data To Solve Business Problems ( One Means To Do This Though Data Mining ) . One Of The Most Popular Forms Of Data Mining In ERP Systems Is Support Of Customer Relationship Management (CRM). Data Warehouses Are One Of The Most Popular Extensions To ERP Systems , With Over Two-Thirds Of U.S. Manufacturers Adopting Or Planning Such Systems ( And Slightly Less Than Two Thirds of Swedish Manufacturers doing the same ). There Has Been Tremendous Progress In Computer Storage Of Data . Many Applications Are Being Found For This new capacity . one major user of massive storage capacity is ERP systems, witch have large storage requirements due to their comprehensive nature .

Data Mining Overview

Data Mining Overview Refers To The Analysis Of The Large Quantities Of Data Stored In Computers . For Example , Grocery Stores Have Large Amounts Of Data Generated By Purchases . Bar Coding Has Made Grocery Checkout Very Convenient . Grocery Stores And Other Retail Stores Are Able To Quickly Process Purchases , And Use Computers To Accurately Determine Product Prices . These Same Computers Help The Stores With Inventory Management By Instantaneously Determining The Quantity Of Items Of Each Product On Hand . Stores Can Also Apply Computer Technology To Contact Their Vendors So That They Do Not Run Out Of Items . Computers Allow The Stores Accounting System To More Accurately Measure Costs And Determine The Profit That Store Stockholders Are Concerned About . All Of This Information Is Available Based Upon The Bar Coding Information Attached To Each Product . The Benefits Of Bar Coding Encompass For More Than Faster Checkout Service . The Entire Business Management Process Can Use The Information Generated .

ERP And Supply Chains

Supply Chain Are Collections Of Organizations That Work Together To Provide Raw Materials That Are Converted Into Products And Delivered To Retail Outlets Where Customers Can Obtain Them . In The Past , Monopolies Would Sometimes Seek Vertical Integration So That They Could Control The Entire Supply Chain ( Standard Oil Went A Long Way Toward Total Vertical Integration ; Steel Companies Also Attained At Lest Something Approaching It ) . The Dutch East India Companies Are An Early Example Of A Global Supply Chain . Military Logistics Systems Are The Epitome Of Supply Chain Is Control And Efficiency . TodayS Companies Gain Efficiency Through A Higher Degree Of Specialization . This Appears In Various Forms , Including Outsourcing . The Idea Behind Outsourcing Is That There Are Specialists Throughout The Supply Chain Who Can Do A Better Job Of The Specific Function They Perform .

I n c r I e n D a c e s D r c e e I e r d c n I a e r c n s a e r c e s a e r d e s a e d e s a d e s d e d

Conclusion
The growing information needs of an enterprise make it imperative to improve or replace old systems. Especially under the present business environment, where the globalization has been initiated, full convertibility is coined. Infrastructure Projects are nearing completion, and it is expected that the whole business system will undergo a major shift. Implementation of ERP solutions is one of the largest drivers of growth in the consultancy business. The introduction of such a large and complex software like ERP, enables an organization to integrate their manufacturing, finance and marketing operations at all levels, is in itself a challenge, since it calls for technical and functional skills and a change in user mindsets.