Enterprise Resource Planning (ERP) Systems

An Overview
By

Khubaib Ahmed DHA Suffa University

Introduction
In Manufacturing, Material Requirements Planning (MRP) for Production Management & Control. For Order Inventory Management of material the Bill of Materials (BOM) was generated under Purchase Order (PO) Management.

Convergence: Order Inventory Management of Materials to Plant Planning, Personnel Planning and Distribution Planning introduces Manufacturing Resource Planning (MRP-II)
MRP-II introduce functions like: Financial Accounting, HRM, Distributed Mgt, Management Accounting. Finally cover all areas of enterprise business and called ERP.

ERP
ERP covers the techniques and concepts employed for the integrated management of business as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of an enterprise.
ERP software packages are integrated covering all enterprise business functions

 Initially ERP focus on Manufacturing to support only major functions like: Sales Management, Production Management, HRM, Accounting, Financial Management etc. ERP globally covers all business functions from Finance to shop floor and integrate them for efficient business planning and management Mirror image of major business processes of the organization. ERP systems set of generic processes, produce the dramatic improvements that they are capable of only, when used to connect parts of an organization and integrate its various processes seamlessly.

Information Integration through ERP Systems

Growth Reasons
To enable improve business performance To support business growth requirement To provide flexible, integrated, real-time decision support. To eliminate limitation in legacy systems To take advantage of the untapped midmarket (medium size organizations)

 To enable improve business performance

Cycle time reduction Increased business agility Inventory reduction Order fulfillment improvement

To support business growth requirement

New products/product lines, new customers Global requirements including multiple languages and currencies.

To provide flexible, integrated, real-time decision support.

Improved responsiveness across the organization.

To eliminate limitation in legacy systems

Century dating issues. Fragmentation of data and processing. Inflexibility to change. Insupportable technologies.

To take adv of the untapped mid-market (medium size org.)

Increased functionality at a reasonable cost. Client/server open systems technology. Vertical market solutions.

ERP Advantages
Business Integration Flexibility. Better Analysis and planning capabilities. Use of latest technology.
(technologies: open systems, client/server, internet/intranet, comp-aided acquisition and logistic support (CALS), e-Commerce etc)

Streamlined business processes

Questions:
Why are ERP package being used now?
Covers individual and enterprises business. Covers all kinds, business functions and sizes of business using interconnected decentralized DB with Information Systems. Global adoption: multi-lingual, multi-currency multi-standards etc

Problem areas in ERP implementation.

Attitude reform of employee and Mgt at all level. Fast rate of change is needed for market competition. Definite business models, timetable, schedules, Wrong estimates: internal & external project development costs, (ERPs Implementation Hidden costs: consultation, customization, training etc.)

Successful ERP Implementation

Gap Analysis:
negotiation between the co. requirements and the functions of package.

Coordinator:
outside consultant having wide experience in package implementation. for co. where persons of differing viewpoints in project team are involved. works at user side to resolve conflicts, between package vendor & system integrator.

 Clearly defined and known Co objectives and targets with business methods. Involvement of Management, employees, and speed of decision making. Selection of experienced Team: Consultants & integrators Groom appropriate (functional and technical knowledge with commitment) Internal employee by train them with external consultants. Finally Co will have In-house consultant and integrator by leaving vendor staff and external consultant.

CSF for Successful ERP Implementation

Selection of the right package. Commitment of the right management. Participation & Dedication of the systems future users. Backing, support & cooperation of the IS/IT personal. Development of interfaces with current operational & under development systems. Effort of consultants, who have respect for the companys know-how and work culture. Sprit & collaboration on the part of all.

Oracle Applications Consultants

Functional Consultants
1.Gather requirements, define Gaps and configure each module. 2.Document possible solutions to gaps. 3.Document business Issues. 4.Confirm reporting requirements. 5.Document and Communicate revised business policies and procedures. 6.Develop and deliver end-user training. 7.Develop test scenarios and perform user testing. 8.Develop security and access requirements.

Technical Consultants
1.Modify existing reports according to user requirements. 2.Design and build new reports. 3.Design and build interfaces. 4.Gather data from the users and massage the data as required. 5.Do data conversion. 6.Work closely with functional consultants to understand end-user requirements.

Role of EDP dept.

Project/Process life cycles. Business Process Modeling. BPR. Attitude changes in Management and Eng.

Future of ERP
Internet ERP, Mobile ERP EAI Solutions

Direct Advantages
Improve efficacy Information integration for better decision making Faster response time to customer queries Business integration Flexibility Better analysis and planning capabilities Use of latest technology

Indirect Advantages
Better corporate image Improve customer goodwill Customer satisfaction

Tangible Benefits
Lead time reduction On time delivery / shipment Increase business value Lower inventory levels Increased inventory turn over Reduction in cycle time Reeducation in work in progress Improved quality

Intangible Benefits
Improve customer satisfaction Better integration with vendors Increased flexibility Reduction in quality costs Better in capacity utilization Improved decision making capability

General Benefits of ERP

Reduction of lead-time On-time Shipment Reduction in cycle time Better customer satisfaction Improved Supplier Performance Increased flexibility Reduction in Quality Cost Improved Resource Utility Improved information accuracy and decision-making capability

ERPs Significant Limitations

Functional: Custom Reports Business Intelligence: Finding out the trends & patterns in available data Enterprises Integration Implementation: Time Rigidity Cost

Introduction (with special focus to Related & Supported tech.)

Business Process Re-engineering (BPR) R Business Intelligence: R
Online Analytical Processing (OLAP). Data Warehousing Data Mining

Supply Chain Management (SCM) Module of ERP now Customer Relationship Mgt (CRM) Module of ERP now Business Integration: Enterprises Application Integration (EAI) S

Other Supported Tech: EDI, Internet, Mobile, IVR, CALS etc. Native Technology: Computer , Network etc

Note: R: Related Tech., S: Supported Tech.

BPR
Definition: 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. Not just change but dramatic change & dramatic improvements. Change is achieved by overhaul of org. structure, management systems, job descriptions, performance measures, training, skill development, use of IT.

Results: Dramatic increase/improvement in performance, profit, productivity, employee/customer satisfaction, quality customer service, business practices and cost reduction etc.
BPR for ERP

BPR Phases
Phase 1. Begin Organizational changes- Initialization
& Comm

Phase 2. Building reengineering organizationPlanning

Phase 3. Identifying BPR opportunities- Strategy Phase 4. Understanding the existing processesAnalysis

Phase 5. Reengineering the process- Redesign Phase 6. Blueprint the New Business SystemModeling

Phase 7. Perform the transformation- Implementation

Introduction
No clear separation line between phases One could start before previous one completed All phases are not all applicable in all cases Logical order is followed COs go through many implementation, in different business units, different modules or manufacturing locations. Some follow Big Bang, some Sequential rollouts and some franchising strategy, and some follow new business unit for implementation For all implementation strategies life cycle phases will be same

ERP Implementation Lifecycle Phases

Phase 1. Pre-evaluation screening Phase 2. Package evaluation. Phase 3. Project planning Phase 4. Gap Analysis Phase 5. Reengineering Phase 6. Configuration Phase 7. Implementation team training Phase 8. Testing Phase 9. End-user training Phase 10. Going live Phase 11. Post Implementation

ERP Markets
SAP Manufacturing (Big size), A-SAP Oracle Applications - Financials JD-Edward - Manufacturing (Mid Market) owned by PS 03 Siebel CRM People Soft HRM owned by OA in 2005 Baan - Manufacturing (Med. size ), Finance, E-

ERP MySys - Banking

MS Great Plan for general SMEs Globus Banking AccPack Textile QADs MFG/PRO

Inventory Management Methods

JIT (just in time) Kanban Make to Order Make to Stock Assemble to Order Eng. to Order Config. to Order

Manufacturing Methods
Process Manufacturing (whole a part) Discreet Manufacturing (build to order)

Standards
Quality Stand.: ISO 9000s, GMP (Good Mfg Practices) etc. APICS foundation: Education of operations Mgt., Certifications, American e-Comm.: Federal Trade Commission Act.(FTC) Act 03, CAN-SPAM Act 03

Introduction Oracle Applications

Presented By

Khubaib Ahmed

ORACLE E-BUSINESS SUITE SPECIAL EDITION