Enterprise Resource

Planning -ERP

What is ERP?

Enterprise Resource Planning ERP is a

software architecture facilitating the flow
of information among different functions of
an organization . It is an area which has
revolutionized the business environment .

 An ERP system is an attempt to

integrate all functions across a
company to a single computer
system that can serve all those
functions specific needs.
Integration is the key word for
ERP implementation.

Features of ERP
A software architecture integrating all
functions of a business.
Integration is seamless. This is achieved
through a common database, sharing of
information, one time entry being sufficient
for the whole organization.
Powerful, user friendly GUI Technology
Supported by client-server architecture for
communication at different levels of the
system.
Uniform system environment.

Major Reasons for

Adopting ERP
Integrate financial information
Integrate customer order information
Standardize and speed up operations
processes
Reduce inventory
Standardize Human Resources
information

Benefits
of ERP

Internal
Benefits
External
Benefits

Potential Benefits of ERP

Internal Benefits
Integration of a single source of data
Common data definition
A real-time system
Increased productivity
Reduced operating costs
Improved internal communication
Foundation for future improvement

 External Benefits
Improved customer service and order
fulfillment
Improved communication with suppliers
and customers
Enhanced competitive position
Increased sales and profits

ERP Components

Finance: modules for

bookkeeping and making
sure the bills are paid on
time. Examples:
General ledger
Accounts receivable
Accounts payable

HR: software for handling

personnel-related tasks
for corporate managers
and individual
employees. Examples:
HR administration
Payroll
Self-service HR

Manufacturing and
Logistics: A group of
applications for
planning production,
taking orders and
delivering products to
the customer.
Examples:
Production planning
Materials
management
Order entry and
processing
Warehouse
management

An ERP Example: Before ERP

Sends report

Sales Dept.

Customer
Demographic
Files

Orders
Parts

Customers

Checks for Parts

Calls back Not in stock
We ordered the parts

Accounting
Files

Accounting
Sends report

Sends report

Invoices
accounting

Vendor
Order is placed
with Vendor
Purchasing
Files

Purchasing

Ships parts

Warehouse

We Need parts #XX

We ordered the parts

Inventory
Files

An ERP Example: After ERP

Orders
Parts

Sales Dept.

Customers

Inventory Data
If no parts,
order is placed
through DB

Accounting
Financial Data exchange;
Books invoice against PO

Order is submitted
to Purchasing.
Purchasing record
order in DB

Database

Books inventory
against PO

Order is placed
with Vendor

Warehouse

Vendor

Purchasing
Ships parts
And invoices accounting

Hidden Costs of ERP

Training
Integration and testing
Data conversion
Data analysis
Consultants
Replacing best and brightest staff
after implementation
Implementation teams can never stop

Benefits of ERP Systems

Reduce stock to a minimum
Improve product quality
Provide more reliable delivery dates
and higher service to the customer
Efficiently coordinate global demand,
supply and production

Risks with ERP

Implementation
Expensive (can costs 100 thousands
to millions of dollars)
Time-consuming (can take months to
years)
Great risk for the organization
Transfer of Knowledge
Acceptance with the company

ERP Implementation
Biggest IT project that most
companies ever handle,
Changes the entire company, and
Has repercussions in all departments
and divisions of the organization.
It is essential that all the key players
understand the scope of the project.
This is an IT-Related Project.

ERP Implementation
Phases
4 Major Phases:
Concept/initiation
Development
Implementation
Closeout/Operation and maintenance

Conclusion
The benefits of a properly selected and
implemented ERP system can be
significant.
An average, 25 to 30% reduction on inventory
costs; 25% reduction on raw material costs.
Lead-time for customers, production time, and
production costs can be reduced.

BUT cost of implementing can be quite

high and risks are great.