Enterprise Resource Planning (ERP) Systems

An OverviewBy

Khubaib AhmedDHA 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.

ERPERP 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 system’s 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 performanceTo support business growth requirementTo provide flexible, integrated, real-time

decision support.To eliminate limitation in legacy systemsTo take advantage of the untapped mid-

market (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 IntegrationFlexibility.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 ImplementationSelection of the right package.Commitment of the right management.Participation & Dedication of the system’s 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

company’s know-how and work culture.Sprit & collaboration on the part of all.

Oracle Applications ConsultantsFunctional 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 Consultants1.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 efficacyInformation integration for better decision

makingFaster response time to customer queriesBusiness integration FlexibilityBetter analysis and planning capabilitiesUse of latest technology

Indirect Advantages

Better corporate imageImprove customer goodwillCustomer satisfaction

Tangible Benefits

Lead time reductionOn time delivery / shipmentIncrease business valueLower inventory levelsIncreased inventory turn over Reduction in cycle timeReeducation in work in progressImproved quality

Intangible Benefits

Improve customer satisfactionBetter integration with vendorsIncreased flexibilityReduction in quality costsBetter in capacity utilizationImproved decision making capability

General Benefits of ERP

Reduction of lead-timeOn-time ShipmentReduction in cycle timeBetter customer satisfaction Improved Supplier Performance Increased flexibilityReduction in Quality Cost Improved Resource Utility Improved information accuracy and decision-making

capability

ERP’s Significant Limitations

Functional:Custom ReportsBusiness Intelligence: Finding out the trends &

patterns in available dataEnterprise’s Integration

Implementation:TimeRigidityCost

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

Business Process Re-engineering (BPR) RBusiness Intelligence: R

Online Analytical Processing (OLAP).Data WarehousingData 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 PhasesPhase 1. Begin Organizational changes- Initialization

& Comm

Phase 2. Building reengineering organization- Planning

Phase 3. Identifying BPR opportunities- Strategy

Phase 4. Understanding the existing processes- Analysis

Phase 5. Reengineering the process- Redesign

Phase 6. Blueprint the New Business System- Modeling

Phase 7. Perform the transformation- Implementation

IntroductionNo clear separation line between phasesOne could start before previous one completedAll phases are not all applicable in all casesLogical order is followedCOs 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 screeningPhase 2. Package evaluation.Phase 3. Project planningPhase 4. Gap AnalysisPhase 5. Reengineering Phase 6. ConfigurationPhase 7. Implementation team trainingPhase 8. TestingPhase 9. End-user training Phase 10. Going livePhase 11. Post Implementation

ERP Markets

SAP – Manufacturing (Big size), A-SAPOracle Applications - FinancialsJD-Edward - Manufacturing (Mid Market) owned by PS 03

Siebel – CRMPeople Soft – HRM owned by OA in 2005Baan - Manufacturing (Med. size ), Finance, E-ERPMySys - BankingMS Great Plan – for general SME’sGlobus – BankingAccPack – TextileQAD’sMFG/PRO

Inventory Management Methods

JIT (just in time)KanbanMake to OrderMake to StockAssemble to OrderEng. to OrderConfig. to Order

Manufacturing Methods

Process Manufacturing (whole a part)

Discreet Manufacturing (build to order)

Standards

Quality Stand.: ISO 9000’s, 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

PresentedBy

 

Khubaib Ahmed

ORACLE E-BUSINESS SUITESPECIAL EDITION