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ERP: Enterprise ResourcePlanning

ERP (From the 80's& 90s) includes ALL Business ManagementSystems, Philosophies andPerformance Evaluation at AllLevels

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Enterprise Resource Planning (ERP)

ERP is an industry term for the broadset of activities supported by multi-module application software that helpsmanufacturer or other business tomanage the important parts of itsbusiness.

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A typical ERP system will use multiplecomponents of computer software andhardware to achieve the integration.ERP delivers a single database thatcontains all data for the software

modules, which would include:

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ManufacturingEngineering, BOM, Scheduling, Capacity, Workflow Management, QualityControl, Cost Management, Manufacturing Process, ManufacturingProjects, Manufacturing Flow

Supply Chain ManagementInventory, Order Entry, Purchasing, Product Configuration, Supply ChainPlanning, Supplier Scheduling, Inspection of goods, Claim Processing,Commission Calculation

FinancialsGeneral Ledger, Cash Management, Accounts Payable, AccountsReceivable, Fixed Assests

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ProjectsCosting, Billing, Time and Expense, Activity Management

Human ResourcesHuman Resources, Payroll, Training, Time & Attendance, Benefits

Customer Relationship ManagementSales and Marketing, Commissions, Service, Customer Contact and Call

Center SupportData WarehouseSelf-Service interfaces for Customers, Suppliers, and Employees

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AIM OF ERP

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MRPII: ManufacturingResource Planning

MRPII (From the 80's& 90s)includes ALL ManufacturingResourcesfor "What If" Pro-Active ProcessSimulations

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Manufacturing Resource Planning (MRP II)

An information system that integrates allmanufacturing and related applications,including decision support, materialrequirements planning (MRP),accounting and distribution.

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The difference between MRP, MRPII and ERP

MRP is simply about ensuring the materials areavailable to manufacture a specific part in a specificvolumeMRP II takes care of all other aspects of a job

including ordering, tracking inventory and ensuringcapacity.ERP is an integrated information system that servesall departments within an enterprise.

ERP software provides an integral coordination of theactivities, which are carried out at every departmentof the enterprise.

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ERP philosophy has evolved from MRPII philosophy.MRPII philosophy evolved from MRP philosophy. It isimportant to understand the difference between eachtermEffective ERP requires that integrated managementprocesses extend horizontally across the company,including product development, sales, marketing,

manufacturing, and finance

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The main function of material requirements planningMRPII is to guarantee material availability, that is, itis used to procure the requirement quantitities ontime both for internal purposes and for sales and

distribution.this involves automatic of procurementproposals for purchasing and production.

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The old term Manufacturing Resource Planning wasalways a handicap when it came to getting salespeople and technical people interested; ERP -Enterprise Resource Planning - breaks down thistraditional barrier at least. For anyone to benefitfrom ERP, everyone has to contribute; this is the keyto ERP survival

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TYPICAL FUNCTIONS

Typical function of MRP1. Financial modules2. Business Plan3. Resource Planning

4. Production Plan5. Sales and Operations Plan6. Master Production Schedule7. Detailed Capacity Planning

8. Product Costing Modules

Typical function of ERP1. Financial PlanningSimulations2. Business PlanningSimulations3. R&D ManagementSimulations

4. Supply Chain ManagementSimulations

5. Production ManagementSimulations

6. Resource ManagementSimulations

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FUNDAMENTAL PROCESSQUESTIONS

The resource planning MRPII and ERP have somefundamental question also this question are the samefor MRPII and ERP. These question follow as;

1. What do you want to make?2. What materials does it take?3. What materials do you have?4. What materials do you need to get?

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EXAMPLE:SAP SUPPORT CENTER

R /3

SDM M

P P

Q M

P M

H R

F I

C O

A M

P SW F

IS

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The basic system (BC) includes; SD Sales & Distribution, PP Production Planning, MM Materials Management, PM Plant Maintenance,

FICO Finance & Controlling, etc.

Each module handles specific business tasks on its own, but islinked to the others where applicable. For instance, an invoicefrom the Billing transaction of Sales & Distribution will passthrough to accounting, where it will appear in accountsreceivable and cost of goods sold.

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MATERIALMANAGEMENT(MM)

In the figure mean of material management(MM)Supports the procurement and inventory functionsoccurring in day-to-day business operations such aspurchasing, inventory management, reorder pointprocessing, etc.

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SUPPLY CHAIN

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Logistics Flow Model

CapitalCapital SourceSource

Long termLong term Short termShort term

MaMa terialterial ResourcesResources

LoLo gg istiisti cc ProcessProcess

Vendor Vendor

ProductionProductionSalesSales

SupplySupply

Customer Customer

StorageStorage StorageStorageMaterialMaterial

CapitalCapital InvestmentInvestment CostsCosts CashCash

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This figure shows the simple flow oflogistics. Every step of logistics, tovendor to customer, material resourcesare needed. These resources aremanaged by material management.

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Material Management Overview

Stockmanagement

InvoiceControl

EneringInvoice

?

A

B

WarehouseManagement

Goodsreceipt

Sales

disrubitionFinans and Management account

Goodsissue

Transfer process

Material Requirementsplanning

External SupplyPurchasing

Internal SupplyProduction

Master dataMaterialBatchVendor G/M accounts

Customer Inv. Level.

.

.

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Material requirements planning is dividedinto two which are external supplay andinternal supply. The examples of datathat flows in the previous system arematerial, batch, vendor, accounts,customer, inventory level, etc.

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General Integration

Accounting Accounting

MaMatt.. ManMan..

ControllingControlling

TreasureTreasure

PurchasingPurchasing Approval Approval

((Ordering to accountingOrdering to accountingcenter center ))

Purchase orderingPurchase orderingdecisiondecision

VerificationVerification((pre registrationpre registration )) Verification

Verification

PurchasePurchaseRequisitionRequisition

PurchasePurchaseOrder Order

MaterialMaterialreceiptreceipt

EnteringEnteringInvoiceInvoice

BankingBankingCashCashmanagementmanagement

CashCashPredictionPrediction

CashCash

VendorsVendors Approval Approval Gen.Gen.Man.Man.

PaymentsPaymentsGeneralGeneral

Accounting Accounting

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Controlling and accounting has the mostinfluencial data flow with the materialmanagement. Purchase requisition,purchase order, material receipt andinvoice is the general order of materialmanagement in this integration.

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Supply Process

MRPMRP

PurchasePurchaseReuisitionReuisition

Vendor Vendor 11 vendor vendor 22

vendor vendor 33

?? ?? ??SupplySupply

ResourceResource

releasereleasestratestrate gygy Compariso

price

PurchasePurchaseReuisitionReuisition

Request for QuotationRequest for Quotation

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Database keeps information about thevendors to provide comparison betweenthem. The price, quality and the leadtime are the key elements of decisionmaking. The integration is also helpfulin this decision making process.

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Invoice control is also an importantprocess. Transport invoice, prepayment,automated price updating can bepossible with SAP.

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MM Information SystemEISEIS

LISLIS

0

5

10

1520

25

30

35

40

45

50

StoSto cc kk CC ontrolontrolPurchasingPurchasing iinf.nf. SS yy stemstem

-- Production placeProduct ion place-- StorageStorage

-- MaterialMaterial-- BatchBatch-- ABC anal ABC anal ysys-- StoSto cc kk ValueValue-- PlanPlan ningning

Flexible AnalysisFlexible Analysisetc.etc.

-- PurchasingPurchasing Gr Gr oo uu pp-- Vendor Vendor -- Mater.Mater. gr gr oo uu pp-- MaterialMaterial-- ABC ABC anaana lyslys

SDSD PPPP QMQM PMPMPSPS

MMMM

PIPI

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Outputs

EDIEDIDocumentsProposals

OrdersOrder approvalsDelivery plansShipping papersW.house check listMaterial doc.

Accounting doc.mat.

delivery/shipping doc.invoicesDept & creditdoc. (invoice)

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