Post on 12-Apr-2017
MS.P.SUDHA/AP/SAEC ERP UNIT I 1
ENTERPRISE RESOURCE PLANNING
2
UNIT I1. OVERVIEW OF ENTERPRISE
SYSTEMS2. EVOLUTION3. RISKS AND BENEFITS4. FUNDAMENTAL TECHNOLOGY 5. ISSUES TO BE CONSIDER IN
PLANNING DESIGN 6. IMPLEMENTATION OF CROSS
FUNCTIONAL INTEGRATED ERP SYSTEMS.
MS.P.SUDHA/AP/SAEC ERP UNIT I
MS.P.SUDHA/AP/SAEC ERP UNIT I 3
OVERVIEW OF ENTERPRISE SYSTEMS
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What is ERP?
Enterprise Resource Planning (ERP) system is “Computer based information system that uses an integrated database to provide a common integrated infrastructure for typical business processes within functional areas and consistent information across areas”.
* ERP is a method of effective planning of all the resources in an orgn.
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• Enterprise An enterprise is a group of people with a
common goal, which has certain resources at its disposal.
• Resources Resources include money, manpower,
material, and infrastructure that are required to run the enterprise.
• Planning Planning is a conscious determination of
future course of action, planning is done to ensure that nothing goes wrong.
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Advantages of ERP
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Advantages of ERP / Tangible and Intangible Benefits
ERP
DIRECT ADVANTAGES
INDIRECT ADVANTAGES
BUSINESS INTEGRATION FLEXIBILITY
BETTER ANALYSIS AND PLANNING CAPABILITIES
USE OF LATEST TECHNOLOGY
IMPROVED EFFICIENCY
INFORMATION INTEGRATION
BETTER DECISION MAKING
FASTER RESPONSE TIME TO CONSUMER
QUERIES
BETTER CORPORATE IMAGE
IMPROVED CUSTOMER GOODWILL
CUSTOMER SATISFACTION
REDUCED QUALITY COST
IMPROVED RESOURCE
UTILIZATION
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Business Integration: ERP system can integrate functions of various
departments in an organization, this integration approach aimed at improved communication and integration of information among various departments of business units in organizations.
So transaction occurs, ERP systems automatically every transaction in related business functions in real time. This enables anyone to be able to grasp business details in real time and carry out various types of management decisions in a timely manner, based on that information
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Flexibility:
ERP Packages have their unique feature of flexibility. Different languages, Currencies, accounting standards, and so on can be covered on one system and functions that manage multiple locations of a company can be packaged and implemented automatically. To cope with system globalization and system unification, this flexibility is essential.
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Better Analysis and Planning Capabilities:
ERP enable to boost the planning functions. By enabling comprehensive and unified management of related business and its data, it becomes possible to fully utilize many types of decision support systems and simulation functions. Filing and better analysis of data from a variety of dimensions becomes possible.
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Use of Latest Technology:
ERP include many functions that will be necessary for future systems. The latest information technology systems such as open systems, client/server technology, internet, intranet, CALS (Computer-aided acquisition and logistic support), electronic commerce, etc. are adapted quickly by ERP system to take advantage of the latest technologies.
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Improved Efficiency / Reduction of Lead Time: The elapsed time between placing an
order and receiving it is known as the lead-time. ERP has efficient inventory management system which is integrated with the purchasing, production planning, and production departments. Similarly material management integrated with sales, marketing, purchasing, manufacturing and production. Hence ERP can automate these tasks more efficient and effective.
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Information Integration / Reduction in Cycle Time:
Cycle time is the time between receipt of the order and delivery of the product. ERP systems save cycle time by integrating with CAD/CAM systems. CAD engineering designs are converted automatically into software programs for computerized production machines. This automatic conversion eliminates the costly and time consuming steps.
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Faster response time to consumer queries / On time Shipment:
ERP system supports the entire range of production strategies. It provides freedom to change manufacturing and planning methods as needs change, without modifying or reconfiguring the workplace or plant layouts. Hence companies are able to deliver customer-specific products (made-to-order) with the lead time of standard, off-the-self-products.
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Better Corporate Image / Increasing Flexibility:
Flexibility means quickly changing something that is being done or completely changing to adjust to new products designs according to the changing market demand and customer wish. ERP enhance flexibility of the manufacturing operations rapidly using latest technology tools without modifying plant layouts.
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Improved Customer Goodwill / Improving supplier Performance:
ERP ensures quality of raw materials, capability of vendors, delivery time, by closely monitoring their activities. ERP include supplier management and control systems to help, plan, manage and control the complex processes associated with global supplier partnerships.
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Customer Satisfaction:
ERP enhance customer satisfaction by three ways. They are as follows:-
• Product and service includes the features that are most important to the customer.• Respond to the customer’s demands in a timely
manner.• Product and service is free of defects and performs as
expected.
ERP certainly produce quality product on time at low cost as enhance customer satisfaction.
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Reduced Quality Costs: Specification control systems in ERP systems offer a
state-of-the-art approach for documenting specifications and enable organization to standardize and simplify its quality assurance and control functions.
ERP reduce the following cost when ensuring quality:-• Internal Failure Costs :- Costs of scrap, rework, re-inspection• External Failure Costs :- Warranty claims, repairs, and service
costs etc.,• Appraisal Costs :- Cost of inspection upon arrival, during
manufacture, in laboratory tests etc.,• Prevention Costs : - Design & Development of new quality
equipment evaluation costs of a new product or service, training of quality personnel .
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Improved Resource Utilization:
The capacity of machines, availability of material and production schedule is properly planned by ERP. ERP offers detailed capacity planning and loads each resource with production requirements from master production scheduling, material requirement planning, and shop floor control. This minimizes cost and waste.
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EVOLUTION
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Historical Evolution of ERP SystemsTypes of Systems Year Purpose ResultsRe-Order Point 1960s It is used to inform the management when
an items falls below a predetermined level, additional inventory is ordered.
Designed to manage high volume production of a few products, with constant demand; focus on cost
Material Requirements
Planning(MRP) Systems
1970s Offered a demand based approach for planning manufacture of products and ordering inventory.
Focus on marketing; emphasis on greater production integration and planning.
Manufacturing resource planning (MRP-II) Systems
1980s Added capacity planning; could schedule and monitor the execution of production plans
Focus on Quality; manufacturing strategy focused on process control, reduced overhead costs, and detailed cost reporting.
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Types of Systems Year Purpose ResultsMRP II with manufacturing execution (MES) Systems
1990s Provide ability to adapt production schedules to meet customer needs; provides additional feedback with respect to shop floor activities.
Focus on the ability to create and adapt new products and services on a timely basis to meet customer’s specific needs.
Flexible ERP( Resource Planning)
Late 1990s and
onward
Integrate manufacturing with supply chain processes across the firm; designed to integrate the business processes to create a seamless information flow from suppliers, through manufacturing, to distribution to the customer.
Integrates suppliers, manufacturing and customer data throughout the supply chain.
Web Enabled ERP 1995 onwards
To incorporate web interfaces and networking capabilities with ERP
Designed to share data and communicate information among internal and external environment.
Inter-Enterprise ERP 1999 onwards
To incorporate internet as well as intranet tools with ERP to enhance communication and data sharing
It is designed for linking subsidiary companies, and group companies under the single umbrella for data sharing decision making.
Customized (ERP)E-Business Suits
2002 onwards
To provide ERP systems products according to the needs of a customer
It is designed to integrate and disseminate modules so that small and medium companies can buy and use.
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Trends in the Evolution of ERP applications:4
E-businessSuits
1Flexible ERP
ERP trends
2Web-enabled
ERP
3Inter-enterprise
ERP
Improvements in integration and
Flexibility
Emersions to E-business
Applications
A broader reach To
New users
Adoption of Internet
Technologies
Trends shaping Continues Evolution
Still evolution
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Flexible ERP :
In 1990 : ERP software packages were the main stage of ERP implementations; criticized for their inflexibility; gradually modified into more flexible products. Companies who installed ERP systems pressured software vendors to adopt more open, flexible, standards based software architectures.
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Web Enabled ERP software:This is the next development in ERP for the reason
that internet ; corporate intranets ant extranets grew this prompted software companies to use internet technologies to build the following into ERP Systems.– Wed interfaces – Networking capabilities
These would enable ERP systems conveniently to use and connect to other internet applications as well as the systems of a company’s business partners.
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Inter-enterprise ERP:
By this arrangement of Internet connectivity, inter-enterprise ERP systems were developed that provide wed-enabled links between key business systems [such as inventory and production] of a company and its customers, suppliers, distributors etc. These external links gave rise to a move towards the integration of internal-facing ERP applications with the external-focused applications of supply chain management (SCR) and a company’s supply chain partners.
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E-Business suites:
The developments mentioned earlier have provided the business and technological momentum for the integration of ERP functions into e-business suites. Popular ERP software companies have developed.
Modular, wed-enabled software suites that integrate ERP, customer relationship management, procurement, decision support, enterprise portals and other business applications and functions.
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Objectives of ERP system
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Objectives of ERP systemThe three primary objectives what we find are as depicted
below:
Objectives
Of ERP
Systems
Provides support for all variations of Best business processes
Empower the customer to modify The implemented business processes to suit
their needs.
Implementation of the best processes by integration and With cross functional
activities towards enhancing productivity.
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RISKS AND BENEFITS
RISKS AND BENEFITS
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Benefits and Challenges of ERP:
FIRM STRUCTURE
BENEFITS
CHALLENGES
MANAGEMENT PROCESS
TECHNOLOGY PLATFORM
BUSINESS CAPABILITY
DAUNTING IMPLEMENTATION
HIGH UP FRONT COSTS
FUTURE BENEFITS
INFLEXIBILITY
REALISING STRATEGIC
VALUE
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Benefits: Enterprise system promises to greatly change the following dimensions: Firm Structure and organization, management, technology platform and business capability.
1. Flat structure and organization: Companies use ERP to support:
• Organizational structures that was not previously possible.• To create a more disciplined organizational culture.
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2. Management Process:
ERP automates many internal business transactions (Order receipt, entry, paying suppliers, employee benefits, status change etc.). Further, it can improve management reporting and decision making.
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3. Technology platform:
Enterprise systems promise to create a single, integrated repository that gathers data on all the key business processes. It promises to provide firms with a single, unified, and all encompassing information system technology platform and environment. The data have common, standardized definitions and formats that are accepted by the entire organization.
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4. Business capability:
ERP can help create the foundation for a customer driven or demand organization. By integrating discrete business processes, the entire organization can efficiently respond to.
• Customer requests for products or information• Forecast new products• Build and deliver them as demand requires.
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Challenges: ERP improves organizational coordination, efficiency, and decision making; they have proven very difficult to build. But it needs large technology investments but also fundamental changes in the way the business operates.
1. Daunting implementation: ERP causes dramatic charges in
business. As per re-engineering principles, it requires not only deep seated technological changes but also fundamental changes in the way the business operates.
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2. Large initial cost:
ERP start up costs are high, highly visible and often politically charged. Hence one should be careful in knowing the future benefits which cannot be qualified at the beginning of a project.
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3. Inflexibility:
ERP software are complex, costs high and difficult to master, world wide shortage of experienced skilled people in installing and maintaining it. It is deeply intertwined with corporate business processes.
4. Failure to achieve strategic benefits:
If the standard ERP software do not allow the firm to use unique business processes needed by the company to gain competitive advantage over competitors, then the firm fails to achieve strategic benefits and do not realize strategic value.
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FUNDAMENTAL TECHNOLOGY
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ERP technologies:
MAIN FRAME
BASED
COMPUTING
COMPUTING POWER DELIVERED AT DESK
TOP MACHINES (INCREASED MANY A TIMES AND REACHES
MAINFRAME COMPUTING POWER)
CLIENT SERVER ERA
INTERNET
ERA
ADVANCEMENT IN COMMUNICATION INFRASTRUCTURE
ABILITY TO DELIVER INFORMATION
AROUND THE GLOBE
PRESENT ERP
SYSTEM
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Limitation / Problems of Acceptance of ERP Systems:
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Limitation / Problems of Acceptance of ERP Systems:
Cost, Availability, service standard or risk
Non- pervasiveness of IT culture, Absence of external stimulaii to change, Lack of awareness
Limitations of acceptance of ERP systems
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Cross-Functional Enterprise Systems
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Cross-functional enterprise system
• It is a group of people with different functional expertise working towards a common goal.
• It may include the people from finance, marketing, operations, human resources. Typically, it includes employees from all levels of an organization.
• Cross-functional enterprise system often function as self-directed enterprise systems responding to broad, but not specific directives.
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Evolution
TASK ORIENTATION
FUNCTIONAL ORIENTATION
CROSS-FUNCTIONAL
SYSTEM
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Application frameworks• Customer Relationship
Management• Supply Chain Management• Selling Chain Management• Enterprise Resource
Planning• Enterprise Application
Integration• E-procurement• Knowledge Management• Decision Support• Business Intelligence
Supplier
SCM
ERP
EAI
CRM
SeCM
Know
ledg
e M
anag
emen
t
Part
ner
Rela
tions
hip
Man
agem
ent
Empl
oyee
s
Busi
ness
Par
tner
s
Customer
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Collaboration system in manufacturing
It is designed for one basic purpose, to help unit employees or people that are working on similar task, or it could be the exact task and system helps unite them to complete their task and achieve whatever goal that task sets out to do.
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Enterprise collaboration system
• Communicate• Coordinate• Collaborate and Cooperation
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Tools used
• Electronic mail• Voice mail• Bulletin board systems• Fax• Video conferencing tools
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Collaboration system in manufacturing
• Structured collaboration system– Easier to organize– Excellent for hierarchical organizations– Increases proficiency
• Limitations of structured collaboration system– Same workflow information– Can cause groupthink– Encourages lack of creativity
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Enterprise application integration
• The use of software and computer systems architectural principles to integrate a set of enterprise computer applications.
• It is an integration framework composed of collection of technologies and services which form a middleware to enable integration of systems and applications across the enterprise.
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Transaction processing systems • A transaction processing system is a type of information
system. TPSs collect, store, modify, and retrieve the transactions of an organization.
• A transaction is an event that generates or modifies data that is eventually stored in an information system.
• The essence of a transaction program is that it manages data that must be left in a consistent state. E.g. if an electronic payment is made, the amount must be both withdrawn from one account and added to the other; it cannot complete only one of those steps
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Single-User System
• Presentation Services - displays forms, handles flow of information to/from screen
• Application Services - implements user request, interacts with DBMS
presentation applicationservices services
DBMS
user module
centralized system
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Centralized Multi-User System
• Dumb terminals connected to mainframe– Application and presentation services on
mainframe• Properties required– Isolation: DBMS sees an interleaved schedule– Atomicity and durability: system supports a major
enterprise• Transaction abstraction, implemented by
DBMS.
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Centralized Multi-User System
user module
central machine
presentation applicationservices services
presentation applicationservices services
• •
•
communication
DBMS
dumb terminal
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Transaction Processing in a Distributed System
• Decreased cost of hardware and communication make it possible to distribute components of transaction processing system– Dumb terminal replaced by computers
• Client/server organization generally used
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Two-Tiered Model of TPS
DBMS
database servermachine
presentation applicationservices services
presentation applicationservices services
• •
•
client machines
communication
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Three-Tiered Model of TPS
DBMS
database servermachine
presentationserver
• •
•
client machines
communication
presentationserver
applicationserver
application servermachine
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features
• Rapid response• Reliability• Inflexibility• Controlled processing
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types
• Batch processing• Real time processing