Unit i erp

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


OVERVIEW OF ENTERPRISE SYSTEMS


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.


• 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.


Advantages of ERP


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


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


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.


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.


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.


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.


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.


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.


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.


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.


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.


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 .


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.


EVOLUTION


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.


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.


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


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.


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.


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.


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.


Objectives of ERP system


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.


RISKS AND BENEFITS

RISKS AND BENEFITS


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


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.


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.


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.


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.


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.


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.


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.


FUNDAMENTAL TECHNOLOGY


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


Limitation / Problems of Acceptance of ERP Systems:


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


Cross-Functional Enterprise Systems


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.


Evolution

TASK ORIENTATION

FUNCTIONAL ORIENTATION

CROSS-FUNCTIONAL

SYSTEM


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


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.


Enterprise collaboration system

• Communicate• Coordinate• Collaborate and Cooperation


Tools used

• Electronic mail• Voice mail• Bulletin board systems• Fax• Video conferencing tools


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


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.


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


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


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.


Centralized Multi-User System

user module

central machine



• •

•

communication

DBMS

dumb terminal


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


Two-Tiered Model of TPS

DBMS

database servermachine



• •

•

client machines

communication


Three-Tiered Model of TPS

DBMS

database servermachine

presentationserver

• •

•

client machines

communication

presentationserver

applicationserver

application servermachine


features

• Rapid response• Reliability• Inflexibility• Controlled processing


types

• Batch processing• Real time processing

Unit i erp

Education

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