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Cosmas Haryawan

Credit for :
Kevin Cowell, Natthawut Lertpitayakun, Isabelle Mertha, XiaoguangYou
 The practice of consolidating an enterprise’s
planning, manufacturing, sales and marketing
efforts into one management system.1
 Combines all databases across departments into
a single database that can be accessed by all
employees.2
 ERP automates the tasks involved in performing
a business process.1

Sources:
1. http://www.cio.com/summaries/enterprise/erp/index.html, viewed September 19, 2002
2. CIO Enterprise Magazine, May 15, 1999.
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Source: http://www.intelligententerprise.com/020903/514feat2_1.shtml, viewed September 19, 2002.
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Managers and
Stakeholders
Financial
Reporting Applications
Human
Sales and
Resource Applications
Delivery
Management
Applications
Applications
Sales Force Central
Manufacturing Back-office
Customers And Customer Database Applications Administrators
Service Reps Suppliers
And Workers

Service Human
Applications Resource Inventory
Management And Supply
Applications Applications

Employees

Source: Davenport, Thomas, “Putting the Enterprise into the Enterprise System”, Harvard Business Review, July-Aug. 1998.
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 Finance: modules for  Manufacturing and Logistics: A
bookeeping and making sure group of applications for
the bills are paid on time. planning production, taking
Examples: orders and delivering products
 General ledger
to the customer. Examples:
 Accounts receivable
 Production planning
 Accounts payable
 HR: software for handling  Materials management
personnel-related tasks for  Order entry and processing
corporate managers and  Warehouse management
individual employees. Examples:
 HR administration
 Payroll
 Self-service HR

Source: http://www.computerworld.com/printthis/1998/0,4814,43432,00.html, viewed September 19, 2002.


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Orders
Parts
Sends report Customer
Demographic
Sales Dept. Files Customers
Checks for Parts
Calls back “Not in stock”
Accounting “We ordered the parts”
Files

Accounting
Sends report
Invoices
Sends report
accounting
Ships parts
Vendor
Warehouse
Order is placed “We Need parts #XX”
with Vendor
Inventory
Purchasing Files
Files “We ordered the parts”
Purchasing
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Orders
Parts Inventory Data
If no parts,
order is placed
Customers Sales Dept. through DB Accounting

Financial Data exchange;


Books invoice against PO

Order is submitted
to Purchasing. Database
Purchasing record Books inventory
order in DB against PO

Order is placed
with Vendor

Warehouse
Vendor Purchasing

Ships parts
And invoices accounting
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 Baan
 JD Edwards
 Oracle
 PeopleSoft
 SAP

8
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Cons

as
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De fe

Oil/G
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Aut o

Phar
Ele c

Man
Baan
Baan
J.D. Series& Co.
Edwards
One World, One World
Software
Oracle Corp.
Applications
PeopleSoft, Inc.
PeopleSoft 7.5
SAP
R/3
% Planned Penetration 10-15 5-10 35+ 40+ 35 30 20
Source: Benchmarking Partners Inc.

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 Training
 Integration and testing
 Data conversion
 Data analysis
 Consultants
 Replacing best and brightest staff after implementation
 Implementation teams can never stop
 Waiting for ROI
 Post-ERP depression

Source: http://www.cio.com/summaries/enterprise/erp/index.html, viewed September 19, 2002.


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 Improving integration, flexibility
 Fewer errors
 Improved speed and efficiency
 More complete access to information
 Lower total costs in the complete supply chain
 Shorten throughput times
 Sustained involvement and commitment of
the top management

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

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 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

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 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.

Source: http://www.integratedsolutionsmag.com/articles/2000_03/000309.htm, viewed November 5, 2002.


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 A Business Strategy aligned with Business
Processes
 Top-Down Project Support and commitment
 Change Management
 Extensive Education and Training
 Data Clean up and Data Integrity
 Implementation is viewed as an ongoing process

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 A Business Strategy aligned with Business
Processes
 Business strategy that will give you a competitive
advantage
 Analyze and map your current business processes
 Develop your objectives
 Evaluate your business strategy and ERP plan before you
commit to software acquisition and installation.

Source: http://www.rmdonovan.com/pdf/perfor8.pdf, viewed November 5, 2002.


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 Top-Down Project Support and commitment
 CEO1
▪ support implementation costs
▪ champion the project, and
▪ demand full integration and cooperation.
 Most knowledgeable and valuable staff2

Sources:
1. M. Michael Umble, “Avoiding ERP Implementation Failure”, Industrial Management, Jan/Feb 2002;
2. http://www.integratedsolutinsmag.com/articles/2000_03/000309.htm, viewed November 5, 2002.
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 Change Management
 Changes in business procedures, responsibilities,
work load.1
 As a result, ERP implementations are times of high stress,
long hours, and uncertainty.1
 Mid-level managers must2
▪ facilitate continual feedback from employees,
▪ provide honest answers to their questions, and
▪ help resolve their problems.

Sources:
1. Yakovlev, I.V., “An ERP Implementation and Business Process Reengineering at a Small University”,
Educause Quarterly, Number 2, 2002;
2. Umble, M. Michael, “Avoiding ERP Implementation Failure”, Industrial Management, Jan/Feb 2002. 18
 Extensive Education and Training
 General education about the ERP system for everyone.
 Massive amount of end users training before and during
implementation.
 Follow-up training after the implementation.
 10 to 15% of total ERP implementation budget for training
will give an organization an 80% chance of a successful
implementation.

Source: Umble, M. Michael, “Avoiding ERP Implementation Failure”, Industrial Management, Jan/Feb 2002.
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 Data Clean up and Data Integrity
 Clean-up data before cut-over.1
 “Near enough is no longer good enough.”2
 To command trust, the data in the system must
be sufficiently available and accurate.3
 Eliminate the old systems, including all informal
systems.3

Sources:
1. http://www.bpic.co.uk/checklst.htm, viewed November 5, 2002;
2. http://www.projectperfect.com.au/info_erp_imp.htm, viewed November 5, 2002;
3. M. Michael Umble, “Avoiding ERP Implementation Failure”, Industrial Management, Jan/Feb 2002. 20
 Implementation is viewed as an ongoing
process
 Ongoing need for training and software support
after implementation.
 Ongoing need to keep in contact with all system
users and monitor the use of the new system.
 Ongoing process of learning and adaptation that
continually evolves over time.

Source: Umble, M. Michael, “Avoiding ERP Implementation Failure”, Industrial Management, Jan/Feb 2002.
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4 Major Phases:
 Concept/initiation
 Development
 Implementation
 Closeout/Operation and maintenance

Source: “ERP Implementation and Project Management, Production and Inventory Management
Journal, Alexandria, Third Quarter 2001, FC Weston Jr.
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 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.

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