ERP

INTRODUCTION TO ERP

ERP SYLLABUS
1)Introduction to ERP. Evolution of ERP. What is ERP? Reasons for the growth of ERP, Scenario and Justification of ERP in India, Evaluation of ERP, Various modules of ERP,Advantages of ERP 2) An overview of Enterprise, Integrated Management Information, Business Modeling, ERP for Small Business, ERP for Make to Order Companies, Business Process Mapping for ERP Module Design, Hardware Environment and its Selection for ERP Implementation
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 3) ERP and Related Technologies, Business Reengineering (BPR), Management Information (MIS), Executive Information System (EIS), Support System (DSS), Supply Chain Management

Process System Decision (SCM)

4) ERP Modules, Introduction, Finance, Plant Maintenance, Quality Management, Materials Management 5) ERP Market. Introduction, SAP AG, Oracle Corporation, People Soft, JD Solutions Company, System Software (SSA), QAD, A Comparative Assessment ERP Packages and Modules Baan Company, Edwards World Associates, Inc. and Selection of

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 6) ERP Implementation Lifecycle, Issues in implementing ERP packages, Preevaluation Screening, Package Evaluation, Project Planning Phase, Gap Analysis, Reengineering, Configuration, Implementation, Team Training, Testing, Going Live, End-user Training, Postimplementation (Maintenance mode) 7) Vendors, Consultants and Users, In-house Implementation-Pros and Cons, Vendors, Consultants, Endusers 8) Future Directions in ERP, New Markets, New Channels, Faster Implementation Methodologies, Business Models and BAPIs, Convergence on Windows NT, Application Platforms, New Business Segments, More Features, Web Enabling, Market Snapshot
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 Text Books 1)Enterprise Resource Planning, Alex Leon, Tata McGraw Hill Reference Books 1) ERP- A Managerial Perspective, S. Sadagopan, Tata McGraw Hill
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DEFINITION OF ERP:
ERP covers the techniques and concepts employed for the integrated management of the business from the viewpoint of effective use of resources to improve the enterprise. It helps a manufacturer or other businesses to manage all the important parts of the organization. It is an integrated information system that serves all the departments in an enterprise. The goal of ERP systems is to maximize production while minimizing cost and wastage. It is a software package that integrates the various departments and functions of an organization onto a single centralized system thereby enabling easy access to all in the enterprise.

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Information Integration through ERP System Finance

Strategic Management Human Resource

Material Management

ERP System

Maintenance management

Manufacturing

Logistics management

Quality Management
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Sales & Distribution

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REASONS FOR GROWTH OF ERP:

The market for Enterprise Resource Planning (ERP) systems is in great demand. The reasons for this demand are as follows. 1) To enable, improved business performance:
Cycle time reduction. Increasing business agility. Inventory reduction. Fulfilling orders on time.
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CONTINUE 2) To support business growth requirements:

Global requirements for multiple languages and currencies. New products/ product lines and new customers.

3) To provides flexible, integrated, real time decision support:

ERP improves the responsiveness across an organization.

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CONTINUE 4) To Eliminate all limitations of the legacy system:

Century dating issues. Fragmentation of data and processing. No support of latest technology. Inflexibility to change.

5) To take advantage of the untapped midmarket:

Increased functionality at reasonable costs. Client-server open systems technology. Vertical market solutions.
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ADVANTAGES OF ERP
Installing an ERP system has many advantages both direct and indirect.

The indirect advantages include:

1. Better corporate image. 2. Improved customer goodwill. 3. Customer satisfaction.
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CONTINUE

The direct advantages include:

1. 2. 3. 4. 5. 6. 7. 8. Improved efficiency. Information integration. Better decision making. Faster response time to customer queries. Business Integration. Flexibility Better Analysis and Planning Capabilities Use of Latest Technology.
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ERP ADVANTAGES
Business Integration: In case of ERP packages, the data of
related business functions is automatically updated at the time a transaction occurs. For this reason, one is 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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CONTINUE

Flexibility: It provides for flexibility in a business organization by enabling any-where and any-time access. It supports various languages and currencies, making the business truly global.

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CONTINUE

Better Analysis and Planning Capabilities ERP provides better analysis and

planning capabilities by implementing real time decision support. It provides for improved information accuracy and decision making capabilities.

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CONTINUE

Use of Latest Technology They quickly adapt the systems to

latest technologies like open systems, client server technology, CALS(ComputerAided acquisition and logistics support).

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Why do many ERP implementations fail?

1. ERP packages, if chosen properly, implemented judiciously and used efficiently, will raise the productivity and profits of companies dramatically. 2. But many a company fail in this because of a wrong product, incompetent and haphazard implementation and inefficient or ineffective usage. To work successfully, the ERP solutions need a lot of factors to click.

3.

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4. There should be good people who know the business. 5. The vendor should be good and his package should be the one best suited for the companys needs. 6. The ERP consultant should be good. The implementation should be planned well and executed perfectly. 7. The end-user training should be done so that the people understand the system and the effect of their efforts on the overall success of the program.
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8. The introduction of the ERP system will dramatically change the job description and functions of many employees. 9. Employees who were earlier doing the work of recording information will, overnight, be transferred into decision makers. 10.Many employees find this transaction difficult to accept. 11.If the employees are not given proper training, well in advance, then the systems will fail.
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12.

Another factor is the fear of unemployment.

13. When procedures become automated, the people who were doing those jobs become redundant. So it is natural to have resistance from employees. 14. But the same employee can be trained in the new system. Without support from the employees even the best system will fail. 15. So it is very important that the management should take the necessary steps, well in advance, to alleviate he fears of, and provide necessary training to their employees.
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Scenario and Justification of ERP in India

As the new technologies are invented, the concept of global village come up. The business grows and customers are getting more and more demanding. The competition is increasing. As a developing country Indian business organizations are also facing these global challenges.
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 Indian companies feeling pressure in the market place. To improve quality, customer service levels, to reduce cost Indian Industries and organizations are also joining the ERP. ERP offers perfect solutions to business organization in India
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 There are number of ERP vendors who offer business solution in Indian market. The international brands like SAP, Oracle, Baan, QAD, J. D. Edwards are well known brands offering solution to the Indian market. Some regional and local vendors also offers solutions to the business.
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 The Indian companies with the foreign collaborations are insisting the implementation of ERP. Some times parent foreign company insists its Indian company without doing so much analysis of cost benefit.

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 The company who had legacy systems that were not year 2000 complaint had interest to migrate to ERP. As the competitors are implementing ERP, the competitive pressure insists the companies to implement the ERP.
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 To get considerable benefits ready to adopt new technology by implementing ERP solutions. The lack of total business integration and need to work with the ERP system Different companies in India are implementing the ERP solutions.
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 Indian market became wider with the new offerings like sales force automation, customer relation management and supply chain management. The well known Indian companies like Birla Copper, Bharat Cellular, Altacura, Arvind Mills, Colgate Palmolive, Cadbury India Limited, Dr. Reddys Lab, Essar Oils, Essar Steels, Finolex, Indal Ltd, Thomas Cook, Titan, Videocon, UTI, etc have gone in for ERP solutions. The above list proves Indian industries have made the ERP implementation and experience its business advantages.
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Evolution of ERP
1960-1970s MRP Inventory and process time reduction with new production planning systems. 1980s MRP II Greater reductions due to the integration with accounting and human resource system. 1990s ERP Focused on clients. Real time transactions. Asset management. 2000s ERP II Focused on clients, optimizing the whole business network including suppliers and clients
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Evaluation of ERP
To implement an ERP system one has to find out a suitable package i.e. best for the organization. ERP involve huge investment and once package is purchased it is not easy to switch to another one, thats why an internal selection team have to be formed for selection of evaluation of the ERP package. Committee members should be experts from different departments of an organization.
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Important points for ERP evaluation

As so many packages are available in market it is better to limit number of packages to be evaluated to less than five. It more economical to do thorough and detailed evalualtion of small number of packages than doing analysis of dozens of packages. The company should do a pre-evaluation screening to limit number of packages than doing analysis of dozens of packages. By doing market survey, organisation can go for a best fit solution ie. To look around to find out how different packages are performing in environments similar to your organisation.
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After the selection or evaluation respective vendors can be called for presentation or demos.

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Various Modules of ERP

ERP solution consists of functions like 1) Customer order processing, 2) Execution, 3) Customer service functions, 4) Financial application, 5) Human resource application, 6) Information reporting application etc.
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Various ERP vendors are there in the market providing different modular structures for their ERP solution. They are having specific grouping of business functionality 1) Sales and marketing business functions including forecasting 2) Sales order processing 3) Shipping 4) Dispatching and billing 5) Analysis of sales 6) Quality maintenance functions 7) Include inward and outward quality assurance 8) Statistical quality control 9) Test and measuring instruments 10) Test records
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 The vendors are different. There are some common elements in ERP architecture like 1) Centralized common database different modules 2) Provides appropriate interface with customers, suppliers, employees, shareholders and modules that are having the business requirement at transaction processing and reporting layers.
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 Some common modules are enlisted below. Service Sales and marketing Distribution and transportation Manufacturing Materials Finance and accounting Quality Plant maintenance Human resource
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End of Chapter 1

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1. 2. 3. 4. 5.

Fill in the blanks

Quiz no. 1

IT is the abbreviation for_________ ERP stands for ________. ____________ is a group of people with common goal, which has certain resources at its disposal to achieve that goal. ___________ is putting necessary functions in place and more importantly, putting them together. _______ means the techniques and concept for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of enterprise management. MRP is the abbreviation of _______________ MRP II stands for ______________. The advantages of ERP are _____________ CALS stands for ___________ Lecture slides prepared by Prof Ujwala Sav 37

6. 7. 8. 9.

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Quiz Answers
1) 2) 3) 4) 5) 6) 7) 8) Information Technology Enterprise Resource Planning enterprise Planning ERP Material Requirement Planning Manufacturing Resource Planning Business Integration, Flexibility, Better analysis and planning capabilities 9) Computer Aided Acquisition and Logistics Support
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Tutorial no.1
1. What is ERP? 2. What are the advantages of ERP? 3. Why do many ERP implementation fail?

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1.__________ is the most critical factor in the success of an ERP implementation.

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