MI0038 Enterprise Resource Planning

Q1. a. Consider two organizational environments in which one of the organization is having no or little communication
between departments and the other organization where all the departments know what the others are doing. Now which
environment is considered to be better and why?
Ans: Managers can be classified by their level in the organization, particularly in traditionally structured organizations
those shaped like a pyramid
1) First-line managers (often called supervisors) are located on the lowest level of management.
2) Middle managers include all levels of management between the first-line level and the top level of the organization.
3) Top managers include managers at or near the top of the organization who are responsible for making organization-
wide decisions and establishing plans and goals that affect the entire organization.
The changing nature of organizations and work often requires employees in formerly nonmanagerial jobs to perform
managerial activities. Non managerial jobs are those where one works directly on a job and had no one reporting to him.
Mary Parker Follet defines management as, The art of getting things done through people Management involves
coordinating and overseeing the work activities of others so that their activities are completed efficiently and effectively.
1) Coordinating and overseeing the work of others is what distinguishes a managerial position from a nonmanagerial one.
2) Efficiency is getting the most output from the least amount of inputs in order to minimize resource costs. Efficiency is
often referred to as doing things right Effectiveness is completing activities so that organizational goals are attained and
is often described as doing the right things
Management Functions According to the functions approach managers perform certain activities to efficiently and
effectively coordinate the work of others. They can be classified as
1) Planning involves defining goals, establishing strategies for achieving those goals, and developing plans to integrate
and coordinate activities.
2) Organizing involves arranging and structuring work to accomplish the organizations goals.
3) Leading involves working with and through people to accomplish organizational goals.
4) Controlling involves monitoring, comparing, and correcting work performance.
Since these four management functions are integrated into the activities of managers throughout the workday, they
should be viewed as an ongoing process and they need not the done in the above sequence.
Significant changes in the internal and external environments have a measurable impact on management. Security
threats, corporate ethics scandals, global economic and political uncertainties, and technological advancements have had
a great impact on the managers job. Two significant changes facing todays managers are importance of customers to
the managers job and Importance of innovation to the managers job Organizations need managers. An organization is a
deliberate arrangement of people to accomplish some specific purpose.
Organizations share three common characteristics:
(1) Each has a distinct purpose (2) Each is composed of people (3) Each develops some
deliberate structure so members can do their work. Although these three characteristics are important in defining what
an organization is, the concept of an organization is changing. The characteristic of new organizations of today include:
flexible work arrangements, employee work teams, open communication systems, and supplier alliances. Organizations
are becoming more open, flexible, and responsive to changes. Organizations are changing because the world around
them has changed and is continuing to change. These societal, economic, global, and technological changes have created
an environment in which successful organizations must embrace new ways of getting their work done.The importance of
studying management in todays dynamic global environment can be explained by looking at the universality of
management, the reality of work, and the rewards and challenges of being a manager. The Universality of Management:
Management is needed in all types and sizes of organizations, at all organizational levels, and in all organizational work
areas throughout the world.
b. Explain integrated Management of integration.
Ans : An integrated management system is a management system that integrates all of an organization's systems and
processes in to one complete framework, enabling an organization to work as a single unit with unified objectives.With
an integrated system, your organization becomes a unified whole, with each function aligned behind a single goal:
improving the performance of the entire organization. Instead of "silos", you have a genuinely co-ordinated system: one
that's greater than the sum of its parts, and can achieve more than ever before. An integrated system provides a clear,
holistic picture of all aspects of your organization, how they affect each other, and their associated risks. There is less
duplication, and it becomes easier to adopt new systems in future. An integrated management system allows a
management team to create one structure that can help to effectively and efficiently deliver an organization's objectives.
From managing employees' needs, to monitoring competitors' activities, from encouraging best practice to minimizing
risks and maximizing resources, an integrated approach can help an organization achieve their objectives.
Sometimes the word 'system' gets omitted, thus changing the subject of integration from system to management.
Integrated management is a concept whereby functional management is dispersed throughout an organisation so that
managers manage a range of functions, eg a manufacturing manager would manage planning, manufacturing, safety,
personnel, quality, environment, finance etc
There are several good reasons for integration, to:

Reduce duplication and therefore costs
Reduce risks and increase profitability
Balance conflicting objectives
Eliminate conflicting responsibilities and relationships
Diffuse the power system
Turn the focus onto business goals
formalize informal systems
harmonise and optimise practices
create consistency
improve communication
facilitate training and development

Q2. Earlier payroll systems used the systems which were more than process time sheets, print payroll checks and keep
total number of annual wages and deductions. Present day systems used computer-based system that optimises the
collection, collation, transfer and presentation of information throughout an organisation. Identify the type of system
used by earlier payroll system and current system and define them. What are the main differences between the two
systems? Explain the various characteristics of MIS.
Ans: Management Information Systems
In the past, most payroll systems were data processing systems that did little more than process time sheets, print payroll
checks, and keep totals of annual wages and deductions. Most other departmental information systems did the same
data processing and never monitored the actual process of the departments. The data processing systems evolved into
management information systems, as managers began to demand more and better information about the working of the
organisation,. For example, a human resource MIS system is capable of predicating the average number of worker sick
days, the amount that must be given as bonus, the overtime allowances, and so on.
MIS is a computer-based system that optimises the collection, collation, transfer, and presentation of information
throughout an organisation. MIS accomplished this through an integrated structure of databases and information flow
within the organisation.
Data Processing System(DPS) is a system which processes data which has been captured and encoded in a format
recognizable by the data processing system or has been created and stored by another unit of an information processing
system.
The major differences between a Management Information System (MIS) and Data Processing System (DPS) are:
of the management.
MIS integrates the information flow between functional areas like accounting, marketing, manufacturing, and so
on, whereas, data processing systems tend to support a single functional area.
whereas data processing systems focus on
departmental-level support.
needs are supported on a timelier basis with the MIS (with its on-line query capability) than
with a data processing system.
The main characteristics of the MIS are the ability to:
keeping.

anisation, but does not provide ad-hoc query facility for
most part of the structured information.
Any successful MIS must support a business five year plan or its equivalent. It must be flexible enough to provide reports
based up on performance analysis in specific areas critical to that plan. The reports include feedback loops that allow for
titivation of every aspect of the business, including recruitment and training regimens. MIS must not only point out how
things are carried out, but why they are not able to perform as planned. These reports also include performance related
to cost centres and projects that drive profit or loss. This must be done in such a way that it identifies individual
accountability in virtual real-time.
Executive Information Systems
The line dividing DSS and EIS is very thin. EIS can be considered as a better and sophisticated DSS. Top-level executives
and decision-makers have to face many problems and face enormous work related pressures. In spite of that, they have
to make the right decisions, at the right time, to resolve the problems and take the company forward keeping the profit
margins high. In today's competitive world, reaction times are shrinking, and time to make decisions is very less. EIS is a
decision support system especially made for senior-level executives. The main concern of an EIS is how decisions can
affect the entire organisation.
An EIS takes the following into consideration:

planning and objectives



The user interface is very important as an EIS needs to be efficient to get back the relevant data for decision makers.
Several types of interfaces are available for the EIS structure, such as scheduled reports, questions/ answers, menu
driven, command language, natural language, and input/ output. The most important aspect is that the interface must fit
the decision makers decision-making style. If the executive is not comfortable with the final information style, the EIS will
not be fully utilised. It is considered that an ideal interface for an EIS would be the one thats:




on
Many a times executive decision-making also requires access to outside information from competitors, governmental
regulations, trade groups, news gathering agencies, and so on. So most executive decision involves a high degree of
uncertainty and a future course for the organisation. Successful EIS are easy to use, flexible and customisable, and use
the latest technological innovations.
Q3. Normally when we review a potential software suppliers, we tend to focus only on the potential products
functionality and cost. Though these elements are important, the methodology neglects other areas of importance. What
are the key selection criteria for ERP software.
Ans: ERP Selection Methods and Criteria
ERP is a very expensive investment and has a long and complicated implementation process. As such, it is important to
make a proper selection of the ERP. ERP selection process involves identifying criteria and their relative weights, and
evaluating the alternatives.
An ERP system is the information backbone of an organisation and extends to all areas of the business. Thus, long-term
business strategy of the organisation forms the basis of the ERP selection criteria. As mentioned earlier, ERP systems are
costly to implement. When choosing an ERP system, it is important to take time to select the right ERP system or set of
modules for your business. In order to do this in an efficient manner, it is important to have a plan of action.
The selection of the appropriate solution is a problem because only a part of it can be handled by a definite or accepted
procedure such as standard investment calculations. On the other hand, the decision maker needs to judge and evaluate
all relevant business impact aspects. There is no agreed-upon and formal procedure for this important task1. The
modules that an ERP offers are the most important selection reasons; and can vary according to the needs of the
organisation.
When you consider an ERP system, it is important to weigh all available options carefully. This is because of the time,
money, and training that can be consumed in implementing such a system. There are three criteria that are generally
used when evaluating an ERP solution:
ial Considerations : When an ERP solution is considered, it must make money to be acceptable. As such, there are
several measurements that the finance department may make in order to determine whether or not an ERP solution is
feasible.
o Net Present Value (NPV) is generally the most accepted method of valuing an ERP. It takes into account the time value
of money and cash flows generated. The cash flow and discount rate selection process is the most important part of an
NPV calculation. Determining an average cost of capital for your firm and the predicted cash flows help you get an
accurate result from the NPV calculation.
o Budgetary constraint is the most used method when considering IT projects. The Internal Rate of Return (IRR) and
payback period methods are also very popular for many firms dealing with IT implementations.
example, managers may differentiate between implicit and explicit business needs, competitive pressures, legal needs,
and environmental concerns. This can make the management side of valuation very difficult to quantify. Generally,
companies take a few factors and try to create a scoring system that can be objectively applied across the options.
Sometimes probability of achieving the intended benefits is included in this part of the calculations else it is included in
the financial part of the process. However, the probability of achieving the benefits instead of simply succeeding in
implementation takes on a different look. This sort of probability may be more directly tied with a softer science such as
management.
of the
most important factors is the probability that a project finishes on time. This simply does not happen very often, so it is
important to determine what sort of adverse effects this could have on business operations.
Q4. a. List the major subsystems of manufacturing and production planning module.
Ans: Manufacturing and Production Planning
A good manufacturing system should provide multi-mode manufacturing applications that include full integration of
resource management. These manufacturing applications must allow an easier exchange of information throughout the
entire global enterprise, or at a single site within a company. Regardless of how big or small an enterprise is, these
applications should provide a wealth of feature/function, broad scope of coverage, operational stability, and a platform-
independent architecture. These capabilities empower an enterprise to achieve productivity gains, adopt forward-
thinking technologies, and implement process re-engineering. As a company's internal processes become more
sophisticated or as market forces change, these solutions must be capable of meeting the challenge. The manufacturing
system must be integrated with the other modules of the package.
A robust system of manufacturing planning business process and execution must satisfy a variety of business practices
and production methods. These business practices and production methods place stringent demands on the
manufacturer. Regardless of how manufacturers view their internal operations, to the customer, it boils down to quick
response to customer demand in two fundamental ways. Manufacturers either make products to stock, prior to receipt
of a customer order, or they make and ship the products upon receipt of a customer order. Manufacturers must
accomplish this task quickly, efficiently, and cost effectively to remain profitable and competitive. These two fundamental
ways of responding to customer demand.
Today, companies must be able to deliver customer-specific products with the lead-time of standard, off-the-shelf
products. To help manage product and market shifts, the Manufacturing module provides the freedom to change
manufacturing and planning methods, as and when they need a change. The Manufacturing modules of most ERP
vendors, do not limit businesses to a single manufacturing method, such as make-to-stock or make-to-order (Figure 5.2).
Instead, many manufacturing and planning methods can be combined within the same operation, with unlimited
flexibility to choose the best method or combination of methods for each product, at each stage throughout its life cycle.
Control and execution can be performed at strategic, tactical, and operational levels within the business. These require
effective planning to support contract commitments throughout the supply chain. They also gain control over
intermediate range planning horizons and time fences, and execution over the short range of frozen scheduling, required
by the shop floor. Whether a single-site implementation, several sites within one country, or hundreds covering the
globe. The manufacturing system should provide the foundation for creating concurrent business processes across the
supply chain and achieving Return on Assets (ROA) improvement.
b. Explain the various modules in detail with example
Ans: ERP software is made up of many software modules. Each ERP software module mimics, a major functional area of
an organisation. General ERP modules include modules for product planning, parts and material purchasing, inventory
control, product distribution, order tracking, finance, accounting, marketing, and HR. Organisations often selectively
implement the ERP modules that are both economically and technically feasible.
ERP Production Planning Module
From Manufacturing Requirements Planning (MRP) II into ERP evolution process, vendors have developed more robust
software for production planning. And consulting firms have collected and stored vast knowledge on implementing
production planning module. It also optimises the utilisation of manufacturing capacity, parts, components and material
resources using historical production data, and sales forecasting.
ERP Purchasing Module
Purchase module contours procurement of required raw materials. It automates the processes of negotiating price,
awarding purchase order to the supplier, identifying potential suppliers, and billing processes. It is closely integrated with
the inventory control and production planning modules. It is often integrated with Supply Chain Management (SCM)
software.
ERP Inventory Control Module
Inventory module helps processes of maintaining the appropriate level of stock in a warehouse. The activities of
inventory control comprises of identifying inventory requirements, setting targets, providing replenishment techniques
and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status. Integration of
inventory control module with finance, sales, and purchase modules allows ERP systems to generate vigilant executive
level reports.
ERP Sales Module
Revenues from sales are live blood for commercial organisations. Sales module comprises of functions like order
placement, order scheduling, shipping, and invoicing. Sales module is closely integrated with organisations' ecommerce
websites. Many vendors of ERP offer online storefront as part of the sales module.
ERP Market in Module
Marketing module of ERP supports lead generation, direct mailing campaign and more. The market needs has to be
understood and addressed very quickly and effectively. If a company fails to understand this and react it has to loose the
profit that it could have made. Market in module must ensure that it will assist the management in addressing the trends
the market show case and update the management for quick decision making.
ERP Financial Module
Both for-profit organisations and non-profit organisations benefit from the implementation of ERP financial module. The
core of many ERP software systems is the financial module. It can collect financial data from various departments, and
generates valuable financial reports such balance sheet, general ledger, trail balance, and quarterly financial statements.
ERP HR Module
Human Resources (HR) is another widely implemented ERP module. HR module streamlines human resources and human
capitals management. HR modules regularly maintain, a complete employee database including contact information,
salary details, attendance, performance evaluation, and promotion of all employees. Advanced Human Resources module
is integrated with knowledge management systems to optimally utilise the expertise of all employees.
Q5. Explain the relation between output variety and the type of manufacturing process with a neat diagram
Ans: the relation between the output variety (degree of customisation) and the type of manufacturing operation. As you
can see from the graph, the output variety is highest when the company is operation in the make-to-order mode as the
companies can serve each and every individual customer in the way he/she wants. However, since the cycle time will be
more the cost of the product also will increase. In the case of an MTS company, the products are already made and kept
in the inventory for the customer to pick up. Here the customer will not get any individual attention or customisation. He
can buy what is available with the company.
This model, make use of traditional bill of material model with parent and component relationships. Rules and
calculations then ensure that the final configuration can be built by defining the way to build it and also establish a selling
price. The flexibility of establishing this CTO model is clearly an important aspect of selecting the best configuration
software for your business. Few functional areas are free from the impact of transitioning to a new way of entering sales
orders. They automatically generate new part numbers, bills and routings; for building and shipping products; and record
the financial results of doing business.

Relation between output variety and the type of manufacturing process
Input from sales and marketing, manufacturing, product data management, and finance is required to develop a CTO
model that supports the integrated environment. It is important to understand how the configuration generates the
"appropriate" bill of material and routing because they are at the core of the planning process. Typically, a CTO model
represents a translation of product engineering rules that define relationships among product options, materials and
manufacturing processes. Multiple models CTO differentiate different sets of valid relationships and required processes.
The CTO model provides valid options within a model, and applies rules or calculations based on selections. For example,
a CTO model of a Personal Computer (PC) would have a set of component options such as case styles, CPUs (66 or 100
MHz), hard drives (520MB or 1.2GB), and monitors (VGA or SVGA). Structured under the options would be the real item
part numbers. This is very use full for identification and verification process during manufacturing and quality control.
Key considerations for production and material planners are the modularity of the real bills of material that will be
combined in the configured end item, and the level at which sales analysis records will be stored. Many times, the
structure (if bills and routings exist at all) needs to be re-examined in light of how it will support the CTO model.
Q6. Describe in detail the workflow of HRM that deploys ERP systems with a neat diagram.
Ans: Workflow of ERP HRM
ERP system maintains a centralised database giving lesser importance to customisation. Figure 10.1 shows workflow of
HRM that deploys ERP systems can be understood by analysing the various sub modules under HR module that ERP
offers.

HRM Workflow

Personnel management module encompasses various software components. This module
deals with responsibilities of human resources quickly, precisely and proficiently. These components are also used as
stand-alone systems being a part of the ERP solution which is company wide.
information is now no longer specific to departments, but it is widely shared by various units across an organisation. This
reduces the possibility of duplicate entries, and protects the information from errors and improves data accuracy.
ation. It
encompasses various tools for transactions. It also facilitates storing of required information of employees. It also
provides graphical information such as standard as well as custom defined charts and employee data of the organisation.
tment Management: This module facilitate in recruiting the right candidates with skills required, to meet the
organisation requirements. Recruiting process should also ensure that the process is cost effective and less time
consuming. This process is achieved by making the entire process of recruitment automatic and instantaneous.
The various functions of HR manager are: posting the vacancies in various job portals, newspapers and other job sites,
filtering the profiles of candidates who best suit the criteria of the organisation, screening and shortlisting the candidates
based on their performance, selecting and hiring. The same process holds good both for internal as well as external job
postings, where advertisements are posted in newspapers, magazines, colleges or recruitment firms.
currencies and formats. Travel management keeps track of the process from start to finish. It keeps track of the process
right from the point when the request was made to the point when it is posted to the accounting sections. The
information regarding travel plans are required to be registered by the person travelling, or by the concerned department
of an organisation. When an employee raises a request, the system automatically generates a workflow that reduces the
burden of the administrator.
The travel management module instantly calculates the necessary tax and transactions for a particular trip. The receipt
that is issued by the administrator can be filled up in any currency format. The costs incurred during the travel trip can be
reimbursed through payroll accounting or any data medium exchange.
programs at any time using a hierarchical structure. It
facilitates flexibility to manage various types of benefits and plans for employees of an organisation. Based on the
demographics of an employee various benefits groups can be established.
Benefits administration module allows the employee to enter information at any time with the concept of real time
processing. The module also manages various savings plans of employees. The module provides the flexibility to
employees to access their individual employee benefits directly. This helps in reducing the burden of the Human
Resource staff by eliminating queries that Human Resource staff has to address.