Enterprise Resource Planning

Dear Students,
VERY HAPPY NEW YEAR

Christ University RADM ERP Jan 2014

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Objectives

Understanding ERP & its potential in

business transformation to improve the
effectiveness of information systems in
organizations
Recognize the business benefits of
ERP systems
Understand the Evolution and Demand
of ERP
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What is ERP?

ERP Definition : ERP covers the

techniques and concepts employed for
the
integrated
management
of
businesses as a whole, from the
viewpoint of the effective use of
management resources, to improve
the efficiency of an enterprise.

Set of Software tools

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What is ERP?

Manages business systems (Processes)

Materials Procurement , Logistics, Supply chain,
receiving, inventory, customer orders, production
planning, shipping, Finance & Accounting, HR,
Plant maintenance, Quality management and
Project Management.
Allows automation and integration of business
processes
Enables data and information sharing, Real time on
line information for analysis and decision making.
Industry specific solutions and company -wide system
Introduces best practices
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ERP Market & Demand for ERP

One of the fastest growing markets in

software industry, 15 - 20 % growth ?
35% of companies with revenues over
$1 billion plan to upgrade. Close to 65
Billion INR.
$ close to 250 billion in sales in 2012
Maybe as much as $1 trillion in next 5
years and targeting MSME sectors.
Christ University RADM ERP Jan 2014

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ERP Market & Demand for ERP

Major investment

Cost between $50,000 and $1,000,000+

Variety of business justifications

Need for IT infra to improve business efficiency/ performance.

Replace fragmented legacy information systems with integrated

single system.

Reduce cycle times and improve efficiency across all functions.

Re-engineering to process based management system.

Adopt global best practices inbuilt in ERP.

Lower operating costs

ERP is a proven system benefiting the industry.

Enables better management decisions

Real-time

On-line
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Evolution of ERP

1960s: In-built software packages for Accounting and stores

inventory management
1970s: MRP systems

Materials management in relation to production schedule

1980s: MRPII systems

Adds Distribution system, Production planning.

1990s: MRPII - Modified

Integrated systems for manufacturing execution covering

Engineering, Finance, HR, S & D, PM.
Late 1990s: ERP

Integrated manufacturing with supply chain

The latest generation ERP II CRM, SCM,BIS, SRM, EAM,
PLM, ELM,CPM, Etc
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ERP ENABLED BUSINESS

TRANSFORMATION

In India, business enterprise are undergoing

the business transformation on a/c of :
Globalization & de-regulation of Indian
economy
Emergence of IT based business practices.
Most of the enterprises implementing ERP
as part of organizational transformation and
process re-engineering which provides the
benefit of transformation in quality,
productivity and profitability.
Christ University RADM ERP Jan 2014

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ERP ENABLED BUSINESS

TRANSFORMATION

Brings transparency in the various activities

and demands flexibility and empowerment in
decision making processes.
For survival, companies have to transform
their internal business processes with
deployment of ERP systems.
ERP happens to be the first large scale
corporate IT application being adopted by
large no. of corporate firms forcing them to
change their business processes, structures
and even business strategies.
Christ University RADM ERP Jan 2014

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BENEFITS OF ERP

Enterprise Integration functional / geographically dispersed

enterprise.
Forces Organizations to re-engineer its obsolete function
oriented processes. Better to align with ERP processes
enabling integration of BPR and IT.
Standardizing systems & Procedures across with emphasis
on transparency.
Overcomes inefficiencies of independent systems ensuring
efficient business networking for sharing the information.
Integrated data supports multiple business functions. ERP
emerging as global IS infrastructure due to their capability of
supporting multiple currency, multinational trade and multi
industry transactions.
Best Global management practices All ERP packages like
SAP R/3, Ramco systems, IFS, Oracle etc have got world
class best business practices inbuilt
Christ University RADM ERP Jan 2014

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Christ University RADM ERP Jan 2014

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Overall Business Benefits

Information

Maximizes information throughput

Provides timely information
Integrates information throughout supply chain

Minimizes response time

Pushes decision making down to lowest
levels
Reduces costs
Cuts inventory
Improves operating performance
Christ University RADM ERP Jan 2014

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Department Benefits

Sales

Increased efficiency

Manufacturing

Concurrent engineering
Faster design and production

Data Service

Lower quotes, reduced lead time, improved

responsiveness

Accurate customer service history and warranty

information

Accounts Payable

Suppliers paid accurately

Christ University RADM ERP Jan 2014

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Systems Benefits

Eliminating legacy systems

Allows sharing and monitoring of information across

organization
Foundation of eBusiness

Reduces incompatible data

Can cause fragmentation

Back-office functions

Standardization
Helps obtain and maintain competitive advantage
Improved interactions with customers and suppliers

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Christ University RADM ERP Jan 2014

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ERP MODULES

ERP system has variety of functions that are linked

together.
Various Modules are :
Financial Accounting (FI/FA)

Costing & controlling(CO)

Sales & Distribution(SD)

Materials Management (MM)

Production Planning(PP)

Quality Management(QM)

Plant Maintenance(PM)

Human Resource(HR)

Project Systems(PS)

Service Management (SM)

Reports Management(RM)
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ERP MODULES

FINANCE MODULE

General Ledger (P&L, financial balances)

Accounts Receivables receivables management
Accounts payable track payments for various heads
Fixed Assets depreciation (building, property, Equipment)
Treasury Management Cash flow, financial investments,
funding and assess investment risks
Cost control monitor expenses under various heads,
calculate the costs for various operations and assess
costing of products/services, budgeting and variances
MIS financial statements for funding agency, Board,
monthly P &L statement, cost/budget monitoring, variance
reports, monthly receivables statements etc.
Christ University RADM ERP Jan 2014

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ERP MODULES

MATERIALS(PURCHASE) MODULE

Purchase data bank materials base, vendor base,

approved vendor base, coding and classification
Procurement planning BOQ data, stock updation,
procurement cycle and generate procurement plan sheet.
Purchasing Release of Purchase documents, vendor
selection and approval (intervals)
Storage Receipt of goods, inspection, Storage and
monitoring stocks, inventory Analysis and control, stock
verification and updations.
Control issues, WIP assessment, FG inventory and stock
transfers.
MIS Inventory reports, slow moving / non moving goods
monitoring, sub-contracted items monitoring and
reconciliations, stock value for banks/institutions.
Christ University RADM ERP Jan 2014

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ERP MODULES

SALES & DISTRIBUTION MODULE

Customer data bank Name, type, contacts, products

sold, history, coding, Enquiry bank, reasons for lost orders.
Order processing Tracks the customer order from the
receipt of order upto invoicing, delivery. At any point of time
the status of the order can be derived.
Distribution networking Demand & Supply status,
monitoring the supplies and distribution channels and the
efficiency, maintains records of stocks existing and
replenishment patterns and re-order levels.
Collection of receivables Monitoring the payments
receivable from each customer and tracking the payments.
MIS sales budget, variance reports, trends, enquiry bank,
hit rate, loss of orders, customer satisfaction levels and
improvements, customer complaints & status, order
booking status, pending orders, receivables & forecasting.
Christ University RADM ERP Jan 2014

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ERP MODULES

PRODUCTION PLANNING MODULE

Capacity planning and scheduling

Monthly/weekly/daily production plans & actual reports.
Routing of processes and cycle time monitoring.
Provides data for making the materials procurement plan
WIP stocks valuation and monitoring
Efficiency of utilization of manpower and equipment monitoring
Equipment downtime estimation and maintenance schedule
planning
Online transmission of information reg the status of the order
processing to the concerned.
MIS Production plans, variance reports, capacity utilization,
manpower efficiency and individual wise efficiency monitoring
reports, status of pending orders, completion of orders, OTD
reports, WIP stocks value.

Christ University RADM ERP Jan 2014

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ERP MODULES

HUMAN RESOURCES MODULE

Payroll Attendance & payment of salaries, statutory bodies

etc.
Manage Personnel admn Recruiting, induction and appraisal
system
Training capturing needs and scheduling
Performance Appraisal Tracking and updation
MIS Training records, employee strength and retention %
form time to time, recruitment status updation to departments,

PLANT MAINTENANCE MODULE

List of equipment, history updation, coding and location

Generating Preventive maintenance schedules
Spares and repairs management
MIS machine-wise downtime and efficiency reports, spares
utilization and updation of history log for each equipment.
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ERP MODULES

PROJECT SYSTEMS

Scheduling - List activities & time schedule

Budgeting and monitor the cost monitor cost during each
phase of the project.
Status updation - project monitoring and updation of project
status to the concerned.
MIS Variance reports, cost variance and status.

QUALITY MANAGEMENT MODULE

Key in the specifications for RM, FG and process inspection

requirements.
Manage the scheduling of calibration of testing / inspection
instruments. Scheduling internal / external audits.
ON line acceptance and approval of RM /Products / process
stage clearances.

Christ University RADM ERP Jan 2014

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Design Alternatives

Vanilla implementation

Complete vendor package

Benefits

Deficits

Total integration across all functional areas

Re-engineering of all business processes
Expensive
Time-consuming

Selected ERP modules

Benefits

Less costly and less time required

Deficits

Lacks total integration of data

Limited applicability and use
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Design Alternatives, continued

Build in-house

Benefits

Deficits

Can create system based on its needs

Competitors will not have access to similar system
Time- and resource-consuming
Expensive
Risky
May not provide competitive advantage

Maintain concurrent legacy systems

Benefits

Familiarity

Deficits

May be a competitive disadvantage

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Maintaining Competitive
Advantages

Implement ERP system better than

competitors
Migrate to new versions faster
Use vanilla ERP for core systems
and build customized modules for
others
Increase availability of operational data
Better use of data for analysis
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Summary

ERP systems can improve the effectiveness

of organizations through automation and
integration of business processes
ERP systems allow data and information
sharing across the organization
Departmental benefits include increased
efficiency, faster design and production, and
accuracy
Implementing an ERP system helps the
organization obtain and maintain a
competitive advantage
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