1

Manufacturing IT Systems
Backbone- an ERP
State of The Art and Future Roadmap

What is an ERP?
2

(Enterprise Resource Planning) An integrated information

system that serves all departments within an enterprise
Integrated :

uses a common database e.g. same customer master in

finance & sales
Real time updates e.g. goods receiving updates inventory
automatically
All Departments
Procurement, stores, production, distribution, sales,
costing , finance, marketing

Enterprise Resources Planning Evolution

3

SCM

BPR
MRP

MRP II

ERP

IT
Goal: link information across entire enterprise:
Manufacturing
Distribution
Accounting
Personnel

Potential Benefits of ERP

Better operational efficiencies through Improved
planning
Faster decision making through real time
information
Better cross functional collaboration
Introduction of best practices brings in business
improvements

How are the benefits achieved?

5

Integration leads to real time

information
Standardization brings in efficiency
One-source data removes redundancies
Best practices improve operations

Best Practices: Planning Hierarchy

6
Long
Term
Demand
Forecast
Resource
Planning

Aggregate Production
Planning

Rough-cut Capacity
Planning

Master Production
Scheduling

Bills of
Material
Inventory
Status

Short
Term

Medium
Term

Material Requirements
Planning
Job
Pool
Job
Release
Job
Dispatching

Capacity Requirements
Planning
Routing
Data

Best Practices: Medium Term Planning

7
Master Production
Scheduling
MPS drives MRP
accurate in near term (firm
orders)
May be inaccurate in long
term (forecasts)
Software supports
forecasting
order entry
netting against inventory

Rough Cut Capacity

planning

Material Requirement
Planning

Quick check on capacity of

key resources
Use Bill of Resource (BOR)
for each item in MPS
Generates usage of
resources by exploding
MPS against BOR (offset by
lead-times)
Infeasibilities addressed by
altering MPS or adding
capacity (e.g., overtime)
Software supports
BOR
Resource usage plan

Develop a product structure

Build a gross requirements
plan
Build a net requirements
plan
Determine lot sizes for lotfor-lot, EOQ, and PPB
Software supports
Product structures
Inventory records
Order sizing
BOM explosion

Best Practices: Short Term Planning

8

Capacity Requirement Planning

Uses routing data (work centers and times)
for all items
Explodes orders against routing information
Generates usage profile of all work centers
Identifies overload conditions

Software supports
Routing
Work center
Set up time & run time of operations

Production Activity Control

Sometimes called shop floor control
Provides routing/standard time information
Sets planned start times
Can be used for prioritizing/expediting
Software supports
compare planned with actual throughput.
Work center scheduling

Best Practices: Short Term Planning

9

Stock Requirements Post MRP Run in SAP

10

RCCP in SAP
11

Multi Resource Planning Board in SAP

12

Production Scheduler in SAP

13

ERP Business Benefits- Case Study-Infor

14

Market leader in food processing equipment manufacturing &

turnkey projects

Turnover increased from 2200 M to 5040 M without

additional investment in capacity
ITR improvement 6 MINR against target of 7 MINR
Capacity Utilization 36.7 MINR against 20.2 MINR
Rationalization of Back-Office functions/Man-power
Standardization of Systems and Processes across the
Organization in line with parent company standard
Having a Computer System with the ability to support future
implementations on CRM, e-Com, Web-trade, SCM, etc.
Overcoming the dependency on Legacy Computer Systems
running the risk of becoming obsolete in 2 to 3 years time.

Implementation Success Factors

15
Customer & Supplier dont have same
expectations from the project

70% of implementation
projects fail
Level of expectation

Top management
commitment
Project team

Functionality vs.
requirements
Customer modifications

End-user skill and training

Enough resources not allocated to achieve its

objectives
Customer project team does not have
sufficient skill or mandate to make and
enforce the solution decisions
The implemented functionality is not
supporting the customers business processes.
Modifications to the system create functional
and financial problems, as well as disrupt the
project plan
End user skill is not sufficient to operate
the system

Typical ERP Modules

16

Sales &
Distribution

Materials
Management

Production
Planning

Quality
Management

Plant
Maintenance

Human
Resources

Financial
Accounting

Controlling

Asset
Management

Project
System

Plant
Maintenance

Business Process Coverage

17

Top 3 ERPs- SAP/Oracle/Infor

18

SAP

Oracle

Infor

Revenue

17.56B

$9.3B

$2.8B

No of customers

293,500

400000

73000

No of employees

74400

122000

12900

Market Share

24%

12%

6%

Module Overview-SAP
19

Module Overview-Oracle
20

ORACLE E-BUSINESS SUITE

CRM

HUMAN
RESOURCES

FINANCIALS

PROJECTS

SELF-SERVICE

BUSINESS INTELLIGENCE
Oracle Web Employees

LOCAL EXTENSIONS

VERTICAL EXTENSIONS

SCM

MANUFAC TURING

Module Process InteractionOrder to Cash Example

21

Financials

Sales & Distribution

Warehouse
Management

Business Document

Quotation
document

Quotation
Business Document

Sales Order
document

Business Document

Business Document

Sales Order
document

Sales Order based

on quotation ref.

Availability check and

product allocation

Credit Limit Check

Sales Order
document

Unblock sales order

Business Document

Delivery
document

Business Document

Sales Order
document

Delivery

Picking and confirmation

Business Document

Delivery
document

Business Document

Completed
Delivery doc.

Packing

Business Document

Delivery
document

Billing

Account
Balancing
Incoming payment

Post goods issue

ERP Architectures
22

3 tier 1990s

2 tier Client Server 1980s

n tier 2000+

Technical Architecture -SAP

23
Hardware

UNIX Systems
Bull
IBM
Digital
SNI
HP
SUN

Bull/Zenith
Compaq
Data General
...

Operating
AIX
Reliant
systems Digital UNIX UNIX (SINIX)
HP-UX

Databases

Dialog
SAPGUI
Languages

SOLARIS

ADABAS D
DB2 for AIX
INFORMIX-On Line
ORACLE

Digital
NCR
HP (Intel) Sequent
IBM (Intel) SNI

Windows NT

ADABAS D
MS SQL Server
INFORMIX-Online
ORACLE

IBM
AS/400

IBM
S/390

OS/400

OS/390

DB2/400

DB2/390

Windows 3.1, Windows 95, Windows NT,

OSF/Motif, OS/2 Presentation Manager (PM),
Macintosh, Java
ABAP/4, C, C++, HTML, Java, ActiveX-Controls

Windows NT,
Windows 95,
PM, Java

Technical Architecture -Oracle

24

Client
Sun 1.5 Java
Runtime
Environment
(JRE) i.e.
Java Virtual
machine (JVM)
: J2SE Plug-in

Middle Tier
Apache Web Server 2.0
JRE (Java Runtime Environment) 1.5
JDK (Java Development Kit) 1.5.X
Oracle containers for J2EE (OC4J)
Oracle Process Manager and
Notification Server
Oracle Forms/Reports 10g

Database Tier
Oracle 10g Enterprise Edition

Typical Total Cost of ERP Ownership

25

Small businesses: $10000 - $150,000

Mid-sized businesses: $150,000 - $1 million

Large enterprises: $1 million - $10+ million

Database
management
system costs:
5% to 10%

Infrastructure
costs: 10% to
20%

Software
costs: 15% to
30%

Human
resources
costs: 40% to
60%

Typical ERP Vertical Solutions

26

Aerospace and Defence

Automotive
Banking
Chemicals
Consumer Products
Defence and Security
Engineering, Construction, and Operations
Food & Beverages
Fashion
Healthcare
High Tech
Higher Education and Research
Industrial Machinery and Components
Insurance

Life Sciences
Media
Mill Products
Mining
Oil and Gas
Professional Services
Public Sector
Retail
Sports and Entertainment
Telecommunications
Travel and Transportation
Utilities
Wholesale Distribution

Advance Add-on Systems

27

Core ERP is a generic solution- caters to basic business

processes of an enterprise
For further business improvements ERP vendors offer best of
breed add-on systems
Enterprises buy these depending on the needs
Base ERP

Add on

Production Planning

Advanced Planning &

scheduling

Scheduling

Manufacturing Execution systems

Inventory management

Inventory Optimization

Extended ERP -Linkages with Other Systems

28

Enterprise Application Architecture

Enterprise Resource Planning

Internal Business Processes

Customer Relationship Management

Marketing Sales - Service

Customers

Partners

Supply Chain Management

Sourcing - Procurement

Partner Relationship
Management
Selling Distribution

Knowledge Management
Collaboration Decision
Support

Employees

Suppliers

Typical ERP Comparison: Features dont differentiate

29

ERP Selection Criteria

30

Functionality- support for critical business processes

Cost- provides a good return on investment
Flexibility- ease of customization
Technology- commercially available platforms
Support- local presence/support contracts
Implementation experience- partner with industry credentials

Global footprint- presence across geographies

Typical Selection Process

Request for
information

Request for
proposal

Demo

Commercial
Discussions

Contract
Finalization

ERP Trends-2015
31

Blurred lines between SaaS and on premise ERP software

Continued adoption of mobile and business intelligence solutions.

ERP software will no longer be limited to ERP.

Best-of-breed systems will make a comeback
Integration and solution architecture will become increasingly
important.
Watch out for the new Tier I ERP vendor Infor
Convergence of ERP and consumer user interfaces.
ERP failures are still very real risks.
Higher failure rates of ERP vendors and consultants.
Increasing dichotomy between ERP success and ERP failure

Source: Panorama Consulting ERP Report 2015

Future ERP Roadmap

32

Source: Gartner Report

2015

33

Thank You
Milind Khirwadkar