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CONTENTS
What is ERP? Evolution of ERP Components of ERP Information Integration through ERP systems Core ERP Components Extended ERP Components Reasons for growth of ERP Market Advantages / Disadvantages of ERP Why ERP over conventional apps? ERP Implementation : Problem areas Roadmap for successful ERP implementation Feedback??
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WHAT IS ERP?
y ERP
integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations.
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EVOLUTION OF ERP
Types of Systems
Reorder point systems
Time
1960s
Purpose
Used historical data to forecast future inventory demand; when an item falls below a predetermined level additional inventory is ordered. Offered a demand-based approach for planning manufacture of products and ordering inventory. Added capacity planning; could schedule and monitor the execution of production plans
Systems
Designed to manage high volume production of a few products, with constant demand; focus on cost.
1970s
Focused on marketing; emphasis on grater production integration and planning. Focus on quality; manufacturing strategy focused on process control, reduced overhead costs and detailed cost reporting. Focus on the ability to create and adapt new pre-cuts and services on a timely basis to meet customers specific needs Integrates supplier manufacturing and customer data throughout the sup-ply chain.
1980
1990s
Provide ability to adapt production schedules to meet customers needs; provide additional feedback with respect to shop floor activities. Integrate manufacturing with supply chain processes across the firm; designed to integrate the firms business processes to create a seamless information flow from suppliers, through manufacturing to distribution to the customer.
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COMPONENTS OF ERP
y Core ERP component traditional components
included in most ERP systems and they primarily focus on internal operations
y Extended ERP component extra components that
meet the organizational needs not covered by the core components and primarily focus on external operations
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COMPONENTS OF ERP
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Materials Management
ERP System
Logistics Management
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3.
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manages accounting data and financial processes within the enterprise with functions such as Journal ledger, accounts payable, accounts receivable, budgeting, and asset management
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materials management ERP component handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control
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BUSINESS INTELLIGENCE
Business intelligence (BI) refers to skills,
technologies, applications and practices used to help a business acquire a better understanding of its commercial context.
BI applications include the activities of
decision support systems, query and reporting, online analytical processing (OLAP), Forecasting Data Mining
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track and organize its contacts with its current and prospective customers. y CRM software is used to support these processes y Typical CRM goals are:y to improve services provided to customers, and y to use customer contact information for targeted
marketing.
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interconnected businesses involved in the ultimate provision of product and service packages required by end customers. y It involves :y all movement and storage of raw materials, y work-in-process inventory, and y finished goods from point of origin to point of
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e-BUSINESS
y E-business (electronic business), derived from such
terms as "e-mail" and "e-commerce," is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. y Companies are using the Web to :y buy parts and supplies from other companies, y to collaborate on sales promotions y and to do joint research.
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support
y Improve responsiveness across the organization
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ADVANTAGES OF ERP
BUSINESS INTEGRATION Automatic data updating is possible among related business related components. Communication and integration of information is strong hence no obstacle in introducing new products or shifting to new business classification. FLEXIBILITY Different languages, currencies, accounting standards and so on can be covered in one system. Also helps to cope with company globalization and system unification.
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ADVANTAGES OF ERP
y BETTER ANALYSIS AND PLANNING CAPABILITIES y It becomes possible to fully utilise decision support systems and simulation functions due to comprehensive data integration. y USE OF LATEST TECHNOLOGY y Utilisation of the latest developments in Information Technology (IT) enables ERP vendors to grow and also sustain the growth. y Latest technologies include open systems, client/server technology, Internet/Intranet, CALS (Computer-Aided Acquisition and Logistics Support), electronic-commerce etc.
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ADVANTAGES OF ERP
What benefit
Reliable information access Avoid data and operations redundancy
How
Common DBMS, consistent and accurate data, improved reports. Modules access same data from the central database, avoids multiple data input and update operations. Minimizes retrieving and reporting delays Time savings, improved control by enterprise-wide analysis of organizational decisions. Changes in business processes easy to adapt and restructure. Structured and modular design with add-ons. Vendor-supported long-term contract as part of the system procurement. Extended modules such as CRM and SCM Internet commerce, collaborative culture.
Easy adaptability Improved scalability Improved maintenance Global outreach E-Commerce, e-business
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DISADVANTAGES OF ERP
DISADVANTAGES
Time-consuming
HOW TO OVERCOME?
Minimize sensitive issues, internal politics and raise general consensus. Cost may vary from thousands of dollars to millions. Business process reengineering cost may be extremely high. The architecture and components of the selected system should conform to the business processes, culture and strategic goals of the organization. Single vendor vs. multi-vendor consideration, options for best of breeds, long-term committed support. ERP system may have too many features and modules so the user needs to consider carefully and implement the needful only. Look for vendor investment in R&D, long term commitment to product and services, consider Internet-enabled systems. Consider middle-ware add-on facilities and extended modules such as CRM and SCM.
Expensive
Vendor dependence
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businesses to the largest organizations, and they can be composed of a highly flexible decentralized database and an information system cluster linked by a network. y ERP packages have the ability to adapt globally since it has multilingual and multi-currency
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do not succeed. y Companies should be able to answer questions like By when in what way can such-and-such thing be achieved?, How should we do such-and-such thing? etc y Cost estimations should be done in an effective manner for ERP implementation,
y consultation, y customisation, y training and
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y education.
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positive aspects.
y Evaluate and decide the additions that need to be made to the business in
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rejects the idea in totality by taking all possible factors into consideration.
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