Definition Of ERP

Software solution that addresses all the needs of an enterprise with the process view of an organization to meet the organizational goals and integrate all the functions of the enterprise

What is ERP ?

  • Facilitates Company-wide integrated Information Systems Covering all functional Areas.
  • Performs core Corporate activities and increases customer service augmenting Corporate Image.
  • Organizes & Optimizes the data input methodologies systematically.

Evolution of Business Applications
MIS - Management Information Systems
    Decision Support - No
IIS - Integrated Information Systems
    No Decision Support - No
EIS - Executive Information Systems
    Decision Support - Yes
CIS - Corporate Information Systems
    Decision Support - Yes
EWS - Enterprise Wide Systems
    Decision Support - No
   Logistics are considered as a part of system
Evolution of Planning Systems
  • Materials Requirement Planning (MRP)
  • Manufacturing Resource Planning ( MRP II)
  • Enterprise Resource Planning ( ERP)
Other terminologies are :
  • Money Resource Planning (MRP III)
  • Supply Chain Management
  • Value Chain Management

Is It Going to be there long?

Yes and No.

ERP will be there for a long time, if you are willing to upgrade to new versions with new features as and when the are released in the market

Your ERP may still work after a long time without enhancements, if your company is not growing!

Moral : Upgrading the systems are a must!

Can We wait ?

Wait if you have :
  • Good systems running.
  • No immediate threat of Euro and other known/unknown problems.
  • No management commitment.
  • Financial problems.
Do not wait if you have :
  • Tough competition in the market. Multiple location operations.
  • Plans to grow Globally.
  • Management Commitment for change.
Why ERP ?

You have Two Choices
Increase in sales - Say 30%

Reduce Procurement Cost - say by 5-10 %

What IT Dept. shall look into?

Automatic Identification System  
Hardware & Networking  
Software DBMS/RDBMS  
Supply Chain Management  
For Healthy Operations
  • Integration of Systems across the Functional Departments in a Company as well as across the Enterprise as a Whole.
  • Better Customer Service.
  • Introduction of Latest Technologies as and when the are ready for the Industry acceptance
  • Expertise database
  • Avoids data redundancy
Competition In the Market!

Manufacturing Challenges.
  • Manufacturing Globally.
  • Distribution network spread.
  • New Product introduction.
  • Lower manufacturing lead time.
Focus on industry markets.
  • Satisfying the needs of customers.
  • Develop specific business methods and processes. Integration with third party products.
Demands on the Industry
  • Better products at lower costs
  • Tough competition
  • Need to analyze costs / revenues on a product or customer basis
  • Flexibility to respond to changing business requirements
  • More informed management decision making
What are your Problems ?
  • Unable to get accurate, timely information
  • Applications not complete for existing business practices
  • Modifications are time consuming or not feasible

ERP - The Enabler

What is that ERP enables ?

  • Systematic Look into your Systems & procedures
  • Optimizing the processes
  • Enables you to adapt yourself to new technologies
  • Discipline across the functions

What does ERP integrate ?
  • Database
  • Applications
  • Interfaces
  • Tools
What drives ERP ?
  • Business
    1. Customer Satisfaction
    2. Business Development - new areas, products, services
    3. Ability to face competition
    4. Efficient processes required to push the company to top gear
  • IT
    1. Present Software does not meet business needs
    2. Legacy systems difficult to maintain, Y2K Problem , Euro currency
    3. Obsolete hardware/software difficult to maintain
Problems Taken Care of
  • Availability check at the time of Accepting Sales order
  • On-line Material Status & Shortages
  • Productivity Enhancements
  • Material Planning
  • Customer Service
  • Cash Management
  • Inventory
  • Quality
Subsystems of ERP
  • Logistics
  • Bill Of Materials
  • Sales & Marketing
  • Master Scheduling
  • Materials Requirement Planning
  • Capacity Requirements Planning
  • Purchasing
  • Shop Floor Control
  • Accounts Payable/Receivable
  • HR

Understanding ERP

Integration of Information Systems


Manufacturing Head Quarters Marketing / Sales
Local purchasing, invoice verification Information Systems Sales, shipping, and billing
Inventory management Project Mgmt Purchasing of trading goods
Internal sales,shipping and billing Inventory Inventory Management
Profit/loss Purchasing Customer service
Capacity utilization Sales    

Definition of Business Intelligence

Any tools enabling people to make better decisions and thus improve their business processes

Examples :
  • Decision support systems (DSS)
  • Executive information systems (EIS)
  • Reporting
  • Data mining
  • Early warning systems (robots)

Enabling Best Business Practices

Change Of Customer Information

The Integrated Supply Chain

Go Ahead with ERP

Business Process Re-Engineering ( BPR)
  • In-depth study of existing systems/processes is required before ERP is considered.
  • This study brings out deficiencies of the existing system/process.
  • This study is called BPR.
  • BPR attempts to re-structure and re-organize the human resources, functional areas, Man-Machine interfaces in the organization.
  • Hence BPR attempts to maximize productivity.
  • Study the current system & Processes
  • Design and develop new systems
  • Define Process, organization structure, procedures
  • Develop/Customize the software
  • Train people
  • Implement new system
ERP without Re-engineering

Advantages Disadvantages
No visible changes in Functionality Best Business practices would have been ignored
Users find it more acceptable Stability of the system is known only in long run
Can be completed within time frame. May not achieve Corporate wide systems integration
Cost can be with in your control New technologies have to be studied your self
Impact on Organization will be moderate Some functionality may be lost

Re-Engineering -a part Life with ERP!
  • Re-engineer process before going for ERP
  • Re-engineer during implementation of ERP
  • Re-engineer after implementing ERP
  • Continuous re-engineering through ERP

If It is a Big Change, don’t do it!

If the Modifications are small and important to the business, you may customize and implement. If the proposed changes are more, discuss with all concerned . Else you may be going towards a dead-end!

The USA Principle

• Understand, Simplify, Automate

Brain storming


ERP Selection

  • Check whether all functional aspects of your Business are covered
  • Check whether all the business functions and processes are integrated
  • Check whether all latest IT trends are covered
  • Check whether the vendor has customizing & implementing capabilities
  • Check the Service options available
  • Check your purse & calculate ROI
Prepare Base for ERP
  • Do not start without Management commitment
  • Allocate sufficient funds
  • Identify Core Project Team
  • Select specialists from all functional areas
  • Evaluate and select ERP package
  • Evaluate Implementation Partner
  • Make an Implementation Plan
  • Present plan to Management Committee for sanctions
  • Present plan to Employee groups for feedback/acceptability
  • Plan for User Training
  • Plan for Future upgrades
Define Requirements
  • Determine the hardware required
  • Analyze the existing Processes
  • Fine tune the processes to be in line with those of ERP defined
  • Analyze effect of system changes.
  • Prototype and present
  • Refine the prototype & freeze the specifications
ERP Implementation
  • Commitment from Management
  • Form a task force with personnel from all functional Areas
  • Take care of Hardware requirements
  • Step-by-step rather than big-bang introduction
  • Be patient. ERP implementation takes Time.
ERP Involves
  • Project Planning
  • Business & Operational Analysis, including Gap Analysis
  • Business Process Re-engineering (BPR)
  • Installation & Configuration
  • Project Team Training
  • Business Requirements Mapping to Software
  • Module Configuration
  • System Modification and Interfaces
  • Data Conversion
  • Custom Documentation
  • End User Training
  • Conference Room Pilot
  • Acceptance Testing
  • Production
  • Post-Implementation Audit/Support
Implementation Approach

Phase   Tasks   Deliverables
  Project Initialization Accepted norms & Conditions
Detailed Discussions Evaluation of current processes, business practices, requirements Project Organization Chart
  Set-Up Project Organization Identify Work Teams

Design & Customization Map Organization Organization Structure
  Map Business Processes Design Specification
  Define Functions and Processes Process Flow Diagrams
  ERP S/w Configuration Function Model
  Build ERP System Modifications Configuration Recording
      Systems Modification

Implementation/Prepare to Go Live Create Go-Live Plan & Documentation Testing Environment report
  Integrate Applications Customization Test Report
  Test the ERP Customization Implementation Report
  Train Users    

Production/Go Live Run Trial Production Reconciliation Reports
  Maintain systems Conversion Plan Execution

Advantages Of ERP

Advantages Of ERP Package
  • Highly Graphics based User Interface.
  • Zero Down time/ planned down time.
  • Readymade solutions for most of the Problems.
  • Only Customization required.
  • Integration of all functions ensured.
  • ROI earlier than the software developed in-house.
  • Easy enterprise wide information sharing.
  • Suppliers and Customers can be on-line communication.
  • Knowledge transfer between industries guarantees innovation.
  • Automatic adaptation to new technology.
Decide Make Or Buy !

Inhouse Development
ERP package
Project Development takes time .
Ready made Projects.
Reinventing the wheel.
Needs only customization
Process specific to your industry are implemented
Best Business practices followed
Documentation may not be present
Documentation is part of system
EDI implementation modifications to be taken care of
EDI Compatible. Universally accepted
Enterprise implementation is difficult as each unit follows different S/W option
The package itself is designed as Enterprise Package.
Latest Developments to be studied as and when they are introduced.
Constant Updates on Technology and Processes assured

Embrace New Technologies