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Enterprise Resources Planning ERP

 

Contents

  • Enterprise Resource Planning is the latest high end solution, information technology has lent to business application.

  • The ERP solutions seek to streamline and integrate operation processes and information flows in the company to synergise the resources of an organization namely men, material, money and machine through information.

Applications and planning systems introduced into the business are:

    • Management Information Systems (MIS)

    • Integrated Information Systems (IIS)

    • Executive Information Systems (EIS)

    • Corporate Information Systems (CIS)

    • Enterprise Wide Systems (EWS)

    • Material Resource Planning (MRP)

    • Manufacturing Resource Planning (MRP II)

    • Money Resource Planning (MRP III)

The latest planning tool added to the above list is Enterprise Resource Planning which will offer an integrated software solution to all the functions of an organization

  • ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc.,

  • ERP performs core Corporate activities and increases customer service and thereby augmenting the Corporate Image.

  • ERP bridges the information gap across the organisation.

  • ERP provides for complete integration of Systems not only across the departments in a company but also across the companies under the same management.

  • ERP is the only solution for better Project Management.

  • ERP allows automatic introduction of latest technologies like Electronic Fund Transfer ( EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E-Commerce etc.

  • ERP eliminates the most of the business problems like Material shortages, Productivity enhancements, Customer service, Cash Management, Inventory problems, Quality problems, Prompt delivery etc.,

  • ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.

  • ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes

  • Sales and Marketing

  • Master Scheduling

  • Material Requirement Planning

  • Capacity Requirement Planning

  • Bill of Materials

  • Purchasing

  • Shop floor control

  • Accounts Payable/Receivable

  • Logistics

  • Asset Management

  • Financial Accounting

 

There are many numbers of ERP suppliers who are very active in the market. Some of the companies offering renowned international ERP products include:

  • Baan

  • CODA

  • D&B

  • IBM

  • JD Edwards

  • Marcarn

  • Oracle

    • Peoplesoft

    • Platinum

    • Ramco

    • SAP

    • SMI

    • Software 2000

 

Business Process Reengineering is a pre-requisite for going ahead with a powerful planning tool, ERP. An in depth BPR study has to be done before taking up ERP. Business Process Reengineering brings out deficiencies of the existing system and attempts to maximize productivity through restructuring and re-organizing the human resources as well as divisions and departments in the organisation

Once the BPR is completed the next task is to evaluate and select a suitable package for implementation. Evaluation of the right ERP package is considered as more crucial step. Evaluation and selection involves:

  • checking whether all functional aspects of the Business are duly covered

  • checking whether all the business functions and processes are fully integrated

  • checking whether all the latest IT trends are covered

  • checking whether the vendor has customizing and implementing capabilities

  • checking whether the business can absorb the cost

  • checking whether the ROI is optimum

Implementing an ERP package has to be done on a phased manner. The total time required for successfully implementing an ERP package will be anything between 18 and 24 months. The normal steps involved in implementation of an ERP are as below:

    • Project Planning

    • Business & Operational analysis including Gap analysis

    • Business Process Reengineering

    • Installation and configuration

    • Project team training

    • Business Requirement mapping

    • Module configuration

    • System interfaces

    • Data conversion

    • Custom Documentation

    • End user training

    • Acceptance testing

    • Post implementation/Audit support

The above steps are grouped and sub-divided into four major phases namely: 

Detailed Discussion Phase

Task : Project initialization, Evaluation of current processes, business practices, Set-up project organization

 Deliverables: Accepted norms and Conditions, Project Organisation chart, Identity work teams

Design and customization Phase

Task : Map organisation, Map business process, Define functions and processes, ERP software configuration and Build ERP system modifications.

Deliverables :Organisation structure, Design specification, Process Flow Diagrams, Function Model, Configuration recording and system modification.

Implementation Phase

Task : Create go-live plan and documentation, Integrate applications, Test the ERP customisation, Train users

Deliverables : Testing environment report, Customisation Test Report and Implementation report

Production Phase

Task: Run Trial Production, Maintain Systems

Deliverables: Reconciliation reports, Conversion Plan Execution

According to the companies like NIKE, DHL, Tektronix, Fujitsu, Millipore, Sun Microsystems, following are some of the benefits they achieved by implementing ERP packages:

    • Gives Accounts Payable personnel increased control of invoicing and payment processing and thereby boosting their productivity and eliminating their reliance on computer personnel for these operations.

    • Reduce paper documents by providing on-line formats for quickly entering and retrieving information.

    • Improves timeliness of information by permitting, posting daily instead of monthly.

    • Greater accuracy of information with detailed content, better presentation, fully satisfactory for the Auditors.

    • Improved Cost Control

    • Faster response and follow up on customers

    • More efficient cash collection, say, material reduction in delay in payments by customers.

    • Better monitoring and quicker resolution of queries.

    • Enables quick response to change in business operations and market conditions.

    • Helps to achieve competitive advantage by improving its business process.

    • Improves supply-demand linkage with remote locations and branches in different countries.

    • Provides a unified customer database usable by all applications.

    • Improves International operations by supporting a variety of tax structures, invoicing schemes, multiple currencies, multiple period accounting and languages.

    • Improves information access and management throughout the enterprise.