chap 1 introduction to erp

8/9/2019 Chap 1 Introduction to ERP

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Enterprise Resource Planning



Introduction to ERP

An integrated information system that servesall departments within an enterprise.

Evolving out of the manufacturing industry,

ERP implies the use of packaged softwarerather than proprietary software written by orfor one customer.

ERP modules may be able to interface with anorganization's own software with varyingdegrees of effort, and, depending on thesoftware, ERP modules may be alterable viathe vendor's proprietary tools as well asproprietary or standard programming

languages.



Evolution of ERP



Why ERP?

To Enhance Profitability

for Healthy Operations:

Integration of Systems across the Functional

Departments in a Company as well as acrossthe Enterprise as a Whole.

Better Customer Service.

Introduction of Latest Technologies as and

when the are ready for the Industryacceptance

Expertise database

Avoids data redundancy



Why ERP?

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 andprocesses.

Integration with third party products.



Why ERP?

Demands on the Industry:

Better products at lower costs

Tough competition

Need to analyze costs / revenues on a product orcustomer basis

Flexibility to respond to changing businessrequirements

More informed management decision making

Solving the Problems:

Unable to get acurate, timely information

Applications not complete for existing businesspractices

Modifications are time consuming or not feasible



Advantages of ERP

Business Integration: automatic dataexchange among applications

Flexibility: Different languages, currencies,

accounting standards and so on Better Analysis and planning Capabilities

Use of Latest Technology

The indirect benefits include better corporate

image, improved customer goodwill, customersatisfaction, and so on.



What is that ERP enables?

Systematic Look into your Systems &procedures

Optimizing the processes

Enables you to adapt yourself to newtechnologies

Discipline across the functions



Problems Taken Care of bythe ERP:

Availability check at the time of AcceptingSales order

On-line Material Status & Shortages

Productivity Enhancements Material Planning

Customer Service

Cash Management

Inventory Quality



What drives ERP?

Business drives

Customer Satisfaction

Business Development - new areas, products,

services Ability to face competition

Efficient processes required to push thecompany to top gear

IT drives

Present Software does not meet businessneeds

Legacy systems difficult to maintain

Obsolete hardware/software difficult to

maintain



ERP in India

Until recently Indian organizations were in asellers market and operating in a regulatedenvironment.

With globalization and gradual lifting of regulation, there is a paradigm shift in runningthe business.



Evaluation Criteria

Some important points to be kept in mind whileevaluating ERP software include

Functional fit with the Companys business

processes. Degree of integration between the various

components of the ERP system

Flexibility and scalability

User friendliness Ease of implementation

Ability to support multi-site planning andcontrol



Evaluation Criteria

Technology - client/server capabilities,database independence, security

Availability of regular upgrades

Amount of customization required Local support infrastructure

Reputation and sustainability of the ERPvendor

Total costs, including cost of license, training,implementation, maintenance, customizationand hardware requirements.



Pre-ERP Scenario



Post ERP Scenario



ERP Modules

Finance

Plant Maintenance

Quality Management Material Management, etc

Inventory Management

Manufacturing and productionplanning

Sales and distribution



FINANCE MODULE

The finance modules of most ERP systems will have thefollowing subsystems:

1. Financial Accounting:

General Ledger

Accounts Receivable/payable

Special Ledgers, Fixed Asset Accounting

Legal Consolidation.

Investment Management:

Investment Planning Budgeting

Controlling

Depreciation Forecast

Simulation

Calculation.



FINANCE MODULE

Controlling

Overhead Cost Controlling.

Activity- Based Costing

Product Cost Accounting Profitability Analysis.

Treasury Module

Cash Management

Treasury Management Market Risk Management

Funds Management

Enterprise Controlling

Executive Information System

chap 1 introduction to erp

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