definition of enterprise resource planning

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Definition of Enterprise Resource PlanningEnterprise Resource Planning is an integrated software package that integrates allfacets of thebusiness, including planning, manufacturing, sales, inventory, HRIS(Human Resource Information Systems), finance and marketing. ERP software ismulti module application that integrates cross functional department centrally.Basic Information

- Minimum three modules should be there (Sales, Purchase and Inventory) or othercombinations.- It comes in different suites - Manufacturing suite and Non-manufacturing suite.- CRM (Customer Relationship management), SCM (Supply Chain Management) arethe extended category of Enterprise Resource Planning to fulfill the completerequirements of organization.- It improve and streamline the internal business process effectively, which typicallyrequires reengineering of current business process. While CRM and SCM attempts toenhance the relationship with customers and suppliers respectively.- It's components are the common components like a MIS (Management InformationSystem). It generates all kinds of report; top customers, top suppliers, WIP (Work InProcess), shop floor, order tracking, production reports, AP/AR (Account

Payable/Account Receivable), GL (General Ledger), Balance sheet, Trail balance,HRIS reports etc.- Most of the software is module based, which is the core of the system. Eachmodule automates the business activities of a particular functional area. i.e. Salesmodule will cover all sales activity in the organization, Manufacturing module willcover all production activity etc. In every ERP all the modules are highly linkedbecause all the functional areas of business process areinterconnected with each other.- There are three levels of business processes - Strategic Planning, ManagementControl and Operational Control. The software has been designed to support orstreamline business processes at all three levels.- ERP software can not take decisions. It will work like DSS (Decision Supportsystem). It will provide you all the relevant information. Based on that informationbusiness managers will take decisions and they can do advance planning for theorganization.- It can be used by all levels of employees - workers, supervisors, managers,executives, top level management.

- Selection is crucial and important for the organization - If you choose a wrongsoftware you willbe in trouble. There are so many failures stories. Always see a complete softwaredemo beforefinalizing any Enterprise Resource Planning for organization.- At the time of selection, check two-three pakages that is made for similar types ofindustry.Always consider following points before finailizing software and vendor- Who isgoing to implement? What will be the implementation time? What are the trackrecords of Company?Vendor track record? (If software is going to implemented by third party)- When selected software does not have a unique features that you are looking foryourorganization. Customizations will come in the picture.


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- The implementer or consultants will do the complete process mapping and GAPanalysis forimplementation. They will map the current business process with software toidentify thecustomization.- Customization should be limited. Too much customization will ruin the original

features of thesystem and it will be costly. Customization services are chargeable basis and it willtake time too.- It is available in all range. It will vary from user wise, company size, etc. Earlier thissoftwarewas used mainly by the big organizations but now it is also available for small andmedium sizeenterprises (SMEs).

Advantages of ERPERP is software which integrates all functionalities of the organization in a single

database. It streamlines all the business processes and gives desired result on a

click of a button. Earlier ERP was for big organization due to its cost, but now it ismade for SMEs (Small and Medium Enterprises) of different segments.ERP software incorporates a large amount of industry specific businessfunctionalities which will ensure less customization or sometime no customization(except reports) to make the package suitable to your business operations.Most important advantage of ERP software is integration of all the businesssolution in a single platform, which reduces unnecessary paper work,documentation, repeated entry, cycle time etc.The software also comes with its framework of upgrades to changing technologies.In the ERP software business functionalities and operating processes are built intostandard software codes, thus it require lesser time to understand process relatedissue of implementation and gives industry specific best practices.

ERP software automates the business processes and also forces its own logic(industry specific) on the business. Verticalization (industry specific) of ERP isincreasingly becoming the buzzword across all the ERP vendors. While the otherstandard solutions may give 55-65% to your business, the same can be as high as90% with industry specific solutions.Accounting applications is another advantage of ERP. It can integrate the costing,profit, andrevenue information of sales that are made etc.Other Advantages* Speeding up the whole manufacturing process* Better and systematic inventory handling with ABC analysis* WIP (work in progress) control* Easy project management* Accessing the status of the goods on a click of a button* Fast transmit commodities through online transactions* Fastens the creation of reports* Reduce paper works and repeated entry* Quick processing of information* Serving the customer efficiently in time* Solve the customer problem quickly


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* Information based decision* Better finance reports* Better supply chain management* Better vendor management* Reduce process cycle time

Disadvantages

What Are the Disadvantages of Enterprise Resource Planning?ERP systems have many advantages like improve cycle time, automate thebusiness process,integrity of various departments, easy workflow, better reporting, etc. but it hasalso somedisadvantages due to inadequate investment in regular training for users, testingcharges, limitedcustomization, reengineering of business process up to some extend, AMC chargesfor thesoftware and updates, difficult to use, etc.

Complete system can be expensive for your organization, although they are comingfor SMEs atlower cost too, but organization should be very careful in selecting the appropriatesoftware thatfulfills their requirements in a budget. There are some limitations in customizations;somecustomization may involve changing of the software structure which is usually notallowed.

Re-engineering of business processes to fit the "industry standard" prescribed bythe ERP systemmay create some problem to the user to understand, they may do some mistakes.

New systemcan be too complex measured against the actual needs of the customers. There is arisk of lossof data in the event of a security breach, because of centralized database in thesystems. It hassome limitations and do not allow much flexibility in implementation and usage. Thenew systemmay be over-engineered relative to the actual needs of the customer. Ifimplementation fails,due to any reason, all the work done by organization in this project will be zero.Organizationshould be very careful about implementation process.There may be some compatibility problem between new technology and old legacysystem likeorganization may have to buy new database, new PCs, new servers to implementthe software.This will increase the cost of the project. If organization does not have ITdepartment, they mayrequired a new IT manger to implement the system.


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There are other disadvantages seen by the organizations who have implementedERP system, butthey are very happy with advantages over disadvantages. Disadvantages cannoteffect theorganization if planned well to implement the software.

Pitfalls

ERP solutions have solved many problems of business enterprises, but ERP softwarehas manypitfalls, which should be analyzed during the implementation of this software.Some of the common pitfalls of ERP software are:Poor compatibly to other software systems: The improper design of softwareimplementation may make enterprise software inefficient. For example: If thecompany buyingthe enterprise software is using software products of some other company, or if to apreviouslyinstalled system a new ERP software is integrated, then the new software may

reduce thesystem's efficiency. If the integration of two systems such as CRM andmanufacturing is not donesuitably, the production unit may not get consistent data to design products. Thecustomerbuying enterprise software should use compatible products to get high efficiency.ERP implementation can be expensive: Large companies have suitableinfrastructure tomaintain software and hardware terminals, but mid-size businesses and smallcompanies mayfind the expenses on computers and hardware too much for their budgets. Manycompanies

prefer to keep previous software modules to prevent expenses on taking newenterprise resourceplanning modules and if the implementation is not done at base level, it may nothelp thecompany completely. Companies buying enterprise software may find ERPsextremely expensiveinitially.

ERP Software security depends on people who using it: Enterprise resourceplanningsoftware provides high security to the company's data, but if it is not maintainedproperly, thedata may face security problems. Companies may have to hire support staff at highpay scale tomaintain this Software security. Sometimes, companies wish to reduce buying costand are notwilling to take expensive training needed for high quality security and it mayultimately result insecurity issues.


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Human Resource Management (HRM) will optimize your human resource processeswith acomplete and integrated HRM solution. ERP provides this HR solution for all types oforganizationsin all verticals. You can maximize the efficiency of your employees and also bettersupport,

growth, and flexibility. Human resource solution automates capacity management,core HRprocesses like recruiting, training, performance appraisal etc.

ERP Operation functions manage end-to-end procurement and supply chainprocesses and otherbusiness process for complete business cycles. It optimizes the flow of materials-better inventorymanagement. It also supports discrete and process manufacturers manage thecomplete lifecycle of product development and manufacturing.The software automates the complete manufacturing processes and reduces costs

by bettercontrolling and adapting the manufacturing process in real time (WIP). Apart fromthese function,after implementation you will be enjoying the following features and benefits -Sales and marketing realize they must provide the highest quality forecast of futuredemand theyare reasonably able to in the form of a regularly updated forecast of the productthey need tomeet the market needs and when they need it. Planning realize their plans must berealistic andachievable (any plan with due dates in the past is neither realistic nor achievable)and they

should only release orders when they have checked that the material is available.Operations recognize that it is in everyone's best interests to follow the plan,advising planning inadvance if they may miss the plan date. CRM realizes that orders must only beaccepted on thebasis of available, planned capacity (based on the sales forecast) unless agreedwith operations.

Different Types of ERP SoftwareTypes of ERP SAP R/3, SAP B1, LN (BaaN), Microsoft Dynamics AX, Microsoft Dynamics NAV, JDEdwards, Oracle Financials, PeopleSoft.

SAP R/3 is software from SAP. SAP is a world's leading provider of business software. SAPsoftware runs in more than 120 countries world wide with more than 86000 customers. SAPsolution is transforming your business process into a best-run business. SAP services are sogood; they provide superior services and supports.SAP B1 (business one) software is also form SAP. It is made for SME (small and mediumenterprise) segment to fulfill their requirement at lower cost. SAP B1 localization is quite good. Itcontains 15 core modules. Report module is discontinued in 2009 due to purchase of BusinessObject, XL Reporter and Crystal Reports 2008 Basic(One Free License per customer)LN/BaaN is software from Infor Global offers the breadth and depth of support for order-driven,

project-based discrete manufacturing. It increase user productivity, operational efficiency, better


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definition of enterprise resource planning

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